3 Competitive Analysis Tools You Must Have
Are you actively monitoring your competitors as part of your marketing strategy? Do you analyze this information and adapt your marketing plans to maximize their effectiveness? If not, you should heed the advice of the ancient Chinese military strategist, Sun Tzu. Sun Tzu’s The Art of War could be a handbook for today’s marketer dealing with an ever-changing competitive environment, consumers empowered with social media publishing platforms, new emerging technologies and devices, and 24/7 news cycles.
In terms of competitors, marketers should heed Sun Tzu’s recommendations because he believed in swift, targeted responses to dynamic conditions to deal with enemies. Here are his words of wisdom.
If you know the enemy and know yourself,
you need not fear the result of a hundred battles.
If you know yourself, but not the enemy,
for every victory gained you will also suffer a defeat.
If you know neither the enemy nor yourself,
you will succumb in every battle.
Marketers like military generals must first gather relevant intelligence about their competitors. As a starting point, it’s critical to determine who your competitors are. Today, just as enemy forces blend in with the general population and environment, the same is true of your competitors. To this end, ensure you’re tracking the seven competitors every marketer has.
Next, gather information across a wide range of competitive marketing elements to get a full picture of the landscape. (Here’s a list of sixteen competitive marketing elements. LINK) In the process, consider both seller and consumer perspectives and how competitors are handling them. Test and track the consumer experience. Use personal email and social media accounts to get a feel for the nature of their consumer experience.
Three competitive analysis tools
Once you’ve collected competitive information, it’s necessary to organize and analyze it in order to be able to adapt your marketing plans accordingly. Here are three techniques to help you gain the most insights from this data.
- Build a competitive grid. This matrix is useful for organizing and presenting the information in a concise format highlighting the differences between competitors. To create your competitive grid, list competitive firms on the vertical axis and attributes on the horizontal axis. With sixteen or more categories of information, there’s a lot of content to digest. Therefore break the grid into several different sections organized by category, such as business strategy, Web site, product and pricing, and offline marketing.
- Create gap analysis. As you assess each competitor, compile a list of differences for which your firm should have equivalent functionality. Include functionality that your competitor has and you don’t as well as functionality that you have and they don’t. Assess the implications for your marketing strategy based on these differences. Next, aggregate the areas for improvement into a grid. Place the gap on the left and the recommended action to improve your offering on the right. Once you’ve finished, organize these gaps by major category.
- Develop a strengths-weaknesses-opportunities-threats (SWOT) analysis. A SWOT analysis is lays out the top competitive issues in a four-quadrant layout. While many marketers feel that a SWOT analysis is simplistic, part of its usefulness is its widespread use as a management tool. While it’s tempting to place more factors in the strengths and opportunities lists, my preference is for lists of similar length because you’re more likely to overstate your positive features.
Remember your competitive analysis assessment is only the first step in your competitive initiatives. Like Sun Tzu, you must quickly and effectively make modifications to your marketing plans to ensure that you have appropriate responses to your competitors’ activities. Understand that sometimes the best business ideas come from seeing something new or interesting that your competitors are doing and adapting it to enhance your own product line, offer, target market, distribution, or cost structure.
Are there any other forms of competitive analysis that you’d suggest adding to this list? If so, what are they?
On a related topic, here’s a list of 100 points to keep your marketing on track.