What is Competitive Analysis? How is it done? Why is it important?
Even if a company makes all the necessary preparations to be successful in the field it works in, it cannot guarantee positive results. Because each company actually carries out its own internal activities to stand out in the competitive environment. However, the fact that the preparations and activities are only inward-looking and related to internal dynamics creates some serious deficiencies. The success of such studies, which ignore external conditions to a greater or lesser extent, depends largely on luck.
Competitive analysis allows you to understand your competitors and your position in the market, thus making your strategic moves more effective.
Under these conditions, it can be said that for a company that wants to achieve its goals, it has become more than necessary in today’s conditions for it to know the ecosystem it is in as well as possible. A very large part of the structure we refer to as the ecosystem consists of competitors operating in similar fields. Competitive analysis is one of the most effective ways to get to know the company’s competitors and the structure it creates with them. This inevitably brings up the question, “What is competitive analysis?”
What is Competitive Analysis?
Competitive analysis can be briefly defined as a form of strategic research. It aims to determine the activities, strategies and strengths and weaknesses of other companies that you are in commercial competition with. Getting to know your competitors with this method saves your company from being a one-dimensional organization that has entered a loop within itself, is closed to the outside world. The data you obtain allows you to more easily determine your own strengths and weaknesses. Thus, it paves the way for the decisions you will make and the strategic moves you will make to be more accurate.
Competition analysis is also of great importance in terms of e-commerce activities, which are gaining more and more importance today. Because the visible increase in the number of sales made over the internet causes many companies to turn to this field, and this inevitably increases the level of competition. Therefore, conducting competitor analysis in e-commerce has become a must-do step for every business that is considering working in this field or is currently working.
What is the Difference Between Competition Analysis and Competitor Analysis?
At this point, it is useful to state that the concepts of competitor and competition analysis have slightly different contents. Competitor analysis is basically a study aimed at determining the status of companies that are only in the same market as you. In addition to this, competitive analysis also aims to measure your ability to compete with these companies. In other words, it can be said that competitive analysis is a method of work that includes competitor analysis and allows you to determine a more comprehensive and clearer roadmap. In fact, competitor analysis is considered a subtype of competitive analysis in many sources.
Determine your company’s strengths and weaknesses with SWOT analysis, and foresee opportunities and threats.
What are the Types of Competition Analysis?
There are basically two different types of competition analysis. The first of these is called sectoral competition analysis. This method is based on the idea of examining all the elements that are included in the sector in different ways. In other words, it has a very wide scope, from customer needs to sector structure, from the bargaining power of suppliers to the determination of unsatisfied expectations in the market. Thanks to this wide scope, it gives the company a clear idea of where it is in the sector. It makes it easier for the business to be prepared for all potential changes, whether positive or negative.
The other type, competitor analysis, is directly aimed at other businesses. It tries to determine their positive and negative characteristics, to have detailed information about their current activities and to predict their future moves. We can say that these two studies should be carried out in parallel within a holistic competition analysis, and that the results to be obtained in this way will be extremely useful and usable.
What are the Techniques and Methods of Competition Analysis?
There is more than one method that you can use to conduct competition analysis. These methods can be applied to different situations or used together for more comprehensive results. Depending on the sector your company operates in, the status of this sector and your competitors, you can use the technique you think is best for you.
SWOT analysis is a technique that stands out with the chance to look at your company from both the inside and outside. In addition to determining your strengths and weaknesses, it aims to foresee opportunities and threats that may arise in the near future. Mastery of the work is very important in order to achieve the best result. Carrying out this study with a group that has insufficient knowledge about the current status of the company may cause you to stray from the main goal.
PEST analysis takes its name from the first letters of the words political, economic, social and technological. As can be understood, it focuses on potential transformations and changes by considering the concepts in question. This is actually where it differs from SWOT analysis. While SWOT covers a more limited time period and area, PEST analysis opens the way for you to make long-term projections.
Competitor array, or competitor array in English, provides numerical data because it is based on scoring logic and draws attention with this feature. For this method, the first thing you need to do is to determine your competitors and the topics you think will be performance criteria. Then, you can move on to the scoring stage by creating a competitive analysis table with performance criteria in the row section and different competitors in the column section. By adding up the points you give on the specified topics, it is possible to obtain numerical data about the current situation of your competitors. If you want to obtain clearer data, you can also assign coefficients to the topics you have determined as performance criteria.
