Estimated duration: 1hr
Carrying out a competitor analysis will help you assess your position in a target market. It will enable you to improve your product or services, identify any gaps in the market, and develop a winning entry strategy.
Understanding your competition gives you valuable insights on your competitors’ capabilities, their strengths and weaknesses…as well as providing you with the opportunity to strategically position yourself in the market.
An in-depth competitor analysis is a key component of a comprehensive market analysis exercise. It is an important final step in market validation.
This course will help you understand how to:
- identify your competitors
- build a comprehensive picture of your competition in your target market
- analyse your competition’s strengths and weaknesses
- assess if you have a competitive advantage in the selected market
- use TradeMalta’s tools and services to your advantage
- use your research to move to the next step of enhancing your value proposition
STEP 1 – IDENTIFY YOUR COMPETITORS
Competitors aren’t always obvious! They might have a similar product or service, or else a completely different offering that is going to compete for the same customers. A competitor can be defined as a business that targets the same customer’s needs as you.
Your competitors usually fall into the following categories:
- Direct competition – businesses that offer identical or similar products and services to the same customers within the same geographical market.
- Indirect competition – businesses that offer similar substitutes to different customers within the target market.
- Substitute/replacement competition – businesses that offer an alternative to the same customer base within the same market.
- Future competition – businesses who are not yet in the market but who have the potential to enter the market, such as large international companies that have not entered the market yet.
All these types of competitors can pull market share away from your company now or in the future.
How can you identify who your competitors are? What are the sources you can use?
You can find a lot of information online. Think of how your customers would look for businesses like yours. Employ online tools such as search engines, social media, forums, online advertisements, local company websites, business directories, etc. Make sure you target platforms that are used in the country you’re planning to enter. Hiring market researchers can also be an option, especially for markets or sectors that present a high number of competitors.
Once you’ve identified who your competition might be, now it’s time to analyse how they operate.
STEP 2 – COLLECT INFORMATION ABOUT YOUR COMPETITION
Now that you’ve put a list of potential competitors together, you’ll need to analyse who and how they can be a threat to you. Do you have to analyse all the potential competitors in your list? That depends on the market you’re targeting. Some markets are concentrated with only a handful of suppliers or service providers, others provide a more fragmented landscape.
In fragmented markets you may be able to use the 80/20 rule, where it is probable that 80% of the market is catered for by 20% of the competition. This is where market share comes into play. It’s the 20% you would examine most closely. In this case you should also consider new players who through new technologies, innovative customer service or aggressive advertising strategies might become strong competitors.
You can access valuable information about your competitors online. Look at adverts in the news portals of the country being targeted. Go through industry journals, view company reports, websites, social media, sales brochures, advertising and promotional strategies, customer reviews etc. Check if they’re exhibiting in major trade shows. You can also visit your target export market, go to local retailers, attend exhibitions and conferences or join trade missions.
Here are some questions you can try and answer through the information you’ve gathered:
- What is their core offering?
- What is their unique selling proposition?
- What is their market share?
- What is their size, growth, ownership?
- What is their total sales volume?
- How long have they been in business?
- How are they placed within the market?
- Are they manufacturers or distributers?
- Do they sell local or imported products?
- Where do they sell from? Local retailers, own shops, online?
- Do they use their website or social media?
- What is their brand and marketing strategy?
- What is their price point?
- What type of packaging and presentation do they use?
- Who is their target customer?
- How do customers rate their product or service?
- What sort of after-sales/service do they offer?
- Who are their partners – manufacturers, suppliers, distributors, retailers etc?
STEP 3 – ANALYSE YOUR COMPETITORS’ STRENGTHS AND WEAKNESSES
Now that you have all the information at hand you can focus on analysing your competition’s strengths and weaknesses. Construct a simple chart to list what your competitors do well and what their weaknesses could be. A comparative analysis will provide valuable insights for your strategic plan, and to assess what your potential market positioning could be. Evaluate your competitors and compare their performance to your own.
Your analysis should usually cover the following aspects:
Identify what product features and benefits are most important to customers. How does it differentiate from your product/service’s features, quality and price? Make a list of product features and benefits in order of importance and compare them to your offering and your customers’ needs. The more unique features and benefits your product has, the stronger your market position will be.
Factors that may come into play include:
- Customer service
- Branding/Perceived Value
Market share is usually the most widely used measure of sales performance. Assessing your competitors’ market share may give you insights on the standards they’ve set in the market and how they’ve developed customer preferences.
Market share is worked out by determining a competitor’s sales as a percentage of industry sales. By correlating product or service features, quality and price, against market share, you can develop a picture of customer preferences. Also, by ranking competitors according to market share, you can have an understanding of who your direct competitors are.
What are your competitors trying to achieve? What are your competitors’ overall market strategies?
- Are they trying to increase market share?
- Are they looking at short-term or long-term profits?
- Do they aim to be market leaders?
- Are they continuously improving their product/service?
