Regardless of the industry you’re in, it’s essential to have your finger on the pulse of the market. At a minimum, an annual review of the competition (competitive analysis) is one of the most important methods you can use to gain direct insights into your customers’ and prospects’ world. If you’re not investing in this process, you will not be privy to the knowledge and understanding of what your audiences want and need. And, without that information, you’re less likely to earn and maintain thought leadership status and gain market share.

Competitive vs SWOT Analysis

Competitive and SWOT analyses are business discovery tools. A competitive analysis as defined by Christine White, marketing expert at Hubspot, is “a strategy where you identify major competitors and research their products, sales, and marketing strategies.” It is externally focused. White says the key areas to consider when conducting a competitive analysis include products and services, geographical region of operations, target markets served, sales techniques and tactics, marketing outreach (including content strategy), social media and promotion, and levels of engagement across communications channels.

A SWOT analysis is, for the most part, internally focused. It helps organizations identify their own strengths, weaknesses, opportunities and threats. The exercise helps to pinpoint opportunities for change, uncover new ways to build relationships and establish priorities. In most cases, you conduct a competitive analysis before a SWOT analysis.

Conducting a Competitive Analysis

1. Put your company mission and values first. When it comes down to it, your company is defined by your corporate values, products and services. Keeping these fundamentals top of mind is a must in creating and maintaining marketplace position. The purpose of competition review is to discover new opportunities, strategies and market segments. The viability of adopting new opportunities or segments into your own strategy is dependent on how they correlate to your values, mission, products, services and budget.
2. Consider the context. Tiffany Bova, a business growth and innovation specialist at Salesforce, warns that benchmarking can lend itself to a limited view of what is happening in the overall market. Bova states, “Watching the competition and changes in the market should always be part of a regular planning cadence—ensuring that your growth strategy remains aligned to the current market context.” Contextual considerations to create a unique selling proposition include innovation in the industry, expansion into new geographical regions, brand identity, budget and other factors that produce meaningful distinctions.
3. Identify and evaluate competitors. Expand your research to consider not only exact competitors but those in related or fringe businesses. Joshua Boyd, content and community manager at Brandwatch, recommends considering and ranking competitors by whether they are a direct, indirect or tertiary competitor. Direct competitors offer the same service within the same audience. Indirect competitors offer similar services but serve a different need or segment. Tertiary competitors are those with services who many not directly compete with yours. Use them to identify different opportunities within your realm of business.
4. Don’t copy the competition. Use the knowledge you gain to get a better understanding of the marketplace. Then you can focus on finding holes in the competition’s strategies and create opportunities for growth.
5. Discover your niche. While keeping an eye on the competition is important, don’t let it distract you from what makes you unique. According to Bova, “You have your own uniqueness. Your people. Your products. Your values. Your customers. There is no other company exactly like you. That uniqueness can be a key differentiator to remove the threat of a perceived competitor.” It’s impossible to be all things to all people. Niche marketing allows entrepreneurs to hone in on the needs, wants and challenges of a narrowly defined audience. In turn, niche-oriented businesses can capitalize on their specific uniqueness and further define it, rather than follow the crowd.

Don’t Be Left in the Dust

A competitive analysis is an essential business tool. It provides you with insights about the environment in which you operate. In addition, it enables you to see and capitalize on marketplace trends (or develop new ones) that will lead you to make better strategic and tactical decisions. The information you glean will help you improve products and services, identify new market opportunities, produce more qualified leads and gain market share. By evaluating the current state with an eye on the future, you reduce the likelihood of being caught off guard and left in the dust as the marketplace changes and the competition forges ahead.