Poor companies ignore competitors, average companies copy their competitors, and great companies learn from their competitors. This is true in all aspects of business. In marketing, competitive analysis is a great way to learn what works and what doesn’t in a specific industry. Seems easy enough right? Not even close. There are many steps to successfully analyzing competing firms marketing plans and figuring out how to apply that to your own business.
The first and one of the most crucial steps of the competitive analysis process is figuring out which companies are similar and comparable to your company. For example, while Pepsi and Bud Light are both in the beverage industry, their marketing plans differ in target market, distribution channels, regulations on advertising channels and product labeling, and many more aspects. On the other hand an eyeglasses company might be wise to not only analyze other eyeglasses companies but also contact lens manufacturers as well because the two products are nearly perfect substitutes, meaning that almost everybody could trade in their eyeglasses for contact lenses or vise versa. To figure out what makes that certain company’s campaign successful or not depends on a few factors. One of these factors and maybe the most obvious one is how your existing and potential customers view and rate the analyzed company’s campaign and overall image. The next factor that determines campaign success is metrics such as sales volume, revenue, and increase in market share due to that campaign. Without positive results in categories like these, there is weak justification for the analysis.
Once you’ve determined which company or companies to analyze, the next step is to figure out exactly what they are doing that makes the campaign or plan so successful. This includes knowing which target markets they use and how that differs from your own target market, knowing which marketing channels they are utilizing, what kind of promotional pricing or discounts they are using, the strengths and weaknesses of their website design, and many more that I don’t want to bore you with. Once you’ve figured out the true strengths and differentiation that the analyzed company holds, you have to ask yourself the question of “how can we restructure our own marketing plan based off of some of these strengths?”
Implementation of your results can make or break your marketing scheme. Not all companies are the same. You have to realize what strengths your company holds as well before you can implement findings from competitive analysis. If there is a niche market that you serve, it might not be wise to do any competitive analysis at all because there may not be anybody with a similar enough marketing plan to analyze.
When done right, competitive analysis can offer a company new ideas that they may have never have thought about, not to mention reduced risk of failure. It is a fantastic way to spark inspiration and understand not only what other companies are doing well, but the strengths and weaknesses of your own company as well. If there is one thing to take away from this it’s that it is important to keep in mind that you can go through an extensive analysis of a competitor and results may not be what you wanted unless you put the proper time into researching which companies are similar enough to your own and are ACTUALLY SUCCESSFUL.