Doing a competitive analysis every few months can help you find market opportunities, keep track of customer trends, and change your product mix to stay ahead of the competition. Use one of these ways to figure out where your competitors might be doing better than your brand, and then adjust your strategy.
The SWOT Analysis
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The information about a company is put into these groups by this method of competitive analysis.
The things that a company does well, like having engaged employees, a strong brand name, or high prices, are its strengths. Weaknesses are things that hurt a business in the market, like not having a website or a small budget for marketing.
Opportunities are outside things that the company could use to its advantage. For example, the company could take advantage of the demand for curbside pickup. Lastly, threats are things outside of the business that could hurt it, like a slow supply chain.
Your company and your competitors can both use a SWOT analysis. With this method, you can see where your business can be better and where there may be a chance to take advantage of the market.
Porter’s Five Forces
This competitive analysis template was made by Michael Porter, a professor at Harvard Business School. It looks at the five most important market forces in an industry, which are:
- Competition in the industry.
- The potential of new entrants into the industry.
- Power of suppliers.
- Power of customers.
- The threat of substitute products.
Porter’s Five Forces is a way for entrepreneurs to look at a market where they might want to start a new business. This framework helps the entrepreneur figure out how competitive an industry or market is, how appealing it is, and how profitable it is.
It can also help you come up with strategies and goals for growing your business, like launching a new product line or moving into a new area.
Growth-share Matrix
A growth-share matrix divides the products your company makes into four groups: “stars,” “question marks,” “cash cows,” and “pets.” These names are cute, but they hide a certain combination of market share and growth.
“The matrix shows that companies should think about two things when deciding where to invest: the competitiveness of the company and the attractiveness of the market. These two things are driven by relative market share and growth rate,” wrote Boston Consulting Group.
Stars, for instance, are products that are growing quickly and have a big share of the market. These products have a lot of potential for the future and are worth putting more money into.
Cash cows have low growth but a large share of the market, while question marks are usually new products with high growth but a small share of the market. Last, pets are low-growth, low-market-share products that could be cut or repositioned.
Strategic Growth Analysis
With this template, competitors are put into groups based on how similar their strategies are. This method is one of the most flexible ways to do a competitive analysis.
You could put competitors into groups based on their marketing strategies, prices, product features, or efforts to be green.
This kind of competitive analysis works best when it’s used to find out what a specific customer’s need is. If your analysis shows that your top three competitors use similar pricing strategies, for example, that could be a sign that you might also benefit from using that strategy. It can also show you how taking a risk by doing something different can pay off in the long run.
Position Mapping
Lastly, one of the easiest ways to do a competitive analysis is to use a position map. Basically, you use one map to compare two things, like perceived quality and price or price and benefit.
Harvard Business Review says that a price benefit-position map shows how the main benefit of a product to customers relates to the prices of all the products on the market.
Position mapping requires a lot of research and regression analysis, but it can tell you how much customers, on average, expect to pay for different levels of the benefit you’ve identified. With this information, you can improve your product line and prices and get more customers.
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