A competitive analysis is a strategic assessment used to inform your product development, sales growth, and merger and acquisition initiatives. To do this, you would evaluate the strengths and weaknesses of your main competitors, ultimately allowing you to determine potential opportunities and threats.
After completing a competitive analysis, you will be able to:
Before conducting an analysis, identify your primary goal for this research project. This helps you clearly define the key outcomes your company is looking for in order to retrieve the appropriate data points. For example, are you looking to better equip your R&D and product teams, accelerate your sales growth or complete an M&A? This question will be your North Star.
Which companies are most similar to yours? Ideally, you would know them off the top of your head. Otherwise, consider what criteria you can use to narrow this search. For instance:
Search online to find tools to help you find your competitors. For example, consider using the seven-day free trial of Crunchbase. If that proves unsuccessful, you could search keywords on the Kompass directory.
Occasionally, companies that have innovative or novel technology believe they have no competitors. This is often not the case, as there are indirect and alternative competitors. If direct competitors (for example, Amazon and eBay) are unclear, search for indirect competitors (such as Amazon and bricks and mortar stores).
You can complete a SWOT analysis to identify your competitors’ strengths, weaknesses, opportunities and threats. Ultimately, this will help inform future strategic goals and establish a foundation for the answer to your North Star question.
The table below provides a template for you to gather and analyze information. Please note that many of the examples may be placed in different boxes depending on the company’s unique research needs. For instance, being in possession of a patent (i.e., intellectual property) is an advantage, but its absence can be considered a weakness.
|Characteristics that provide an advantage
Examples: intellectual property, brand reputation, strategic partnerships
|Characteristics that provide a disadvantage
Examples: isolated location, limited number of employees, outdated business model
|Areas that can be exploited to gain an advantage
Examples: alternative markets and verticals for entry, financing or fundraising to expand, acquisitions
|Areas that can be exploited to create a disadvantage
Examples: political climate, cost of supplies, outdated software
In order to grow, you should consider your current positioning. That is, where does your product or service stand relative to similar offerings by competitors? What is your market share and revenue? Now compare this with your competitors’. Request a free trial of PitchBook to acquire competitor revenue information. Request a free sample report within your industry at IBISWorld to get market share information.
Finally, identify your competitors’ and your own end customer. This will guide both your marketing efforts and any changes to your positioning. What are your competitors’ customer satisfaction scores, and what themes are common in user reviews? Scan sites such as Google Reviews, Yelp, YouTube and Capterra.
A successful go-to-market (GTM) strategy is iterative in nature and has four key considerations: who, what, how and where. Answering the questions in the following table will help you establish the foundation for your GTM.
Four components of a strong GTM strategy:
|Who: Who are you selling to?||What: What are you selling?|
|Where: Where will you promote your product or service?||How: How will you reach your target market?|
Now that you’ve completed steps one through four, you should combine your learnings to inform the primary research goal you established at the start. Download and use the sample template below to analyze all the data points and the research you’ve conducted.
Before you begin a competitive analysis, always identify the primary goal of this research task. Also make use of free trials for the suggested software, as one of the most difficult aspects of a competitive analysis is attaining the programs to retrieve the data you seek. Ultimately, you will walk away from this process having a clear focus on how to further enhance your product offering.