In view of the ever-increasing challenges of global markets, it is essential for companies to obtain detailed information about competitors on the market in the form of an analysis of the competition.
The results of such studies are an important basis for business decisions.
This article provides everything you need to know about the tool of competitive analysis and highlights relevant strategies and methods.
Rising costs and increased competitive pressure due to digitalization, online retail and globalization are exacerbating the situation for companies in the battle for market share.
From this perspective, it is important to obtain information about competitors' strategies, market position, product quality and objectives.
This effectively supports strategic corporate planning as well as marketing campaigns and sales agendas and underpins them with facts.
Within market research, competitive analysis is part of strategic market analysis; it lists and evaluates the methods, instruments and strategies that competitors use to enter the market and achieve their business objectives.
In this way, valuable insights can be gained not only for your own strategy planning, but also for product management and for marketing and sales tasks. In terms of practical implementation, a distinction is made between strategic and operational competitive analysis.
Although competitive analysis, like competitor analysis, is a classic component of market analysis, competitive analysis is sometimes used in the literature as a generic term for the areas of market analysis and competitor analysis.
As the individual areas of analysis are closely interwoven, the terms "competitive analysis, market analysis and competitor analysis" can also be used interchangeably, and there are also thematic overlaps.
Competitor analysis involves collecting comprehensive information about competitors, processing it and - ideally using special analysis tools - evaluating it according to strategic aspects. The results serve as a decision-making basis for the corporate strategy to be chosen or for potential investors, as well as a basis for internal activities in the area of operational business.
A high-quality competitor analysis not only provides information on the number, market shares and products of competitors, but also draws a strength/weakness profile of competitors.
The following points should be covered as part of the competitor analysis:
In market research, market analysis describes the systematic and objective analysis of a defined market at a specific point in time using concrete figures and data. It provides the company with facts about market volume and potential as well as market development, market shares and customer structure. It also provides information on general conditions such as the economic situation, legal provisions or prevailing trends.
The market analysis also provides information on whether the target market is suitable for achieving a sufficient sales volume or which measures are recommended to increase sales opportunities.
A precise definition and description of the target group is always a prerequisite for carrying out a market analysis.
Market analysis includes the following aspects:
A well-founded analysis of the competitive situation should be carried out for the first time when a company is founded and then repeated annually. Its main purpose is to identify competitors' strategies and objectives and to predict their behaviour, e.g. in the event of market changes. It is also used to optimize your own strategic orientation and market performance.
Other areas of application include clarifying which competitors are present on the market, what strengths and weaknesses they have and determining the general intensity of competition on the market.
After the analysis has been completed, it should be possible to determine your own positioning and realistically assess your chances of success on the market.
A professional analysis of the competition answers the following questions, among others:
A basic distinction is made between operative and strategic competitive analysis.
Common methods here are:
Methods used:
The SWOT analysis (SWOT = Strengths, Weaknesses, Opportunities, Threats) is a powerful tool in market research and is used to optimally align your own strategies based on existing strengths and weaknesses and to obtain detailed information about competitors.
Source: https://www.projectsmart.co.uk/swot-analysis.php
The SWOT analysis consists of internal and external factors:
The factors are analyzed and evaluated in relation to their individual opportunities and risks.
A correctly conducted SWOT analysis answers the following questions:
Which individual strengths does the company use to exploit which opportunities?
Which specific advantages does the company use to minimize which risks?
Which individual weaknesses does the company reduce in order to exploit which opportunities?
Which specific weaknesses is the company working on to prevent which risks?
What is the fundamental opportunity/risk profile in the target market?
In times of increasing market competition, rising cost pressure and growing globalization and digitalization-related challenges, a professional and regular analysis of the competition is an essential element of any business strategy.
This enables the company to react appropriately to changes in the market and changes in competitor behavior. Divided into an operational and a strategic area, the competitive analysis provides clarity about strategies, goals, market position and product quality of the competition and provides a valuable decision-making basis for the strategic orientation of your own company as well as for targeted activities in the areas of marketing and sales.
Conducted annually, the competitive analysis helps to maintain the competitiveness of your own company.