How to conduct a competitor analysis: methodology, examples, analysis tools
Nesterov A. An example of competitor analysis // Nesterov Encyclopedia
The article describes the procedure for analyzing competitors using the example of an enterprise for the production of electrical goods.
Developing a Competitor Analysis Plan
For this example, the analysis of competitors is performed according to the following plan:
- Evaluation of initial information;
- Conducting an information and analytical study of competitive conditions;
- Data analysis;
- Presentation results;
- Formation of conclusions based on the results of the analysis.
Purpose of the study: to identify promising areas for strengthening the competitive position of the enterprise in the market.
- Describe the surveyed company;
- Analysis and segmentation of the target market;
- Conduct a competitor analysis;
- Describe positions competitors;
- Identify potential opportunities for increasing the competitiveness of the studied enterprise.
Presentation of the analysis results: formalization of the studied information, preparation of conclusions and recommendations.
Initial data on the enterprise:
- Eltop LLC is a manufacturing enterprise. The main activity is the production of electrical goods.
- Full cycle production, from idea to finished product.
- Management of the company's activities based on market research and customer needs.
- Sale of any volume of products.
- Warranty service.
- The company has data on the state of affairs in the industry, and regularly prepares reports on sales and calculations.
- Annual revenue from product sales:
85-90 million rubles. Profitability
Target market analysis and segmentation
Eltop LLC is engaged in the production of electrical goods:
Competition is considered the engine of the market economy and it really is. But its downside is that the strongest survives in the competition. In other words, those who could not stand the competition lose their positions or leave the market altogether.
Competitor analysis is a necessary part of the competition. Knowledge of their strengths and weaknesses gives additional trump cards in the hands of a businessman, allowing him to competently build an economic policy of the enterprise, which will allow not only not to incur losses, but also to receive serious profits.
A good knowledge of the strengths and weaknesses of competing firms not only allows you to save your organization from losses, but also helps to correctly navigate the market conditions.
This side of the business cannot be underestimated by remembering competitors only when you feel their pressure. By this time, all your steps may be useless and you will not be able to reverse the unfavorable situation in your favor.
Important! The collection and analysis of information should be carried out constantly, with the involvement of the necessary funds and resources.
At the same time, you should not go to the other extreme, devoting more effort, money and time to this than is required. The study of competing firms is just one of the tools of competition, but an important and necessary tool.
Content of competitor analysis in business plan
In order for the analysis to be properly correct, you should immediately outline the range of issues that it should address. The general outline of its content may look like this:
- Identification of firms that can compete with your company.
- Identify the advantages and disadvantages of each.
- Assessment of their potential.
- Assess the threats they may pose.
Based on the results of this analysis, the tactics that your business should adhere to is selected so that:
- Protect yourself as much as possible from possible threats.
- Achieve maximum promotion of your products on the market.
When launching a new product or promoting existing ones, one cannot ignore the most important marketing tool, which is competitive analysis. With its help, you can assess your market position and attractiveness to buyers, as well as use the strengths and weaknesses of competitors for your own development.
How do I analyze the competitive landscape? What tools are there for this? And what techniques can be used to get offline business data and online sales? The FAN journalist asked these questions to the marketer Sergey Strogonov.
What is competitor market analysis
Competition is the basis of a market economy. Different manufacturers can offer the buyer a similar or even exactly the same product. But the buyer will choose not all offers, but only one that suits him in terms of price, quality characteristics, properties and other features. The fight for the buyer is competition, and here everything is like a war. Drawing up plans and strategies, defining the principles of the struggle for attention, "reconnaissance in force" - all this forms the success or loss of business. And, as practice shows, today there is nothing to do on the market without "intelligence", that is, analytical work.
“The current 2021, with its upheavals, has turned micro and small businesses towards analytics,” says marketer Sergey Strogonov. - Entrepreneurs began to think en masse about how to survive the crisis. Many today are taking the first steps towards building work in two basic strategies. The first is a performance strategy, that is, dealing with costs. The second is a growth strategy or work with revenue. Both strategies are effective and can help a business cope with difficult times of crisis. But only if the company has a clear understanding of the competitive environment. Competitive analysis allows obtaining such information ”.
In simple terms, this is the collection and processing of information about competitors. It is important to find data on their strengths and weaknesses, their strategic and marketing policies. It is necessary to evaluate them in the current situation and in retrospect, because business is actively changing following changes in the needs of society and trends in it.
Competitive analysis takes into account both trends that will affect the industry in the very near future, and consumer behavior, which can be influenced by many external factors, from declining incomes to approaching holidays. It is important to pay attention to new business models that can breathe life into a dying or frozen business project. And also - for external and internal threats to business - there are a lot of factors for assessing competitive analysis.