What is Competition Analysis Done for? What is its Purpose?
The main purpose of competition analysis is to make the right decisions. Because it is difficult for a company that does not have a clear idea about its own internal structure and the competitive environment it is a part of to make accurate decisions and take the most efficient steps for its work. This is where competition analysis comes into play and provides the data needed to make the right moves in a managerial sense.
Competition analysis is a method that can be applied at many different stages. Whether or not an idea that has just emerged as a startup idea will be put into practice can be decided after this analysis is applied. Similarly, this method can be used to obtain information about the current situation of your company that has been operating for a while and to plan how the situation can be improved. In light of these, we can easily say that competition analysis can be done at every stage of commercial work.
Provide a better customer experience than your competitors by analyzing customer relations methods.
In Which Areas Can Competition Analysis Be Done?
This analysis method can be applied to cover all activities of the company or to focus on the area that is desired to be developed. We can list the areas where competitive analysis can be done as follows:
Experience: Although sometimes overlooked, experience is extremely important for a business’s activities to improve. Individuals or organizations that have previously experienced problems that may occur, regardless of the age of the employees, are more likely to make accurate decisions in the face of these situations.
Location: This concept may first bring to mind the traditional trade conducted in physical environments. However, in e-commerce, the channels in which companies operate are also important. Today, many companies that do not have their own websites sell through virtual marketplaces. When viewed from this perspective, it can be seen how important marketplace competition analysis is. Because companies selling the same or similar products can make serious mistakes if they do not analyze their competitors in that marketplace.
Products: Before launching a product, it is very important to determine whether there are similar products and the details that will make your products different. Because pricing and marketing strategies are often built on these details.
Marketing Strategies: Marketing is a concept that has purposes beyond just increasing sales figures. Positioning the brand, how to establish a relationship with customers, etc. are also part of marketing. In order to achieve the targeted results in this area, it is necessary to take into account the work of competitors in this area.
Sales figures: The digital world makes it easier for you to examine your competitors’ sales figures thanks to its basic structure. Thanks to these analyses, you can evaluate where your own figures stand in the competitive environment. In addition, it becomes easier for you to determine the paths you need to follow to increase your figures.
Customer Satisfaction: Performing customer satisfaction analysis through the scoring and comment functions in online sales environments is quite useful for determining market expectations and getting ahead of your competitors in this regard. For the same purpose, you can also examine the posts made on social media. From this perspective, it can be inferred that the impact of competitor analysis on customer service will be greater than expected.
Why is it important to conduct a competitive analysis? What are its benefits?
By conducting a competitive analysis, you can not leave your job to chance in decision-making processes and increase the hit rate of your moves. Based on this, it is possible to say that this analysis method provides very important advantages. We can summarize these benefits as follows:
It facilitates the determination of the most effective strategies in every field from marketing to production.
You have the chance to see the strengths and weaknesses of your competitors.
It provides the best evaluation of branding opportunities.
It helps to determine SEO opportunities for the field of activity.
It paves the way for the detection of gaps in the market.
It enables the construction of structures that offer a higher user experience.
It allows for clearer and more accurate projections for the future.
How is Competitive Analysis Done?
The information we have provided and the advantages we have mentioned inevitably lead to the question of “How is competitive analysis done?” E-commerce competitive analysis is a complex process consisting of many different steps. The information obtained by implementing and following all these steps in detail will help you achieve your goals. The competitive analysis stages and details you need to follow are as follows:
Create your own pricing policies by analyzing your competitors’ pricing strategies.
Know Your Business
The first stage of a successful competitive analysis is to know your business well. Because attempting a competitive analysis without being fully familiar with your own working style, the products or services you sell, customer expectations, and the know-how you have can make it difficult to achieve the targeted results. If you are hesitant about this, you can carry out the preliminary preparation stage in the most efficient way by meeting with people who work in different positions in your company and have different seniorities.
