As a small business, it’s important to run a competitor analysis of your industry competition to stay ahead of the curve. From small startups to large corporations, mastering the art of the competitor analysis can be a game-changer to increase your sales and find your target audience! Let’s dive deeper into a step-by-step guide for beginners to run a competitor analysis.
Identify your Objectives
I recently ran a competitor analysis on a small business, analyzing the competitors in the industry that were local to the area. Through the analysis, we realized that there were a lot of competitors that had similar branding and target audiences. While there were a lot of competitors in one space in the industry, we saw gaps in the analysis that helped us identify the direction that we could hone in on in order to become more competitive.
Competitor analysis is helpful for your business for a few reasons:
- By identifying the gaps in your industry, you can adjust your product to meet those gaps.
- By creating a product that meets gaps in the industry, you can meet the needs of customers who are looking to fill the gap.
- By identifying and targeting a different audience than your competitors, you can tap into a new market that is ready to buy your product or service.
Through the competitor analysis, my client and I were able to recognize the need to rebrand into a company that targeted younger audiences and leaned more into their cultural background. We wouldn’t have been able to figure this out if it weren’t for mapping out their competitors and making a strategic decision on the direction of her brand.
Identifying your objectives for running a competitor audit is helpful to understand what you are trying to achieve with the audit.
Identify Your Competitors
Start by deciding who your direct and indirect competitors are. You can group your competitors by similar products and services and location, or those targeting the same audience as your company or solving similar problems.
For example, if you are small HVAC company in Cleveland, Ohio, you could group your competitors by:
- HVAC companies in Cleveland and surrounding areas
- Large, nationwide HVAC companies
- Companies targeting millennials in Cleveland, Ohio
- Local contractors
Identifying groups of competitors, not only in your industry but also in your location and target audience helps identify all of the potential competitors that your target audience could be searching for. Create a list on a Word or Google Doc with all of your competitors.
Analyze Your Competitors
Next, you’ll need to analyze your competitors’ brands. First, research their online presence. Find links to your competitors’ websites, social media profiles, Google Business profiles, and any other media they have.
Assess Visual and Verbal Style
Then, you will want to analyze your competitors’ visual style and verbal style. What colors are they using – more muted tones or more bright and colorful? What style of font – fun and funky, serious and modern, or something else? How do they speak – corporate and professional, humorous and playful?
I like to pull up a list of adjectives for assessing a brand and pick the top 3 adjectives that I would use to describe the company. I will then go through each brand and pick the top 3 adjectives that best describe their visual and verbal brand.
Perform a SWOT analysis
You can also analyze your competitors by performing a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for both your business and competitors. Highlight your unique selling points, areas of improvement, and potential opportunities and threats in the market. This analysis can help you understand where the gaps are in your marketing.
Create a Competitor Map
A competitor map is a visual representation that helps businesses understand their competitive landscape by plotting the position of their competitors relative to each other on different criteria. The criteria can be on an axis such as Quality vs. Price, Personable vs. Corporate, Innovative vs. Established.
Competitor maps can help you grasp the strengths and weaknesses of different players in your market and quickly identify key competitors and any gaps in the market. The gaps or “white spaces” in the market are where there are fewer competitors or unmet customer needs. This can present opportunities for businesses to differentiate themselves and capitalize on underserved segments of the market.
You can create a competitor map by first creating a graphic with 2 axis that you would like to compare.
Then, copy and paste the logos of each of your competitors into the location that they belong on the competitor map.
After all of your competitors are on the competitor map, you can ask yourself several questions while assessing the completed map:
- Is there anything surprising or interesting?
- Is your brand where you want it to be on the competitor map?
- Have you heard any feedback from your existing customers regarding your competitors (positive feedback or pain points)?
- What opportunities exist to enhance your presence based on your competitors?
- What industry trends, emerging technologies, and
Asking yourself these questions can be helpful in understanding what your next steps are after conducting your competitor analysis.