Why do you need an analysis of the competitors of an enterprise, organization
Let's give a simple example. You have decided to open a small shop selling handmade sweets. They rented a room, hired employees, and launched production. At the same time, we took up the site and even mastered the basics of contextual advertising in order to attract the first visitors to the site. But time passes, and the income from the sale of goods does not grow, the business operates at a loss. At the same time, you see an increased interest in a product similar to yours from a competitor. Before the holidays in his store there is no end of customers, and in the profile on the social network there is an incredible number of subscribers, likes and positive comments from regular customers. What's the matter?
If you have already been behind enemy lines, then you have already taken the first step towards competitive analysis. One of his main tasks is to understand what exactly attracts customers in your opponent's offers. And based on the information received, develop your own development paths. It is optimal to do this even before a new product is introduced to the market. If you launch sales without understanding who should buy your product and why, the prospects for business development will be extremely dim.
Despite the economic downturns, the coffee business has remained a kind of shining example of constant development. For example, at a time when literally hundreds of companies in many market segments faced poor sales, negative balance sheets and bankruptcy, coffee chains continued to show steady growth. From this we can conclude that the love of people for good coffee does not dry out during the good times and the bad.
Ensk is a great market to launch our business.
By opening Cappuccino in Ensk, we maximize our potential for success through several factors:
- Wealthy local population;
- Year-round availability of tourists;
- Constantly changing university students;
- Excellent car and pedestrian traffic at our location;
- Low media costs;
- A large number of local special events.
Cappuccino is located in what is arguably one of the best places for a coffee shop. in the heart of the tourist and business district. There are good shops and a historic theater nearby, and the Cappuccino is just a few steps from the city's busy intersections.
Thus, "Cappuccino" has all the components for a direct successful business.
4. ... Market segmentation
The Cappuccino customer base in Ensk consists of five target audiences:
- Wealthy Locals
- Office Staff
- Passers-by <
These groups are potentially strong consumer segments. The benefit in these segments is that they help maintain business profitability year round. For example, despite the fact that tourism in Ensk is at a high level, it reaches its maximum peak during the summer months. On the other hand, there are not as many students in the summer months as in the period from September to June.
At the same time, other segments (locals, office workers, local businesses and city traffic) provide Cappuccino profitability throughout the year.
In addition, by targeting multiple market segments, Cappuccino does not become overly dependent on any single consumer group. For example, a few local coffee shops, with predominantly students as customers, have rather low returns during the summer months. In addition, these institutions should strive to sell themselves to newcomers to college every year. Cappuccino will avoid this by connecting all consumer segments into one customer flow.
Competitive analysis: how to analyze the marketing strategy, website and advertising of competitors?
Speed is the main weapon in the competition! Richard Branson, British entrepreneur, author of the book “To hell with it! Take it and do it! "
Should I agree with this quote? Perhaps yes, but not 100%. Speed is of course important when it comes to competition. However, one should not forget about the quality of what is offered to consumers. But the benefits of the speed of idea generation and production are worth talking about when the manufacturer is confident in the quality and relevance of his product.
Who are the competitors?
We will not go into details of the origin of the term. A competitor is someone who produces exactly the same product / service as yours and is focused on the same consumer market as you. This means that at any time your consumer can go to another manufacturer - a competitor.
Many startups and even experienced manufacturers ask themselves the question: "How to deal with competitors?" Is it worth fighting them?
Business Intelligence - Finding and identifying all business needs and problem-solving techniques to drive the growth of your company.
You need to know your competitors by sight! It is a fact. And only after recognizing them, you can decide: fight with them, "be friends" or stay in a wait-and-see attitude and monitor their behavior in the market. Of course, the last option is the worst one. Because during the time of "surveillance" relations with their own customers will deteriorate, and competitors will succeed. Let's look at the other two options.
In the modern economic market, supply continues to grow, while demand is practically not increasing. More and more new manufacturers of the same products appear, for example, hairspray, pickled cucumbers in cans. The buyer does not know what to choose, how to check the quality. The manufacturer, in turn, does not always keep track of how his product is being bought up and which brand is the most popular among its competitors. Hence the surplus of some goods, production crises and bankruptcy of manufacturing companies, whose products were unclaimed.
A striking example is the Pyaterochka chain of stores! In one district of the city, several supermarket outlets can be located on only one street at once. 3-4 stores at a distance of less than a kilometer from each other (considering that there are also Dixie, Magnit, Podruzhka and other stores with similar / the same goods nearby).
Of course, the owners of the chain understand how great the demand is for the goods offered in this chain of stores, for the prices that they put on these goods. They open several more stores. But, in the end, it turns out that not at all points the goods are of high quality, and the sellers are of goodwill. In addition, territorially new points are often unprofitable: too far, in comparison with other "Pyaterochki", in which the residents of the area are used to walking. Conclusion: the money was spent on a new location, and the store itself is closed in a couple of months.