Competitor analysis, also known as competitive analysis, is a process used to evaluate the competitive environment in which a business or organization operates The goal of a competitor analysis is to assess the advantages and disadvantages of a company’s competitive position in the market and to develop strategies to maintain or improve on that competitive edge.
In performing a competitive analysis, it is important to identify and analyze the strengths and weaknesses of competing firms. This information can then be leveraged to devise actionable strategies for the future. Competitor analysis should include competitor identification and categorization, competitor product comparison, and competitor market share analysis. By evaluating the competition, a company can determine how best to position their products or services to outpace and outperform the competition.
The following five examples of competitor analysis are commonly used by successful businesses:
1. Strengths and Weaknesses Analysis: A strengths and weaknesses analysis looks at both the strengths and weaknesses of a company’s competitors. Companies can then use this information to identify areas where they have an advantage and areas where they lack in comparison to their competitors. Strengths and weaknesses analyses are best used in markets with few competitors.
2. SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities, and threats. This type of analysis combines a strengths and weaknesses analysis along with looking at opportunities and threats in the market. Companies can use this analysis to identify areas where they can gain a competitive edge and areas where they are vulnerable.
3. Competitive Position Analysis: A competitive position analysis focuses on how a company’s competitors are positioned in the market. Companies can use this analysis to identify competitor positioning and develop their own unique positioning.
4. Competitive Product Comparison: A competitive product comparison looks at how a company’s products or services compare to those of its competitors. Companies can use this analysis to identify technological advantages and disadvantages, price differences, and other factors.
5. Competitor Market Share Analysis: A market share analysis looks at the size of a company’s competitors relative to its own. This can be helpful in determining where competitors are growing or declining and how quickly. Companies can use this analysis to identify strategies to maintain or increase their market share.
Competitor analysis is an important tool used by businesses to evaluate and plan their competitive strategies. By understanding the strengths and weaknesses of their competitors, businesses can better position their own products and services to gain an edge in the market. Also, by utilizing the many different types of competitor analysis available, businesses can gain further insight into their competition and devise strategies to stay one step ahead.