What is Competitive Analysis? How To Do Competitive Analysis? Why is it Important?

Even if a company makes all the necessary preparations to be successful in its field at the best level, it cannot guarantee to achieve positive results. Because each company carries out its own internal activities in order to stand out in the competitive environment. But the fact that preparations and activities are only introverted and related to internal dynamics creates some serious shortcomings. The success of this type of work, which ignores external conditions to a greater or lesser extent, depends largely on luck.

It can be said that a company that wants to achieve its goals under these conditions, has become a necessity beyond the necessity in today’s conditions, to know the ecosystem it is in in the best way. A large part of the structure that we describe as an ecosystem consists of competitors operating in similar fields. Competitive analysis is one of the most effective ways of getting to know the company’s competitors and the structure it creates with them. This inevitably leads to the question “What is competitive analysis?” raises the question.

What is Competitive Analysis?

Competitive analysis can be briefly defined as a form of strategic research. It aims to determine the activities, strategies, and, accordingly, the strengths and weaknesses of other companies with which you are commercially competitive. Knowing your competitors with this method saves your company from being a closed and one-dimensional organization that has entered a circle within itself. The data you obtain allows you to more easily identify 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 of great importance in terms of e-commerce activities, which are gaining more and more important with each passing day. Because the visible increase in the number of sales made on the internet causes many companies to turn to this field, which inevitably increases the level of competition. Therefore, competitor analysis in e-commerce has become a must-have step for any business considering or currently working in this field.

What is the Difference Between Competitive Analysis and Competitor Analysis?

At this point, it should be noted that the concepts of competitor and competition analysis have slightly different contents from each other. Competitor analysis is basically a study to determine the status of companies in the same market as you. Competition analysis, on the other hand, also aims to measure your competitiveness with these companies. In other words, it can be said that competition analysis is a way of working that includes competitor analysis and gives the opportunity to determine a more comprehensive and clearer roadmap. In fact, competitor analysis is considered a sub-type of competitive analysis in many sources.

What are the Types of Competitive Analysis?

Basically, two different types of competition analysis can be mentioned. The first of these is called sectoral competition analysis. This method is based on the idea of ​​examining all the elements that are involved in the industry in different ways. In other words, it has a very wide scope from customer needs to the structure of the sector, from the bargaining power of the suppliers to the determination of unsatisfied expectations in the market. Thanks to this broad scope, gives the company a clear idea of ​​where it stands in the industry. It makes it easier for the business to be prepared for all potential changes, positive or negative.

The other type, competitor analysis, is directly aimed at other businesses. It tries to determine their positive and negative features, 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 comprehensive competitive analysis, and the results to be obtained in this way will be extremely useful and useful.

What are the Techniques and Methods of Competitive Analysis?

There are multiple methods you can use to conduct competitive analysis. These methods can be applied to different situations, or they can be used together for more comprehensive results. Depending on the sector in which your company operates, the situation 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 because it gives you the chance to look at your company from both inside and outside. In addition to identifying your strengths and weaknesses, it aims to predict the opportunities and threats that may arise in the near future. Mastery of the job is very important in order to achieve the best results. Conducting this study with a group that has insufficient information about the current situation of the company may cause you to deviate from the main target.

PEST analysis takes its name from the initials of the words political, economic, social, and technological. As can be understood, it focuses on potential transformations and changes by considering these concepts. This is where it differs from the SWOT analysis. While SWOT covers a more limited time frame and area, PEST analysis allows you to make long-term projections.

The competitor array or competitor array, on the other hand, provides numerical data as it is based on the scoring logic and draws attention to this feature. For this method, the first thing you need to do is to determine your competitors and the subjects that you think will be performance criteria. Afterward, you can proceed to the scoring stage by creating a competitive analysis table with performance measures in the row and different competitors in the column. It is possible to collect numerical data about the current situation of your competitors by collecting the points you have given on the determined subjects. If you want to obtain clearer data, you can also assign coefficients to the subjects you have determined as performance criteria.

What Is Competitive Analysis For? What Is Its Purpose?

The main purpose of a competitive analysis is to make the right decisions. Because it is difficult for the company, which does not have a clear idea about its internal structure and the competitive environment of which it is a part, to make the right decisions and take the most efficient steps for its work. This is where competitive analysis comes into play and provides the data needed to make the right moves in managerial terms.

Competitive analysis is a method that can be applied at many different stages. After the application of this analysis, it can be decided whether a thought that was born as an initial idea will be put into practice or not. Similarly, this method can be used to obtain information about the current situation of your company, which has been operating for a while and to plan how the situation can be improved. In the light of these, we can easily say that competition analysis can be done in every period of commercial studies.

What is Competitive Analysis

In Which Areas Can Competitive Analysis Be Performed?

This analysis method can be applied to cover all the activities of the company, or it can be applied to focus on the area to be developed. We can list the areas where competitive analysis can be made as follows:

Experience: Although it is sometimes overlooked, experience is extremely important for the improvement of a business’s operations. Persons or organizations that have previously experienced problems that may occur regardless of the age of their employees are more likely to make the right decision in these situations.

Position: This concept may first bring to mind the tradition of trade in physical environments. But in e-commerce, it is important in which channels companies operate. Today, many companies that do not have their own website make sales through virtual marketplaces. From this point of view, it can be seen how important the 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 ones and the details where your products will make a difference. Because most of the time, pricing and marketing strategies are built on these details.

