“If you know the enemy and know yourself, you need not fear the result of a hundred battles.” Although this ancient philosophy is most commonly associated with The Art of War, it applies to modern day business too.
Competitive analysis is a must for anyone looking to survive and conquer their industry.
With a deeper understanding of your top competitors across different metrics, you’ll be armed with the strategic insights needed to develop a much more impactful digital research strategy, whether it aims to grow your audience, launch into a new market, or increase market share.
But before you find your footing, you have to find your framework – arguably the most important tool in your market research toolbox. Let’s dive into the seven types of competitor analysis frameworks for industry analysis, what they are, and how to use them successfully.
What is a competitor analysis framework?
A competitor analysis framework—also called a market analysis framework or competitor analysis model—is generally defined as a structure that business professionals can use to research and evaluate their competitors. In other words, the art of knowing your enemy.
Competitive frameworks gather vital information, such as a competitor’s business strategies, products, offerings, marketing efforts, sales, and the like, into an organized visual model that’s easy to digest at a glance.
And though competitive analysis might seem like a daunting task, with the right frameworks, you’ll know exactly what information you need to gather — with zero guesswork necessary.
Why use a competitor analysis framework?
Plugging your competitive analysis into a good framework can do wonders in strengthening your business’ research strategy. If you’ve had trouble achieving any of these, competitor analysis models could be the answer:
- Identify market shifts: Frameworks can make it easy to discover market shifts that you might’ve missed if your competitor analysis wasn’t previously visually organized well.
- Locate gaps you didn’t even know you had: Examining businesses within a specific industry can reveal gaps in your own strategy compared to your industry at large, which may spark inspiration for a new business idea, product, or offering.
- Target the most effective marketing strategies: By pinpointing the marketing channels that worked well for your competitors, you can create a data-backed roadmap to march confidently forward with your own marketing plans.
- Avoid mistakes: In the same vein, by looking at what didn’t work for your competitors, you can avoid costly mistakes.
- Create measurable (and achievable) goals: A good competitive analysis framework helps businesses build specific performance goals based on their competitors’ data.
- Make data more digestible: Frameworks help display dull or confusing information in a visually appealing and organized manner, making it that much easier to share your findings with the rest of the team, as well as with investors or C-level executives.
The seven most useful competitive analysis frameworks
1. SWOT Analysis
Talk about an old faithful. The SWOT analysis has been around for decades, and for good reason. It organizes a company’s information into the following categories:
- Strengths: internal factors that provide benefits, like a highly trained staff.
- Weaknesses: internal factors that cause disadvantages, like a small marketing budget.
- Opportunities: external factors that pose opportunities, like high demand for a product offering.
- Threats: external factors that pose challenges, like an increase in the cost of supplies.
We recommend using SWOT analysis best practices to hone in on the strengths or weaknesses of your competitors. This is especially helpful for identifying potential competitive advantages your business may have over others, as well as finding areas for improvement.
2. Porter’s Five Forces
Porter’s Five Forces is a formidable framework created by Michael Porter, a professor at Harvard Business School. This competitive framework examines the five key market forces in any given industry, including:
- Intensity of competitive rivalry
- Threat of new entrants
- Bargaining power of new buyers
- Bargaining power of suppliers
- Threat of substitutes
Porter’s Five Forces is especially useful for analyzing the competitive structure of an entire industry. This information will be helpful when shaping business strategies and creating targeted goals amid the expansive competitive landscape. However, you can also apply this framework to niche industries or specific market segments.
3. Strategic group analysis
Strategic group analysis does exactly what it says—it organizes competitors into groups based on similarity of strategy.
There’s a wide range of ways you can group companies. Perhaps you’d like to group competitors by their marketing tactics, pricing strategies, or range of offerings. Don’t forget to place your own company into the analysis to get a better sense of who you’re most closely competing with and gain a better understanding of the impact different strategies provide.
For instance, if you discover that the top three most successful companies in your niche are all grouped into the same pricing strategy, it may be time to see if doing the same will benefit your own business.
4. Growth-share matrix
The growth-share matrix classifies your company’s products against the competitive landscape. This is an example of a competitor analysis that’s especially useful for big organizations with a large portfolio of products or offerings.
A growth-share matrix is a chart divided up into four quadrants to classify products or business units into:
- Stars: products with high growth and high market share. Invest more in these.
- Question marks: products (usually new ones) with high growth, but low market share. Decide whether to invest more (if convinced it will become a star) or give up on it.
- Cash cows: products with low growth but high market share that are usually used to fund investment in stars.
- Pets: products with low growth and low market share. Decide whether to reposition or give up on it.
Using this market analysis framework can help determine what’s worth giving priority to, what to reposition, and what to ditch.
Read More – How To Make The Most Of A Competitive Matrix
5. Perceptual mapping
Perceptual mapping, also known as positioning mapping, visualizes the perception of a company and its competitors on a plot graph.
