Why identify and monitor competitors?
Every business has to compete. And every savvy business will be keeping an eye on their competitors, seeing:
- what they are offering
- how much they are charging
- who their customers are
- how they are marketing their product or service
- new products appearing in the market
By identifying and monitoring competitors, you’ll be able to see where their exploitable weaknesses are, and conversely, what threats they pose to your business. You may also be able to spot gaps in the market.
Types of competitor
There are several types of competitors that should be on your radar:
- Direct competitors are the brands that first come to mind when you think about your competition. They’re in your sector or neighbourhood, marketing products and services that do the same like-for-like job as yours. Your target audience is the same as theirs. For example, you own a garden centre, and so your direct competitors are all the other garden centres in the local area.
- Indirect competitors are trickier to spot. They address the same customer needs as your business does, but they do it in a different way. Your target audience will overlap with theirs but won’t be an exact match. So, an indirect competitor to your garden centre might be a supermarket. Garden supplies aren’t its core business, but it may offer cheap plants. Using its economies of scale, it can undercut your prices and offer convenience to shoppers who pick up trays of bedding plants alongside their weekly food shop.
- Substitute competitors don’t sell the same products, but compete for consumer spending. E.g. pubs, cafés, restaurants, sandwich bars and supermarkets all competing for lunchtime trade in a high street.
- New entrants are new competitors who enter a market offering the same products or services. Depending on the barriers to entry, new entrants will find it easy or hard to get established in the existing market.
How to identify competitors
Part of setting up a business is knowing who you’ll be competing against, and you know your product inside out and how it compares with the competition. You can dig deeper with the following techniques for uncovering direct competitors:
- Market research: This can be as simple as asking your sales staff which competing companies get mentioned most in their customer conversations, or as complex as an unaided brand awareness survey where respondents name competitor brands they associate with a particular product.
- Ask your customers: They have, after all evaluated other brands (some you may never have considered) before choosing yours. Ask even potential customers, who will be weighing your brand up against others.
- Review sites, forums and online communities: Listen in on online conversations and recommendations about brands.
- Competitor identification tools: There are many of these. Some of the best ones in our opinion are: Google search, Google maps, Social Mention, Google Trends, SpyFu, STAT, SimilarWeb, Searchmetrics, Meltwater, Advanced Web Rankings (AWR), SEMrush.
It’s important to keep your eye on the indirect competition because they could move into your niche at any moment. For indirect competitors, you can use:
- Keyword research: Your customers will be searching online – run an SEO Competitive Analysis, which will show you websites related to your product or service that rank higher than yours. These are usually your competitors.
- Value proposition keyword analysis: if you Google the keywords of your product or service’s value proposition, your closest competitors should appear.
How to gather competitor analysis data
There are three main ways to analyse what a competitor is up to:
- Look at the products: it should be fairly easy to find information online about a competitor’s product range, prices, quality, and discounts or special offers. You’ll be able to compare competitor’s products and service with yours, and work out why a customer might choose that product over yours.
- Look at sales: Where product data is easy to find, sales data can be trickier. Ask sales teams which competitors customers mentioned, and use panels which include competitors’ customers. You can ask panels about their buying channels, discounts and offers, customer churn.
- Look at the marketing: Conduct market research to gauge respondents’ reaction to competitors’ marketing campaigns, and use it to inform your own. Use open-text surveys for respondents to tell you why they feel they way they do, and for you to gain deeper insights using text analytics.
By tracking your competitor’s success across all these variables, you’ll be able to target your goods or services, differentiate your business and find your own market niche.