When two teams face each other in a sports match, for example, it is very common for their coaches to study the players and the opposing team’s strategy. This allows them to identify the competitor’s strengths and weaknesses, increasing the chances of success. In Digital Marketing, the same thing happens through competitor analysis!
By knowing who is competing for people’s interests with your company, you can define ways to stand out and achieve better results. Therefore, it is essential to know how to carry out an effective analysis to support your decisions.
Throughout this content, I share the main points to know and overcome your direct and indirect competitors. Follow along!
Who are your competitors?
Your competition is made up of companies that compete for the interest and preference of the same public. A competitor does not necessarily sell the same thing as your business, but they have the potential to attract your customers.
The competitive relationship also manifests itself in different ways, and it is important to know the main ones. Check it out:
- Direct competitors: are those who offer similar products or services to the same customer segment;
- Indirect competitors: they do not offer the same type of product or service, but they meet the same needs as your business;
- Potential competitors: these include companies that are not yet competitors to your business, but that could start competing in the market;
- Broad competitors: these are all those competing for the consumer’s attention, even if there is no direct competition between products or services;
- Local competitors: These are linked to geographic location, such as similar companies in the same neighborhood or in the same shopping mall.
Why analyze your competitors?
Competitor analysis, whether direct or indirect, is essential for a company that wants to operate more efficiently. This type of analysis is especially important in the context of Marketing and business strategy.
One of the reasons is that analyzing competitors allows you to understand the market in which the company operates. Since Marketing is a science of markets, its mission is to transform the business into something consumable, generating value.
By understanding your competitors, it becomes easier to understand where your company is, what it can achieve and how Marketing can lead you to these results.
Competitor analysis also helps you understand your competitors’ positioning in the market , such as in the digital environment. This helps you develop more effective strategies to compete for the attention of your ideal customer.
Furthermore, understanding the competition is essential for the company to define how it wants to differentiate itself and consolidate itself in the market. It is one of the most effective ways to increase the chances of success in the long term.
The benefits of competitor analysis
Understanding why you should analyze your competitors directly relates to the advantages of doing so. As you’ve seen, one of the reasons has to do with business strategy.
By identifying a gap left by a competitor, for example, it is possible to act to fill that space. This allows you to capture the public’s attention and increase sales, improving results.
It is also time to identify the strengths of the competition. From there, there is a chance to better direct pricing and market positioning strategies to strengthen yourself.
Furthermore, analyzing competitors is a way to predict trends and understand the reach of the target audience. If a competitor begins to adopt a technology that improves its results, it is time to act to innovate and not fall behind, maintaining your competitive position.
Overall, the analysis also has to do with optimizing operations in order to maintain and even increase competitiveness in the market.
That’s why competitor analysis makes it easier to adjust business operations strategically . Doing so gives you the opportunity to work on barriers to entry, strengthen your negotiating power, and capture the attention of your ideal customer!
Recognizing direct and indirect competitors
As you have seen, there is more than one type of competition. While direct competitors offer similar solutions, indirect competitors meet the same need, even if with different products.
Different methods can be used to identify each type. In the case of direct competitors, the way to do this is to identify companies that serve the same market segment.
Depending on the size of the market, however, it is necessary to start by defining a positioning to find the most relevant direct competitors.
Consider the case of Digital Marketing agencies, which total more than 36,000 companies in Brazil. It doesn’t make sense to define all of them as competitors; it is more strategic to find out who the main competitors are.
Indirect competitors can be identified by understanding the needs of the public. From there, it becomes easier to know which businesses meet, even partially, these interests.
Analysis of competitor strengths and weaknesses
Using the SWOT matrix (Strengths, Opportunities, Weaknesses, Threats) is one of the first steps in analyzing competitors. With it, it is possible to clearly understand the positioning and strategies of competitors.
To apply the SWOT matrix, aimed at analyzing the competition, you need to know what to consider about each aspect. See:
- Strengths: These consider where the company uniquely stands out, which can include market experience and customer base, for example;
- Weaknesses: indicate which points of competitors are most vulnerable. Elements to evaluate include dependence on a single customer, inefficiency of operational processes and existing financial limitations;
- Opportunities: involve which scenarios can favor competitors, if properly taken advantage of. Among them are market trends and strategic partnerships;
- Threats: These include situations that could harm competitors. These include regulatory changes and economic downturns.
