Ten years ago we didn’t have Uber or Lyft. Five years ago, no Apple Watch. And just in the past year we witnessed the long-awaited introduction of Heinz’s Mayocue. No matter what your industry, it’s changing, we guarantee it. New players come into the market, players leave, distribution channels change, and new technology drives features. If you are not regularly conducting a competitor analysis, you run a serious risk of being late to adopt an industry trend or innovation that could be the difference between success and failure. To help ensure that you and your company are on top of your game, make sure you do your research. Here are a few key tips that you should consider when conducting a competitor analysis.

1. Identify the Players

Conducting a competitor analysis doesn’t work unless you understand who your competitors are. Whether you are a brand or a retailer you must take two factors into account:

A. Identifying current major players

Utilizing market share to identify the current competition will help you narrow your list down to the largest competitors you compete against. Identify the top players in the industry, build a competitive matrix, and list them. There are some helpful key considerations in this workbook on unraveling your competitor’s strategy here.

B. Identifying future players

Be sure to keep your focus not only on your competitors now, but also which competitors pose a threat as industry disruptors. For instance, if you were a payphone provider in the United States in the 90s and you focused only on other payphone providers, you would have had quite a shock as cellphones gained near 100 percent penetration. Utilizing market share to identify upcoming competitors can be a powerful tool for trying to head off threats before they overtake your position. Or, if you do not yet have a position, can provide a way for a more agile company to capitalize on a successful model. To identify these future competitors, look for players that are small, but demonstrate rapid share gains in the market, for example: Amazon’s share in small appliances jumped from 5 percent to 8 percent in just 2 years. For help in understanding what type of share gains are “normal” over time, contact your TraQline rep.

2. Emerging Trends – Identify what’s new in the industry

Disruption seems to be the norm today, particularly in tech. Without keeping your finger on the pulse of your industry, you can easily be lost to what trends are emerging in the market today. There are many different ways you can stay on top of what’s new.

A. Create it

If R&D is your thing, then you can be the inspiration for new innovations in the industry. This gives you first-to-market advantages (and disadvantages!), but can be a more expensive road. Creating a feature or choosing to partner (particularly common when private labeling) with someone who has already developed the technology may help grow the industry in ways that have yet to be taken advantage of.

B. Partner

Rather than investing in a new technology, retailers (via private labeling or exclusives) and manufacturers (new feature introduction) can create innovation and growth. For example, the partnership of Nike and Apple leveraged the two first strengths to create apps and products that benefit the consumer. Partnerships function by identifying a need and working with a partner who has complimentary resources, allowing you to create a trend that consumers will love.

C. Watch the trends

3. Understand your strengths (and their weaknesses)

Entire books have been written about understanding your strengths and their weaknesses. A few old-school books such as Good to Great and Blue Ocean Strategy give you a framework for identifying your key strengths. But what does identifying your own strengths have to do with performing a competitor analysis? You’re looking for the overlaps and the gaps in the two. It’s easiest to start with your own strengths, create a matrix with your strengths listed on the side, and list yourself and your competitors across the top. Start listing key strategic and tactical strengths. It is ok to have too many at first. You can delete the mundane or duplicates later. Once you have yours finished, move on to your key competitors that you identified in #1. Note, the list may be long at first, but you’ll realize that some strengths can be deleted as everyone shares them (thus it’s not really a strength, but a common feature). Focus not only on product/service features like unique colors or product durability, but also intangible strengths, such as “quality customer relationships” or a “strong distribution network”.

Once you have your list of strengths, fill out the matrix by indicating with a 1,2, or 3 (3=high, 1=low) in each cell to indicate which competitors have which strengths. This will help you to identify areas where you are stronger than your competition and areas where your competition is stronger than you. Having this understanding helps fill in some of the most important elements of a competitor analysis – where you have your unique selling proposition. Identifying the reasons that customers choose a particular product or service — and reasons that they do not select another — can go a long way toward helping you understand why and when those successes occur.

4. Who are your competitors targeting?

A. Age brackets

Your marketing may be focusing on a particular age group or generation. If your competitors concentrate elsewhere, your preliminary research may show that they are missing a key segment. Alternatively, this may suggest that you have a substantial opportunity to fill a market gap—or that you are putting your resources in the wrong place.

B. Gender differences

Do your competitors sell more to men or women? These distinctions can significantly impact how you should direct your efforts and your messaging.

C. Income levels

Some products or services fit better with different income levels. This may be a matter of pricing strategy or social norms but understanding the relative affluence of your customers as well as your competitors’ customers helps you drive toward those most likely to purchase. Combining the income level of the consumers purchasing with your price point data in Element #1 will help you optimize mix of pricing and demographics.

D. Online or brick and mortar

Having your product in a physical store carries higher costs as it relates to distribution, POP, etc. but it may be the price of entry into your market. It may also be a key strength! Understand where your competitors are selling, and you may find additional opportunities and revenue streams.

Using these steps as a starting point, there are multiple ways you can continue your competitor analysis. Different types of market data, like the consumer data provided within TraQline, will be invaluable as you identify where and how you can best succeed within the market. If you are uncertain what additional data will help you build out your analysis, you can reach out to one of our TraQline representatives. They are always prepared to help you get the most out of the tools we have available.