Why Analyzing Your Competitors Is Important for Your Business

A competitor analysis allows you to discover new competitors, the space they occupy in the market and the strategies they use. This is a valuable tool for better understanding your target customers, avoiding many costly mistakes and increasing your market share. 

It is therefore important to take the time to study your market and the companies that offer similar products or services to yours. Whether you're in the middle of creating a new project or your business is already active, a competitor analysis will help you make more informed decisions and position yourself effectively.

WHY DO A COMPETITOR ANALYSIS?

There are many reasons why you could (and should!) do a competitor analysis.

First, this approach allows you to better understand the market in which your company operates. Your field can change over time, and doing an analysis helps you take the pulse of the current situation while anticipating future trends. In the case of a start-up project, it also helps assess the viability of your business idea and can be included in your business plan.

This work also allows you to identify your strengths and weaknesses. By comparing yourself to your competitors, you'll find out where your shortcomings are, but also how you can stand out.

A study of your competitors is also very useful to help you get to know your ideal customer better. By observing who your competitors are targeting and what strategies work with their customer base, you'll gain valuable insight to define and better understand your own target audience.

When done right, this will also help you increase your sales and expand your market share. After all, the better you understand the market and customer behavior, the easier it is to build an effective marketing strategy!

WHAT SHOULD A COMPETITOR ANALYSIS CONTAIN?

A list of your competitors

First, you need to identify who your competitors are. There are probably several names that come to mind, but you'll have to dig deeper to come up with a complete list. Look for companies that offer identical products or services to yours in the same geographical area: these are your direct competitors. Also look at companies that have a different offer, but meet the same need. These are your indirect competitors.

The Internet is a valuable resource for finding your competitors! You can also visit brick-and-mortar stores to see which brands offer similar products to yours. These observations will already provide you with a wealth of useful information for the rest of the analysis.

An analysis of your customer base

Who are your current clients? Does their profile match that of your ideal clientele? How are these two audiences different? These questions will guide your thinking. Analyzing your own customer base allows you to better understand your positioning and which segments you are really reaching. It also helps you adjust your offer or communication according to the expectations of your target market.

A comparison of the products or services offered

What do your competitors offer? When researching, pay attention to several things, including price, features, quality, and packaging. Are they similar to yours? Are there things that come up often from one company to another? This data will serve as a starting point for you to innovate, identify overlooked segments of your industry, or discover your unique value proposition.

Your unique value proposition

The unique value proposition is the distinctive benefit that your product or service brings to your customers, i.e. the one that differentiates you from the competition. This is the element you should focus on in your communication. Since a competitor analysis allows you to understand what your competitors offer, it helps you more clearly identify what makes your business stand out and what advantages customers have in choosing you.

Your estimated market share

If possible, find out the total revenue generated by your market. You can go very broad or just consider your niche. For example, if you sell t-shirts made in Quebec, your broad market analysis will include all t-shirt sales, whereas a niche analysis will be limited to the companies that design and produce them locally. This data allows you to assess the space you occupy in your industry, set realistic goals, and track your growth more accurately.

Marketing strategies observed

Your competitors' success isn't just about their products or services. A lot of it has to do with their marketing efforts. Notice the actions they take to reach their audience: do they have an active online presence? Do they run advertising campaigns? Do they create content on social media regularly? What tone do they use in their communications? This information gives you insight into what works with your target audience and will help you fine-tune your own strategy.

How to Do a Competitive Analysis in 5 Steps

• Define your objectives: what are you doing this competitor analysis for? Is it to gain market share, improve your marketing strategy, discover business opportunities?
  
  

• Identify and rank your competitors: what options, other than you, does your target audience have to meet their needs? Who are they most likely to turn to? Then rank these competitors according to the degree of similarity of their offer to yours.
  
  

• Choose your comparison criteria: You can compare your company to others in a thousand different ways. What are the most relevant criteria according to your objectives? Is it cost, customer experience, brand awareness, online visibility?
  
  

• Collect and analyse data: what do your observations mean in concrete terms? Data analysis allows you to identify trends, spot important gaps, and identify best practices or gaps in the market.
  
  

• Determine your next actions: Now that you have all this new knowledge, what are you going to do? You could adjust your marketing strategy, rework your unique value proposition, completely review your positioning. The options are endless!

With a good analysis of the competition, you will be better equipped to make informed decisions and position your business strategically. Whether it's to launch a project, improve your offers or refine your marketing, this type of approach offers you a clear vision of your market, and the space you can take in it.