The idea, therefore, is to create this matrix not only for your business, but also for your competitors. This provides more clarity on the conditions in which your competitors operate, highlighting opportunities more easily.
The metrics that can be used are:
- Annual revenue;
- Market share;
- Customer satisfaction level;
- Online presence;
- Operational efficiency;
- Growth in the market;
- Brand reputation.
Competitor mapping tools
As you have just seen, the SWOT matrix is essential for evaluating the characteristics of competitors. But you can also use other resources to enhance competitor mapping. Some examples are:
- Backlink analysis;
- Social media monitoring;
- Keyword analysis;
- Evaluation of awards and highlights at events;
- Market research;
- Benchmarking resources.
The idea is to use these tools regularly to stay up to date on your competitors’ activities and strategies. This allows you to respond more quickly and dynamically to potential changes in the market.
Integrating Competitor Analysis into Business Strategy
There is no point in mapping and monitoring your competitors if you are not going to integrate this analysis into your business strategy. Bringing this intelligence to operational planning helps make your business more competitive and capable of dealing with those competing for the public’s attention and interest.
The insights gained from competitor analysis can (and should!) be used to complement or update the business plan. This may involve including new distribution channels or seeking a differentiated positioning in the market, for example.
It is also worth integrating this information into your marketing planning. Understanding your competition can help you to adapt and differentiate your communication, ensuring a closer relationship with your audience.
Furthermore, there is the chance to understand which Marketing messages are most effective and how to best impact the target audience.
This understanding of your competitors can even be used to support product development! Looking at what is being done on the market will help you improve or even launch new options, considering the needs that are being met or not being met by your competitors.
Overall, using insights from direct and indirect competitor analysis is essential to reach your audience more broadly and effectively. After all, when you meet your audience’s needs, you attract more people and even improve the experience.
Pricing and positioning strategies
Thinking about incorporating insights into strategy also involves questions related to pricing and positioning strategy.
With a competitive price analysis, for example, it is possible to identify patterns, as well as seasonal offers and discounts. It also allows you to understand how competitors price, according to the market segment.
Here it is important to highlight again the role that brand positioning plays! The image and values that the brand wishes to convey need to be compatible with the perception of the value that consumers have of a product or service.
Depending on the consumer’s sensitivity to price, a company will establish different elasticity criteria for prices, making the company more competitive in this sense.
Depending on the case, value- added strategies can be established. They serve to justify higher prices and can be part of market positioning.
Speaking of which, competitor analysis also allows you to identify gaps left by competitors, as well as the value proposition. By taking advantage of competitors’ blind spots, the company can establish itself in a distinctive way, even resisting competitive pressure based solely on price.
Trend anticipation
“Wow, Gearrice, I’m not a psychic!” Me neither! But by looking at other sectors, news and, of course, competitors, you can anticipate trends and innovations in the market.
After all, by identifying the use of an emerging technology by a competitor, for example, insights may emerge on how to use it even better — or even decide not to use it!
From Betamax to Google Glass, some technological innovations just don’t gain traction! So yes, it’s important to be an early adopter and test new things whenever possible, but don’t keep repeating the same mistakes, OK?
Returning to trend anticipation, evaluating multiple competitors also helps to find common gaps or unexplored needs of the public. This way, the company has the chance to innovate to meet these underutilized demands, such as by developing new products and services.
Incorporating trends into your planning will help you adjust your strategies according to your customers’ needs and demands. As a result, your business’s reach to the public becomes more effective.
With this type of anticipation, therefore, your business can stay ahead! This is a way to further consolidate your positioning, favoring the achievement of results.
You are one step ahead of the competition!
I hope you enjoyed the content and tips so far! In my opinion, knowing your direct and indirect competitors, mapping them and monitoring them is essential for success.
If what you want is to build a sustainable competitive advantage, transform these insights into concrete actions in your company!
Did you like the content? Take the opportunity to also check out our other content, which will put you ahead of the competition, here on the Enjoy Minder blog!