Analyze Your Current Situation
When you think you have enough information about your business, it is time to make a detailed analysis of the current situation. Situation analysis is an extremely effective method to take a holistic look at the current situation of your company. In the meantime, you can complete this step without any problems by applying the SWOT analysis method. As a result of the analysis you make, a clear picture of the strengths and weaknesses of your company against its competitors emerges. In addition, you can identify different risks that may arise in the short term and determine the opportunities that you are likely to encounter. In this way, you can both focus on the issues you need to develop and increase your maneuverability in the face of the changes experienced.
Analyze your current situation and clearly reveal your strengths and weaknesses.
Observe Sectoral Competition
Although companies are the main players in the field, a sector is not just about them. Knowing your competitors in the sector in the best way possible makes your job much easier, but focusing only on this can also cause you to overlook some details. The functioning and structure of a sector are affected by the situations of other related sectors, the decisions of lawmakers, the social or economic transformations experienced, and many other factors. These effects inevitably trigger changes in the sectoral competitive environment. In this case, it is essential to have a broad perspective on the sector in order to obtain the most successful competitive analysis results.
Categorize Your Competitors
Just identifying your competitors may not be enough on its own. Dividing them into categories within themselves will make it easier for you to be successful in the competition you enter with your competitors. Because this way, you can determine where you need to focus more. In this sense, you can group your competitors according to three different degrees. Your first-degree competitors include companies that want to reach the same or similar products to the same target audience as you. Your second-degree competitors refer to companies that aim to sell the same products to different audiences. You can think of your third-degree competitors as companies whose products they offer for sale have the potential to compete with what you sell, even if from a distance.
Get to Know Your Competitors Who Do the Same Business
It will be beneficial for you to take a closer look at your competitors who are included in the first group in your categorization and to examine their products, marketing and sales strategies in detail. Because competitors in this group can also be considered as companies that you need to get ahead of in the first place. Therefore, taking your decisions by considering the work of these companies will help the market share shift from them to you over time.
Get to Know Your Customers and Common Target Audience
The main goal of all commercial activities is to sell more products or services to the potential customer audience. It is very difficult to do this without knowing their expectations, current trends and general characteristics. Therefore, conducting target audience analysis is of great importance. This study allows you to closely know your customers and the target audience they create as part of your competitive analysis. In this direction, you can benefit from social media research, conduct surveys at certain intervals or benefit from research that has been conducted.
Examine the Market Situation of Your Competitors
Determining the dominance of your competitors in the market is also extremely important in terms of determining your strategies based on competitive analysis and results. Analyzing the issues where your competitors make a difference, the paths they follow to reach a wider audience, and their customer relations performance will be useful in this respect.
Analyze Price Strategies
Price is one of the factors that directly affect customers’ purchasing decisions. It is not surprising that a standard customer prefers a company that sells the same product at a lower price. Performing price competition analysis in the field of e-commerce is much more practical than the traditional understanding. You can determine your pricing strategies based on the data you will obtain in a simple way. At this point, let’s add that it would be useful to analyze not only the prices in normal periods but also the prices in campaign periods when sales figures increase significantly.
Analyze Marketing Strategies
Examining marketing activities, which have become an even more complex issue with social media becoming a very big part of life, is one of the basic stages of competitive analysis. Logically, when you think about it, such studies also aim to mobilize the same audiences as your competitors. Therefore, observing how your competitors work for this purpose and examining what results they get from these studies will greatly facilitate the steps you will take.
Analyze Customer Relations Methods
Thanks to the opportunities provided by the internet, customers can communicate with e-commerce companies much more easily than in the past. This has made customer relations a much more important concept. Today’s customer tendency is to prefer companies with which more positive or warm relationships can be established. Therefore, the analysis to be made should include how your competitors perform in terms of customer relations and which channels they use in this direction.
Examine Your Competitors’ Websites and SEO Work
You should definitely examine what kind of user experience your competitors promise on their websites and their SEO work. Competitor SEO analysis is basically carried out over keywords and domain authorities. Examining the work done by other companies in these areas and taking countermeasures against them will ensure that your website appears higher in search engine results. Based on this, it can be said that a successfully performed SEO competition analysis will help increase your sales figures.