Marketing Strategies: Marketing is a concept that has more than just increasing sales figures. The positioning of the brand and how to establish a relationship with the customers are also a part of marketing. In order to achieve the targeted results in this area, it is necessary to consider the work of competitors in this area.

Sales volumes: The digital world makes it easier for you to analyze the sales volumes of your competitors, thanks to its basic structure. Thanks to these reviews, you can weigh where your own numbers stand in the competitive landscape. It also makes it easier for you to identify the paths you need to follow to increase your numbers.

Customer Satisfaction: It is very useful to analyze customer satisfaction through the scoring and comment functions in online sales environments, to determine market expectations, and to stay ahead of your competitors in this regard. For the same purpose, you can also examine the posts made on social media. From this point of view, it can be concluded that the effect of competitor reviews on customer service will be more than expected.

Why is Competitive Analysis Important? What are the Benefits?

By conducting a competitive analysis, you can not leave your job to chance in the decision-making processes, and you can increase the hit rate of your moves. From this point of view, it is possible to say that the analysis method in question 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 get the chance to see the strengths and weaknesses of your competitors.
  • It provides the best use of branding opportunities.
  • It helps to identify SEO opportunities for the field of activity.
  • It paves the way for the detection of gaps in the market.
  • It makes it possible to build structures that offer a higher user experience.
  • It enables clearer and more precise projections for the future.

How to Perform Competitive Analysis?

The information we provide and the advantages we talk about, inevitably “How to do competitive analysis?” gives rise to the question. E-commerce competitive analysis is a complex process consisting of many different steps. The information obtained by applying and following all these steps in detail will help you reach your goals. The competitive analysis stages and details you should follow are as follows:

Know Your Business

The first step to successful competitive analysis is getting to know your business well. Because, attempting a competitive analysis without fully understanding your own working style, the products or services you sell, customer expectations, and the know-how you have may make it difficult for you 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 working in different positions in your company and having different seniority.

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 view of the current state of your company. In the meantime, you can complete this step without any problems by applying the SWOT analysis method. As a result of your analysis, a clear picture emerges of the strengths and weaknesses of your company against its competitors. In addition, you can identify different risks that may occur in the short term and identify opportunities that are likely to come your way. In this way, you can both focus on the issues you need to improve and increase your maneuverability in the face of changes.

Observe Industry Competition

Although companies are the main players in the field, the industry is not just about them. Knowing your competitors in the industry in the best way makes your job much easier, but focusing only on this may cause you to miss some details. The functioning and structure of a sector; It is affected by the situations of other related sectors, the decisions of the legislators, the social or economic transformations experienced, and many other factors. These effects inevitably trigger changes in the sectoral competitive environment. That being the case, it is essential to have a broad view of the industry in order to obtain the most successful competitive analysis results.

Categorize Your Competitors

Identifying your competitors alone may not be enough. Separating them into categories makes it easier for you to be successful in your competition with your competitors. Because in this way, you can determine where you need to focus more intensely. In this sense, you can group your competitors according to three different degrees. Your 1st-degree competitors include companies that want to deliver the same or similar products to the same target audience as you. Your 2nd-degree competitors refer to companies that aim to sell the same products to different audiences. You can think of your 3rd-degree competitors as the products they sell, companies that have the potential to compete with what you sell, albeit from afar.

Get to Know Your Competitors Doing the Same Job

It will be beneficial for you to take a closer look at your competitors, which are included in the 1st group in your categorization, and to examine their products, marketing, and sales strategies in detail. Because the 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.

Know Your Customers and Common Audience

The main goal of all business activities is to sell more products or services to potential customers. It is very difficult to do this without knowing their expectations, current orientations, and general characteristics. Therefore, target audience analysis is of great importance. This study allows you to get to know the customers and the target audience they create in the context of competition analysis. In this direction, you can benefit from social media research, you can conduct surveys at regular intervals or you can benefit from research.

Examine Your Competitors’ Market Situation

Determining the dominance of your competitors in the market is also very important in terms of determining your strategies based on the competitive analysis and results. It will be useful for you to analyze the issues that your competitors make a difference, what ways they follow to reach a wider audience and their customer relations performance.

Analyze Price Strategies

Price is one of the factors that directly affect customers’ purchasing decisions. It is not surprising that a standard customer would prefer a firm that sells the same product at a lower price. It is much more practical to do price competition analysis in the field of e-commerce compared to 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 the prices not only in the normal periods but also in the campaign periods when the sales figures increased significantly.

Analyze Marketing Strategies

Examining marketing studies, which has turned into an even more complex issue with social media becoming a huge part of life, is one of the basic stages of competition analysis. When you think logically, these kinds of studies have the goal of mobilizing the same masses, while you and your competitors are defocused. Therefore, observing how your competitors are working for this purpose and examining what results they have obtained from these studies will provide you with great convenience in the steps you will take.

Analyze Customer Relationship 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 more positive or warm relations. Therefore, the analysis to be made should also include how your competitors are performing in terms of customer relations and which channels they use in this direction.

Review Your Competitors’ Websites and SEO Studies

You should also examine what kind of user experience your competitors promise on their websites and their SEO work. Competitor SEO analysis is basically performed on keywords and domain authorities. Examining the work of other companies in these areas and making counter moves towards them will ensure that your website is displayed higher in search engine results. From this point of view, it can be said that a successful SEO competitive analysis will help increase your sales figures.

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