- Are they experimenting with new markets?
It’s important to understand where your competitors are heading to be able to develop your own strategy whether it be divergent, in parallel or by developing partnerships.
The marketing strategies employed by your competitors is an important factor to analyse, since findings will enable you to identify how they are reaching and influencing their customers. Analysing how your competition’s marketing strategies are defining the market is not the only thing you should be focusing on. In your analysis you should also include how these companies are utilising their resources to gain market share.
Here, you will need to look at their branding, their messaging, their presence on social media and their direct promotional initiatives. Assess what each of your competitors is doing and discuss with your team if you can do better.
To conclude your analysis, rank your competitors by product/service, market share, business strategy and marketing initiatives. In your analysis, you could also include operational efficiency and customer service. Operational factors can also provide a competitive edge, as will customer services, such as availability, ease of purchase, delivery and returns options.
Some other factors that you could additionally consider include, financial stability, strategic partnerships, company culture and CSR (Corporate Social Responsibility).
Now, use this information to identify where your competitive advantage might lie and how you can develop a strategy that will provide you with a better position for your product or service.
STEP 4 – GAUGE YOUR COMPETITIVE ADVANTAGE
The research you would have carried out will help you gauge your competitive advantage.
As a first step you will need to compare your offering to that of your main competitors in the market: product, price, place, promotion. But this may only be a short-term strategy, as these aspects may easily be replicated or advanced by your competitors. So, delve deeper…your winning strategy may involve developing resilient distribution networks, a strong messaging and brand image, or a new and unique product trend.
If you think you have an edge over your competitors, then it’s time to discuss your strategy with your employees: share the key areas of your competitive advantage, discuss enhanced products or services, summarise risks, and ask for ideas to strengthen your market position. It’s time to move to your next step and fine-tune your value proposition. Develop a winning strategy with your team!
When assessing whether you have a shot in a particular market, you may also want to consider some other options that could improve your strategy, such as using your competitors’ marketing and pricing strategies to improve your own or developing a partnership with them to achieve greater market penetration.
If, on the other hand, you realise that the market is saturated, move on. Don’t hesitate to back out if your findings indicate that your advantage is slight. After all there’s no benefit in investing in a market that offers higher risks and lower profit. Concentrate on the next best thing and start this process again.
STEP 5 – CARRY OUT COMPETITOR ANALYSIS ON A REGULAR BASIS
Competitor analysis shouldn’t be a one-time process, but an exercise that is carried out regularly. Depending on the market you operate in, competitive analysis could be required every few months or once a year. It is important to stay up-to-date with current and emerging competition. Change in a market is constant – your competitors’ approach may shift, new products or players may emerge, and new consumer trends may develop. To hold a competitive advantage, it is crucial that you constantly evaluate your market position, so you can leverage your competitors’ weaknesses and improve your own proposition.
How can TradeMalta assist?
Support is just one click away!
TradeMalta is dedicated to helping Malta-based businesses succeed internationally. We offer a range of services tailored to the needs of companies that are planning to enter new markets with their products or services. Assisting companies with their market research is an integral part of our support package. Here’s a list of the key services that can support you with executing your competitor analysis.
- Company Lists – Kompass EasyBusiness Solution: This is a freely accessible database on TradeMalta’s website that covers 55 million B2B companies in more than 70 countries. You can use this database to identify companies that operate in your target market, and who might either be your competitors or your potential partners.
- Market Data – Statista Database: TradeMalta has access to the Statista database, a world leading data platform for strategic market analysis, statistics, and editorial research results. Through this service you may be able to gather information about your target market, the sector you’re operating in, or your competing peers.
- Market Research: This programme is designed to aid companies in procuring specific market research and market intelligence reports, which will assist in developing new or existing export markets.
- Trade Missions: Financial assistance is available for companies to participate in real-life or virtual trade missions organised or endorsed by TradeMalta. Joining a trade delegation, whether in person or virtual, can provide you with unique international business opportunities to access networks of buyers, agents, and government decision-makers. It will also give you the opportunity to evaluate the market you’re planning to target.
- Exhibiting in Trade Fairs: We also support companies by providing part-financing to businesses looking to exhibit in international trade events, fairs and exhibitions. Apart from an opportunity to promote your business, such events can be a goldmine of information when it comes to gathering intel on your competition.
- Global Growth: This programme is launched on an annual basis, and it’s targeted towards experienced exporters. It offers financial aid to companies presenting a clear business internationalisation plan. Among other activities, support is provided to cover costs related to travel and market research.
Finally, if you’re still unsure whether you’re ready to export, TradeMalta can assist you in assessing your export readiness with a simple online self-assessment tool that will allow you to carry out a basic Strategic Gap Analysis. Furthermore, you can also benefit from an in-depth assessment to measure your export readiness and determine your company’s capabilities to internationalise.
Explore our website to discover how TradeMalta can assist in your research: https://www.trademalta.org/