9 reasons why a competitor analysis is important for your business
No matter how big or small your business is, it’s important to know who your biggest competitors are. It’s best to know how you are performing on the playing field full of market share hogs. This is to gain perspective and assess how you could do better. Let’s look at the 11 reasons why competitor analysis is important for your business, but before we delve deep into it, let’s first define what competitor analysis is.
What is a competitor analysis?
A competitor analysis compares your company to numerous others in your industry — your competitors.
Rivals who are focused on a similar geographic location may target comparable clients and may have similar products, services, and marketing strategies to your own company – anyplace you and they are vying for marketing share.
The strategic benefit of compiling a competitive analysis is that it allows you to better understand the competition so you can try to mimic their success while also recognising and avoiding their failure.
9 reasons why competitor analysis is important for your business
1. Understanding your competition allows you to better understand your own business.
Understanding your competitor’s strengths and shortcomings allows you to learn what works and what doesn’t, how to make better decisions, and how to prevent mistakes. As a result, you learn about your own company’s strengths and limitations.
2. A competitor analysis will assist you in expanding your industry knowledge, which you will be able to share.
You gain expertise and authority, which you may utilise to develop trust with your customers. You may also share this knowledge with your employees, which will help them learn about and appreciate your company.
3. A competitor analysis can help you understand and uncover market gaps
This may apply to a certain geographic location, product offers, price, or marketing to a specific target market.
For example, a competitor may be targeting younger generations while none of your competitors is tailoring the offering to an older audience.
4. A competitor analysis identifies your Unique Selling Proposition (USP).
By analysing and assessing your competitors (and yourself), you may uncover what sets you apart from the competition. It starts by answering the customer’s query, “Why should I buy from you instead of your competition?”
5. Understanding your competition entails looking at firms of the same size as yours.
If your company’s goal is to grow, you may wish to watch larger competitors to learn from their successes or prevent costly mistakes. You can find areas for internal and external development as well as chances for growth.
Similarly, this applies to smaller enterprises – those that you believe are too little to pose a threat. You should keep a watch on smaller enterprises since they are attempting to climb the same tree to obtain the same fruit as you are.
6. A competitor analysis might aid in the organisation of your marketing.
Do you know what keywords your competitors are utilising or what marketing channels they are employing? You may begin to comprehend the cost of their marketing and how much they spend to gain new customers by researching where the competition is investing.
For example, you can decide whether to compete directly or employ less expensive keyword alternatives. You may discover a marketing channel gap, allowing you to target a whole different market and in a completely different method.
7. It allows you to learn what not to do in addition to understanding your competitors’ strengths and flaws.
You recently completed a competitor study for a home builder. According to consumer feedback, this competitor received a few bad ratings and negative feedback.
Instead of taking the client offline to discuss and resolve the issue, the competitor had a very public tit-for-tat fight over what was correct/incorrect with the build and who was to blame. While the rival may have been correct, the visible slanging battle did not give a good impression of why the builder was in such a bad situation in the first place. Arguing can lead to false expectations about trust and openness.
8. Further competition analysis may reveal a new rival plan or strategy,
This can be in the form of news items about expansion, location changes, staff recruiting, redevelopment, and so on. This allows you to construct your marketing plan to counteract any of their marketing strategies.
9. An in-depth competition research can reveal industry trends.
It is critical to understand where your competitors and industry are going. Examine the potential threats and opportunities, as well as what you (and your competitors) are doing to address these trends. Instead of being an industry behind, you will be considered forward-thinking and nimble, a market leader and authority.
How to do a competitor analysis and how Privacy Ninja can help
Competition analysis does not have to be overly difficult. You may perform a rudimentary SWOT analysis on each rival and your own company. The majority of the study is spent determining each competitor’s Strengths, Weaknesses, Opportunities, and Threats pertaining to their product lines, target clients, branding and advertising, company size, and geographic location.
But of course, you can always save the trouble doing the competitor analysis yourself and just focus on the further growth of your business. Privacy Ninja offers Competition Analysis for your business and will provide you with valuable digital marketing insights.
Stay ahead of the marketing race by learning what your top competitors are doing online. Analyse valuable insights and build a solid marketing strategy with Privacy Ninja, and receive your first month’s full report free of charge!
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