To use this competitive analysis framework, choose two factors to use as the basis for comparison, like perceived quality and price. Then, plot where your business and your competitors fall on the spectrum of those two factors.
Perceptual mapping is great for obtaining a birds’ eye view of how customers perceive your company in relation to your competitors. Armed with that knowledge, your company can identify market trends and gaps, as well as make adjustments to improve its existing positioning strategy. Smart and strong.
6. Business model canvas
This framework strips a business model down to its bare bones, improving clarity and focus on the most important factors.
A business model canvas is a single analysis that’s divided up into nine elements:
- Customer segments: Who are the customers?
- Value propositions: Why do customers buy/use the proposition?
- Channels: How are propositions promoted, sold, and delivered?
- Customer relationships: How is the customer treated throughout their buyer journey?
- Revenue streams: How is revenue earned?
- Key activities: What unique strategies does the business use to deliver its propositions?
- Key resources: What unique strategic assets are required to compete?
- Key partnerships: What can the business outsource so it can focus on its key activities?
- Cost structure: What are the major cost drivers and how are they linked to revenue?
7. Customer journey map
A customer journey map, also known as a user journey map, is a visual story of customers’ interactions with a brand.
First, all customer channels are mapped out—i.e., a company’s website, social channels, paid media, newsletters, email support, phone services, and face-to-face services (if the brand has brick-and-mortar locations).
Customer journeys can then be mapped across these channels for each buyer persona. The customer experience at each touchpoint should be tacked on to the map, including key engagement metrics the customer hits. Below that, add how the brand responds to address the customers’ concerns. Finally, jot down what opportunities exist to improve the experience at each channel.
Utilizing customer journey maps can help gain insights into common customer pain points and how to improve them—not only within your own company, but for your competitors’ customers as well.
Pro Tip: Use Similarweb Consumer Journey Analytics to uncover competitor strategies and performance metrics through all stages of the conversion funnel.
How can you create a competitive analysis in five steps?
Now let’s see this all in action. Below is a case study of a digital analysis using competitive insights to make faster and better business decisions. All of the data collected can be used to plug into any of the various competitive analysis framework templates we covered so far.
Overview: Steve is a Category Analyst at a market-leading homeware and furniture retailer in the U.S. His company has several business-lines across categories such as sofas, bedding, kitchenware, and outdoor furniture.
Steve’s company has one to two competitors that are particularly strong in the sofa category. An email comes in from senior management saying that sofa sales at the company have been on a downward trend, and now Steve has to pinpoint why this is the case and present a recovery plan. No pressure, right?
Step 1: Analyze competitor’s digital footprint
In order for Steve to truly understand his competitors, he needs to build a digital view of each company and break down assets such as subdomains to spotlight any trends that indicate a competitor’s digital performance. For example, he can identify the unique number of visitors the competitor generates over time to compare online reach relative to his own company’s performance.
Steve can then use this data to see where the company is growing or losing traction. In the example below, the percent change column indicates one of the domains has a 42% downward growth in the last 12 months.
Having this information gives Steve a quick and easy snapshot of his competitor’s online performance and where its strengths and weaknesses lie.
Step 2: Map out your market landscape
Once Steve has built a company view of his direct competitors, he can also analyze their websites to benchmark traffic and engagement data against his company’s overall performance. This will enable him to instantly identify who the market leader is and where he needs to be to improve his digital strategy.
Try plotting out graph-specific metrics such as monthly visits vs. percent month-over-month change to know exactly how he’s performing.
Step 3: Analyze search interest
Next, Steve can assess the market demand for the sofa category and use search interests as a way to identify any emerging competitors that are gaining traffic share for related search terms within the United States. In this example, he can measure the search volume of traffic, see the overall search trend over time, and analyze which competitor is winning digital market share.
With these insights, Steve understands the overall trend for the market and can spot any specific competitors that he may not have considered before during his competitive analysis.
Step 4: Understand traffic and engagement metrics
To learn how your competitor’s traffic and engagement metrics have grown or declined over time, benchmark your growth to your competitors’ to reveal if they’re growing at a faster rate and that’s why they’re potentially winning market share.
In this example, Steve can see the year-over-year traffic growth for his competitive set and can see that one of his competitors grew its traffic by 80%, which is 5% more than his company’s website. Aha! At this point, Steve can use Similarweb to deep dive into the digital marketing strategy of his competitors to understand what’s causing that spike. He could discover that his competitor has an optimized paid search strategy, a marketing channel he previously overlooked.
Step 5: Continuously track the competitive landscape
The last step for Steve is to continuously track and monitor the competitive landscape to identify potential threats and emerging players. This way, he can quickly react to any changes in his competitive landscape and investigate the root cause using smart insights.
Start crafting your competitor analysis framework
Now that you know how to use the seven most powerful competitor analysis frameworks, it’s time to decide which ones work best for you and get to it! When it comes to the art of marketing, knowledge truly is power.
Try Similarweb for free and find out for yourself how our research tools can strengthen your competitive analysis.
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