From Competitor Analysis to Competitive Advantage

How can you achieve a competitive advantage by utilizing competitor analysis? The purpose of competitor analysis is to respond to market demands and generate value for your company, customers, and stakeholders. However, you should avoid "throwing the baby out with the bathwater"—that is, diluting your company's uniqueness by trying too hard to mimic or differentiate from competitors. What unique value do you offer your customers? Keep this starting point in mind as you read about what to consider when designing an effective competitor analysis to gain a competitive edge.

1. Profiling Competitors

The first step in competitor analysis is to identify who your competitors are and what they offer.

Identifying competitors

Identifying competitors is not always simple, as there can be both direct and indirect competitors in the market. Direct competitors offer similar products or services to the same customers, whereas indirect competitors offer alternative solutions for the same needs.

How do you find your competition? Get started by searching for information:

• About search engines: Use key keywords for your business and see what other businesses pop up.
• From social media platforms: Follow trends in your industry and which companies are being talked about.
• From customer feedback: Ask your customers which other companies they have considered.

Gathering information about competitors

Once you have identified your competitors, collect as much relevant information about them as possible. This will help you find ways to stand out or adapt to their ways of doing things.

Key information to collect:

• Product and service selection: What are your competitors offering? Is there anything special in their selection?
• Pricing: At what price do they sell their products or services?
• Marketing channels: In which channels are they active and how do they reach their customers?
• Customer segments: Who are their customers? Is their target audience the same as yours?

Analysis of strengths and weaknesses

After collecting the data, it's time to analyze both your own and your competitors' strengths and weaknesses. This will help you identify your own areas of development and exploit your competitors' weaknesses to get you started and get initial ideas. 

How to analyze competitors effectively?

• Strengths: Find out what your competitors are particularly good at. Do they have a strong brand, a wide range of products or excellent customer service?
• Weaknesses: Identify areas where your competitors are not doing as well. Can you provide a better solution in these areas?

For example, if your competitor's brand is strong and well-known, but their customer service constantly receives negative feedback, you can stand out by investing in excellent customer service. Similarly, if a competitor's product range is wide but the products are expensive, you can develop a strategy to offer quality alternatives at a lower price. This is how you take advantage of your competitor's weaknesses and strengthen your own position in the market.

2. Use of SWOT analysis in competitor analysis

SWOT analysis connects a company's strengths and weaknesses with market opportunities and threats, aiding in long-term planning. It broadens your perspective to a more strategic level by including both internal and external factors affecting your company and your competitors. If you are unsure at any later stage, you can refer back to the SWOT or modify it if new information emerges during the competitor analysis.

What is a SWOT analysis?

SWOT analysis consists of four areas:

• Strengths
• Weaknesses
• Opportunities
• Threats

How to apply SWOT analysis in evaluating competitors

By applying a SWOT analysis to your competitors, you can identify their strategic positions and plan your own moves accordingly.

Steps for doing a SWOT analysis:

1. List the competitor's strengths: What factors make them successful?
2. Identify weaknesses: Where do they have room for improvement?
3. Discover opportunities: Are there opportunities in the market that your competitors are not taking advantage of?
4. Assess threats: What external factors can affect their actions negatively?

Using the results of the SWOT analysis

After the analysis, you have a clear picture of the position of your competitors. You can use this information to:

• For strategy development: Take advantage of your competitors' weaknesses and market opportunities.
• For risk management: Be prepared for possible threats and plan how to avoid them.
• To achieve a competitive advantage: Stand out with your strengths and offer customers something your competitors can't.

For example: You have noticed that your competitor's products are subpar, but to use and maintain them, they have excellent customer service that keeps their customers relatively satisfied. If you have an innovative team but few resources for customer service, you can focus on offering easier-to-use and more durable products to stand out.

3. Market analysis and Porter's Five Forces -model

Market analysis helps to identify the competitive situation in more depth by looking at industry trends, customer needs and other key factors.

With the help of market analysis you can:

• Identify market size and growth: Is your industry growing or declining?
• Understand customer behavior: What factors influence customers' purchase decisions?
• Detect market trends: What are the future trends that you should be prepared for?

Porter's five competitive forces model

Developed by Michael Porter, the five competitive forces model is a powerful tool in market analysis. The model helps evaluate the intensity of competition and the profitability of the market, both currently and as it changes over time.

The five competitive forces are:

1. Competition between existing companies: How fierce is the competition among the current players?
2. Threat of new entrants: How easy is it for new companies to enter the market?
3. Threat of substitute products or services: Are there alternatives that can replace the products or services you offer?
4. Bargaining power of suppliers: Bargaining power of suppliers: How much power do suppliers have? Can they influence prices or quality?
5. Bargaining power of customers: How much power do customers have? Can they influence the prices or the content of the service?

