Competitor analysis is the process of understanding your competition in order to succeed in the marketplace. All aspects of competing businesses are examined, from internal firmographics and employee information to their social media presence.
Businesses can begin competitor analysis even before they enter a new market.
With a proper competitor analysis model, you can benchmark your progress against more established competitors, identify your target market, and even anticipate new products or services from your competition.
Moreover, competitor analysis can provide more nuanced information about the marketplace through sentiment analysis. That is, people may talk about your competition more, but do they say anything positive? And specifically what aspect of their products do they like that you can replicate?
While most of competitor analysis data is external, there is a lot of internal data you should record—and not just for comparison’s sake. In addition to firmographic, company, and employee satisfaction data, you have customer surveys. You can also take advantage of reports from your customer service department: These agents speak to customers every day and know why customers prefer you over your competitors.
Most important competitor analysis data is public in market reports, stock market numbers, news, and social media posts. However, you may need to outsource or develop a sentiment analysis model to truly understand the content.
Other sources of this data include market surveys, polls, and company data on your competitors.
Additional external data includes employee data and direct investigation from your side.
To the first point: If your competitor’s workplace attracts brilliant employees and encourages them to develop or market successful products, you must emulate that in some way. And while much of this information is publicly available, measuring how your competitor fosters a creative environment can be very difficult. Third-party surveys and public online reviews provide important clues, however.
To the second point, direct investigation: you may consider contacting your competitor as a potential customer. This way, you can see first-hand what your competitor offers to customers and what kind of service they provide.
One of the main challenges to developing a useful competitor analysis model is that it is very difficult to determine the source of a change in consumer sentiment or sales numbers. This is particularly true for an established company; the link between a new sales campaign and its effect can be muffled by prior experience (see Brand Health & Brand Perception).
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