Competition

Purpose

The purpose of this task is for you and your group to better understand the competitive environment for your startup venture. Before you begin, it is important that recognize and understand that your startup is competing with other business to attract a finite number of customers. Moreover, these customers make decisions to purchase one product or service in which they weigh the benefits of one product or service over another product or service.

Background Information

What is a competitive analysis?

First things first: Let’s get on the same page about what a competitive analysis is.

A competitive analysis is a comparison of your competitors’ strategies that can be used to evaluate the strengths and weaknesses of different marketing approaches within an industry. It helps a business determine potential advantages and barriers within a market around a product or service, and generally helps brands monitor how direct and indirect competitors are executing tactics like marketing, pricing, and distribution.

What should you cover in a competitive analysis?

Your competitive analysis can vary widely depending on what you’re trying to learn about your competitors. You might do a competitive analysis around a specific aspect of your competitors’ business—like their website, for example—or you might do a high-level look at their marketing approach as a whole.

There are a lot of different ways you can structure a competitive analysis, so let’s look at the types of information that are frequently seen within this kind of research.

If you’re doing a high-level competitive analysis, there are a few major elements you’ll want to be sure to include around competitors’ market positioning, such as:

Who their target customers are
What their main differentiator/unique value-add is for their business and products
Key features/benefits they highlight in sales materials
Price points for products, even across different marketplaces
How they approach shipping

These sections will help you get a zoomed out look at what separates these businesses from each other and how they’re working to differentiate themselves from the competition within the niche.

If you want to look at more specific elements of your competitors’ approaches, you might consider adding sections like these to your competitive analysis:

Website features (like search tools, product images, design/layout, etc.)
Customer experience elements (cart abandonment strategy, customer support, mobile UX, etc.)
Social media approach (channels used, frequency of posting, engagement, etc.)
Content marketing tactics (blog topics, content types, etc.)
Marketing tactics (types of promotions, frequency of discounts, etc.)
Email marketing approach (Newsletter, promo codes, etc.)
Customer reviews (language used around products, recurring complaints, etc.)

Generally, competitive analysis can take on many shapes and forms depending on what a company wants to evaluate about its competitors, but this should give you a rough idea of what could be included within the different sections.

Why competitive analysis matters?

Maybe at this point you’re thinking, “Okay, but why does competitive analysis matter for me as a business owner?”

The main reason this activity is important is because you can’t effectively compete without knowing your competitors—and you can’t differentiate yourself if you don’t know what actually makes you different.

A competitive analysis helps to:

Make more informed marketing decisions
Identify industry trends
Create benchmarks for yourself
Determine your pricing strategy
Unearth new ways of speaking to customers, or even new customers to speak to
Finding a gap in the market, but also ensuring there’s a “market in the gap”

Thus, a competitive analysis can be a living document that’s constantly evolving as your company grows and matures over time.

Maintaining a resource like this is a powerful way to measure how your brand stacks up against the competition right now—but it also can help provide clear direction on how you’ll continue to excel in the future.

In what follows, I provide you with procedures to conduct a competitive analysis for your startup.

Procedures

Step 1: Create a list of 7-10 competitors

To identify relevant competitors to include in your analysis, start with searches on Google, Amazon, and Alexa around your product and business idea. You want a mix of competitors that:

Sell similar types of products
Have a similar business premise
Market to similar and slightly different audience demographics
Are both new to the marketplace and more experienced

To put together a list of diverse competitors that will give you a good look at the competitive landscape that’s not too small and not too large, it’s a good idea to create a list of 7-10 relevant competitors, before deciding on the ones you want to analyze.

Step 2: Create a spreadsheet

As you collect data on this group of competitors, keep it organized within a table or spreadsheet that can be easily shared and updated over time. Within this document, jot down the different criteria you want to compare and contrast, such as:

Price range
Product offerings
Social media engagement
Content used for lead generation
First time visitor offers
Other traits that are worth exploring

Click here for a template to organize and collect your data.

Step 3: Identify primary/secondary competitors

Starting with your list of competitors, begin your spreadsheet by categorizing each one as a primary, secondary, or tertiary competitor. This will help you better determine how they’ll relate to your business:

Primary competitors are your business’ direct competition, selling a similar product/service to your target audience. These are the brands that your customers may compare you to. Example: Nike and Adidas are primary competitors.
Secondary competitors sell similar products or services but to a different audience (e.g. they focus upmarket or downmarket with their products). Example: Victoria’s Secret and Wal-Mart are secondary competitors.
Tertiary competitors are related brands who may market to the same audience, but don’t sell the same products as you or directly compete with you in any way. They may be potential partners or future competitors if they choose to expand their business. Example: Gatorade and Under Armour.

Step 4: Do some hands-on research

Along with the research you’re doing through software and tools, it’s a good idea to get hands-on with your competitive research. Assume the role of a potential customer and check out what your competitors are doing in the marketing department.

You can do this by:

Subscribing to their blog
Following them on social media
Abandoning a product in your shopping cart
Even purchasing a product and evaluating the customer experience

As you execute these activities, be sure to document your findings with notes on the tactics you see. By studying their approaches to cart abandonment and looking at how they deliver support via social media (and beyond), you can spot interesting approaches your competition is using to attract more customers and drive sales.

Step 5: Create Document Set

While you are conducting your research and finding documents that help you better understand your competition, you want to create a document set. To complete this step you want to follow the steps below.

Create a Wakelet account by going to Wakelet.com
Add the links for specific competitors
Add a brief description about the company
Share the link with your group