Steps to apply the model:

• Assess the impact of each force on your business: What forces are most significant in your field?
• Identify strategic measures: How can you strengthen your position with respect to each force?
• Plan long-term: Prepare for market changes and develop flexible strategies.

4. Analyzing competitors' marketing strategies

Marketing affects the company's visibility and success. By understanding your competitors' marketing strategies, you can find ways to differentiate yourself and reach your customers more effectively.

Comparison of marketing channels

Think for a moment on which channels your competitors are present. Are they active on social media, do they publish blog posts or invest in search engine marketing? For example, some competitors may be highly visible on Instagram and reach a younger audience, while others focus on LinkedIn to target corporate clients.

How to use this information?

• Identify underutilized channels: If your competitors are not present on a certain channel where your target audience is active, you have the opportunity to capture space there.
• Analyze the communication method: Pay attention to the language and tone your competitors use. Can you offer something different that resonates better with your customers?
• Follow campaigns: Pay attention to what kind of marketing campaigns your competitors are implementing and with what success. You can learn from their successes and failures.

Analyzing content strategies

Content is king in today's marketing. Your competitors may produce blogs, podcasts, videos or webinars. Take a critical look at their content:

• Subject areas: What topics do they cover? Do you have an opportunity to delve into topics they haven't yet touched upon?
• Quality: Is their content informative and well produced? Can you provide better or more in-depth content?
• Publication frequency: How often do they post new content? Could a more regular release cadence give you an edge?

Proceed as follows:

• Create unique content: Offer perspectives and information that your customers can't get anywhere else.
• Use versatile formats: If your competitors focus on blogs, try videos or interactive webinars.
• Engage your audience: Encourage discussion and interaction around your content. This increases the visibility and loyalty of your brand.

Customer segmentation and target groups

Understand who your competitors are marketing to. They can target their message to a specific age group, professional group or audience segmented by interests.

What can you learn from this?

•  Identify underserved areas: Are there customer segments that your competitors are not serving?
• Customize your message: Tailor your marketing to better meet the needs and expectations of your target audience.
• Strengthen customer relationships: By understanding your customers' needs more deeply, you can offer them better service and thus increase loyalty.

5. Analysis of pricing strategies

Pricing is one of the most powerful tools in competition. It directly affects the profitability of your company and how customers perceive the value of your product or service.

Comparison of competitors' pricing models

Research what pricing strategies your competitors are using. Are their prices higher or lower than yours? Do they offer discounts, package deals or flexible payment terms?

Things to consider:

• Price level: How do your prices compare to your competitors? A higher price can communicate quality, while a lower price can attract price-conscious customers.
• Value experience: Do customers get value for their money? If your competitors offer more features for the same price, you can consider adding value by offering customized services, for example.
• Pricing model: Are your competitors using one-time payments, subscription models or a freemium strategy? Could an alternative model be a better fit for your customers? If your competitors offer one-time payment options, you could consider a flexible monthly subscription model that attracts customers with a lower initial investment.
• Pricing psychology: Pricing isn't just math; it's also psychology. The customer's perception of price relative to value is a decisive factor.

Optimizing own pricing

Changing your pricing strategy can be a delicate process, but it can also open up new opportunities.

Actions:

• Test and learn: Try different pricing models on a small scale and monitor their impact on sales and customer satisfaction.
• Communicate clearly: Make sure your customers understand the rationale behind your prices and what value they're getting in return.
• Provide flexibility: Consider different packages or customized solutions for different customer segments.

6. Digital competitor analysis

The digital world offers a huge amount of data that you can use to understand what your competitors are doing. This helps you make informed decisions and react quickly to market changes.

Analyzing websites

Your competitors' websites are a window into their business. Examine their structure, content and user experience.

What to look for:

• SEO-strategia: For what keywords do their sites rank high in search results? Can you optimize your own site with the same or better keywords?
• Content quality and quantity: How often do they update their site? Is the content informative and adding value?
• User experience: Is the site easy to use, fast and mobile-friendly? A good user experience improves customer engagement.

Comparison of social media presence

Social media is an effective channel for building a brand and engaging customers.

• Activity: How often do they post content and what kind of interaction do they get?
• Content types: Do they use videos, images, text, or a combination of these? What seems to work best?
• Customer service: Do they respond quickly to customer comments and questions?

Use your findings to:

• Find your own voice: Stand out from your competitors by using a unique tone of voice and content strategy.
• Join the conversation: Be active and interact with your followers. This builds a community around your brand.
• Take advantage of advertising: Targeted social media advertising can help you reach new customers effectively.

7. Branding and product development in achieving a competitive advantage

Branding and product development are key factors when you want to stand out from your competitors and create a sustainable competitive advantage. These areas directly affect how customers perceive your company and your products.

The importance of branding in competition

What makes your brand special? A strong brand is not only a logo or a slogan, but it reflects your company's values, culture and promise to the customer.

