Small business owners and entrepreneurs have been finding themselves in a tricky situation in the 21st Century. They’re forced to keep up to rapidly accelerating trends, new products, and new markets, at ever-increasing speeds. This is especially true in any industry that involves technology, which is almost every business at this point.
Consider the specialty chemical industry. It might not sound that exciting, but specialty chemicals are found in everything from food to dye. It grows by 3 – 3.5% each year.
A specialty chemical company needs to stay at the forefront of their field if they hope to remain competitive and economically viable. That means keeping up with emerging markets as well as the latest technology.
This is where competitive research comes in.
With competitive analysis, a company analyzes the other businesses working in their sector for clues of how to proceed. The marketing firm Infiniti Research conducted a competitive analysis campaign for a leading specialty chemical company. This campaign yielded a 27% revenue increase in a single year!
So what is competitive research? How do you do it? Why is it effective?
Let’s delve into this arcane science, to show you how you can use your competition to get ahead in the business world.
But before we do, let’s review this infographic that demonstrates your competitive analysis in 7 steps.
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A Complete Guide To Competitive Research
Competitive research is not just some flashy corporate jargon. In its essence, it’s a technique as old as business itself. The way it’s implemented has changed significantly in the Digital Age, however.
Entrepreneur.com defines competitive analysis as “Identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product or service.” In essence, it’s rather like your everyday market research, with a dash of identifying your unique value proposition (UVP) thrown into the mix.
There’s a lot more to it than that, though. It’s a technique and business discipline all in its own right. When handled correctly, it can mean the difference between your business flourishing or floundering.
One thing to keep in mind is you should strive to see your company as your customer’s do, as well as from a sales or marketing standpoint. This means constructing elaborate buyer personas before your competitive analysis gets underway in earnest. This will help you assess your competition’s strengths and weaknesses more thoroughly, as you’ll have an idea of what your customers are looking for.
The main takeaway is competitive analysis lets you objectively assess your competition’s strengths and weaknesses. That’s not all there is to competitive analysis, though.
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How To Conduct Competitive Research
Competitive research is a thorough analysis of your industry. It involves multiple steps for it to be ultimately effective.
Determine Your Competition
The first step in competitive research is deciding who is your actual competition. These can be broken down into multiple categories.
Direct competition is any company who offers a comparable product or service as what you offer, or a reasonable replacement. They should be operating in a similar geographic region as you, as well.
Indirect competition is any company who offers a different product or service but that could fill a similar need. They could operate in a different region or serve a different demographic, as well.
This leads to one of many people’s misconceptions about competitive research. You should only focus on your direct competitors. Anything more muddies the water and will cloud any business insights you might gather from conducting your research.
With that being said, you should know your indirect competition. They could still give you ideas for future business models and marketing strategies. You never know when you might pivot to a new direction or to serve a new market, either.
List Your Competitor’s Products
Really drilling down and noticing what products or services your competition offers will further help you determine if they’re direct or indirect competition. Are they selling high ticket items, for instance? Or are they focusing on consumer goods and services?
You should also determine if they’re selling direct or supplying items or services in bulk. If they’re selling in bulk, that could put them more in the realm of B2B, for instance. They wouldn’t exactly be competition if you were in B2C sales or marketing, as a result.
You should try and conduct some market research on your competition’s customers, as well. You should try and get a sense of who their ideal customers are. Try and get some insight into their unique pain points and needs, which will further give you an idea if they’re your competition or not.
It will also give you ideas of how to run your own business campaigns, as well, which is one of the main points of competitive analysis.
Assess Their Sales Channels
Getting clear insights into your competition’s sales methodology isn’t easy. You’re going to have to approximate, most likely.
You’ll still want to answer as many basic questions as you can. What does their sales process look like, for example? Do they feature an online shopping cart or do they have a sales team?
You’ll also want to pay attention to what channels they’re using for sales. You should also consider their physical setup. Do they have brick-and-mortar locations?
If so, how does that impact their sales model?
If at all possible, you should strive to find out what prevents people from doing business with them, as well. What makes them abandon their shopping carts? What prevents their sales team from making conversions?
These insights will help your own sales and marketing teams create workable systems.
To get these insights, consider creating a questionnaire for your customers asking them about other companies they might be considering. Your customers can offer a wealth of useful, actionable sales and marketing info.
Don’t rely strictly on online forms, either. This will restrict your audience to people who are willing to fill out forms. You might consider some form of phone outreach, as well, to get a more accurate overview of your demographic.
Assess Their Marketing
Marketing information is a bit easier to come by than sales data. Marketing’s done in public, after all. Your competition is literally leaving you a breadcrumb trail to follow for your own marketing efforts.
You should still strive to be as thorough as possible in assessing their marketing channels, however. Are they focusing on content marketing, for instance? Do they have a blog on their website?
You should pay attention to what kind of content marketing they’re focusing on, as well. Are they hosting whitepapers or ebooks, for instance? The kinds of content a company promotes can give you a further idea of their core demographic, as well as a number of other useful marketing data.
Don’t just rely on surface-level metrics, either. If your competition does have a blog, consider running an SEO analysis on some of their posts. This can help give you some ideas of both a content strategy of your own as well as an insight into your industry as a whole.
For social media marketing, pay attention to when and where they’re posting, as well. Not all social media networks are created equal. Different networks appeal to different demographics, so where they’re posting could even give you an idea of how to market your business.
Consider Their Content Strategy
You should not only consider what kind of content your competition is using but how they’re delivering it. Your competition’s content strategy could also tell you a lot about their demographics, their marketing funnel, and all manner of other useful sales and marketing insights.
Say your competition offers a free ebook for signing up for their email list. They might ask for this after clicking on a link from social media. This is a relatively short time from brand awareness to moving you to the next stage of the buyer’s cycle.
People tend to spend longer on stages of the buyer’s cycle in B2B, for instance. Asking for an email address on the first visit could be an indication that your particular niche converts more quickly, for instance, if you happen to be working in B2B.
Pay attention to how many steps pass before they try to move you to the next step, as well. How many additional pieces of content do you need to move you along to the next stage of the buyer’s journey?
When you factor all of these data points together, you can create a fairly robust portrait of your competition. If you do this with more than one company, you can practically create a whole new business plan, based solely on publicly available data and information.
Want To Learn How To Conduct Your Own Competitive Research?
As you can see, there’s a lot to know about competitive research and analysis. I’m going to be hosting a webinar on conducting competitive research using SEM Rush.
Would you like to visualize your competitive analysis? Check out this blog by Creately.
If you’d like to sign up for the competitive research for your business webinar, or have any other questions, don’t hesitate to reach out!