Here's how you can strengthen your brand:

• Define your brand core: Clarify your company's mission, vision and values. What do you want to communicate to customers?
• Unified communication: Make sure all your communication channels reflect the same brand identity.
• Customer experience: Offer customers positive experiences at every point of contact. Satisfied customers are the best brand ambassadors.

Benefits:

• Distinction: A strong brand helps you stand out from your competitors in the market.
• Confidence: Customers trust a recognizable and consistent brand.
• Commitment: Loyal customers are more likely to return and recommend your company to others.

Product development as a competitive advantage

The market is constantly changing, and customer needs are evolving. Active product development ensures that you offer solutions that your customers really want right now.

Steps for effective product development:

• Using customer feedback: Ask your customers what they want from your products or services.
• Following market trends: Be aware of the latest trends and technologies in the industry.
• Encouraging innovation: Encourage your team to develop new ideas and try different solutions.

Benefits:

• Achieving a competitive advantage: By offering unique products or services, you stand out from your competitors.
• Increasing customer satisfaction: When you respond to the changing needs of your customers, their satisfaction grows.
• Strengthening the market position: When you offer innovative products or services.

The role of innovations in the market

How does innovation affect your competitiveness? New ideas and technologies can revolutionize the market and create completely new business opportunities.

Proceed as follows:

• Investment in research and development: Reserve resources for developing new solutions.
• Building cooperation networks: Cooperate with companies, educational institutions or research institutes.
• Try and learn: Take controlled risks.

Benefits:

• Advantage over competitors: Innovation allows you to offer something that others don't offer yet.
• Opening up new markets: You can discover completely new customer segments or needs.
• Improving brand image: Innovativeness is often associated with quality and pioneering.

8. Utilization of competitor analysis in strategic decision-making

Competitor analysis is not just a report, but a tool that helps you make better strategic decisions.

Applying the results of competitor analysis

How to turn analysis into action?

• Set clear goals: Determine what you want to achieve based on competitor analysis.
• Prioritize actions: Focus first on the areas that have the greatest impact on your business.
• Track progress: Set metrics and track how your actions affect goals.

Adapting the strategy to market changes

Be ready to change direction, because markets can change quickly and require a flexible strategy.

Proceed as follows:

• Conduct regular reviews: Check the functionality of your strategy and make the necessary changes.
• Listen to your customers: Customer feedback is a valuable source of information in strategy development.
• Follow industry trends: Be aware of new technologies, legislation and market trends.

Examples of successful strategic decision-making

• New product launch: Based on the competitor analysis, you detect a market niche and develop a product that meets the needs of customers better than the solutions offered by competitors.
• Renewing the marketing strategy: You notice that your competitors are successful in a certain marketing channel and you decide to invest in the same channel, but offer unique content to stand out.
• Pricing optimization: You analyze your competitors' pricing models and adapt yours to offer better value to customers without compromising your margins.

9. Monitoring and maintenance of competitive advantage

The competitive environment is not static, and therefore continuous monitoring of competitors' activities and self-adaptation is vital for your company. 

Maintaining competitive advantage

Competitive advantage is not a permanent state. It requires constant work and adaptation.

Strategies:

• Risk management: Identify potential risks and develop plans to manage them.
• Invest in competence: Train your staff and invest in their well-being.
• Constantly innovate: Look for new ways to improve your products, services and processes.
• Using customer feedback: Use feedback to improve your business.
• Stay agile. Adapt to changing circumstances and learn from your experiences
• Benchmarking: Benchmark your performance against industry best practices.
• Follow the market actively: Be ready to react to new challenges and opportunities.

Why continuous monitoring is important

The market is changing fast. New technologies, customer trends and regulatory changes can affect your business in surprising ways.

Benefits of continuous monitoring:

• Predictability: You can identify potential threats and opportunities before your competitors.
• Strategic Agility: Thanks to the quick reaction, you can adapt your strategy effectively.
• Informed decision-making: Up-to-date information helps to make better decisions.

Tools for competition monitoring

How can you track your competitors effectively?

• Google Alerts: Set up alerts with competitor names to get notified of new mentions online.
• Social media monitoring: Use tools like Hootsuite or Sprout Social to track your competitors' social media activity.
• SEO Tools: SEMrush this Ahrefs can help you monitor your competitors' search engine rankings and keywords.
• Analyzing customer feedback: Read reviews and comments about your competitors' products to understand their strengths and weaknesses.

Integrating competitor information into decision-making

How to use the collected information in practice?

• Strategy meetings: Process competitor information regularly with your team.
• Action plans: Draw up concrete measures based on your findings.
• Continuous learning: Update your processes and strategies based on the latest information.

Start a competitor analysis today to grow your business by leveraging Woorati's efficient business information search tool.