Competitor analysis is the process of identifying and analysing your business’s direct and indirect competitors in order to gain insight into their products, services, marketing strategies, and target audience. This information can then be used to make informed decisions about your own business strategy, such as pricing, marketing, and product development.

For small businesses, conducting a competitor analysis is crucial in order to stay competitive and relevant in their industry. By understanding what your competitors are offering and how they are marketing themselves, you as a small business owner can identify areas where you can differentiate yourself and offer unique value to your target audience.

The benefits of conducting a competitor analysis for small businesses include:

• Identifying opportunities for growth and improvement
• Developing a unique selling proposition (USP) that differentiates the business from competitors
• Staying up-to-date with industry trends and changes
• Making informed decisions about pricing, marketing, and product development

This blog post will cover how small business owners can conduct a thorough competitor analysis, including identifying competitors, gathering data, analysing strengths and weaknesses, and using the information to make informed business decisions. We will also cover the tools and resources available to small businesses for conducting a competitor analysis, such as Google search and social media, competitor analysis tools like SEMRush and Ahrefs, and survey tools like SurveyMonkey and Google Forms. 

By the end of this post, you will have a clear understanding of how to conduct a competitor analysis and why it is so important for your business’s success.

How to Conduct a Competitor Analysis

Define the business’s industry and identify direct and indirect competitors

If you are a small business owner looking to conduct a competitor analysis, the first step is to define your business’s industry and identify both direct and indirect competitors. Direct competitors offer the same or similar products or services to the same target audience, while indirect competitors offer different products or services that could be used as substitutes for yours.

Gather data on competitors’ products/services, pricing, marketing strategies, target audience, and online presence

Once you have identified your competitors, you need to gather data on their products/services, pricing, marketing strategies, target audience, and online presence. You can start by researching their website, social media profiles, and online reviews. Look at what they offer and how they market themselves to their target audience.

Analyze strengths and weaknesses of each competitor

Next, it is time to analyse the strengths and weaknesses of each competitor. This will help you to understand what they do well and what areas they could improve on. For example, one competitor may have a strong social media presence, but their pricing is higher than yours. Another competitor may have a wider range of products or services, but their customer service is lacking.

Use SWOT analysis to identify areas where the business can differentiate itself from competitors

After analysing your competitors’ strengths and weaknesses, you can use a SWOT analysis to identify areas where your business can differentiate itself from competitors. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This analysis will help you to identify areas where you can improve your business, as well as opportunities for growth and development.

Here’s a sample table for a competitor analysis:

Competitor Name	Products/Services Offered	Pricing	Marketing Strategies	Target Audience	Online Presence
Branch	Product A, Product B, Service C	Higher, similar, lower	Social media, print ads, email marketing	Young adults, families, small businesses	Website, Facebook, Instagram
Competitor 2	Product C, Service D, Service E	Higher, higher, similar	Influencer partnerships, referral programs	High-income professionals, older adults	Website, LinkedIn, Twitter
Competitor 3	Product A, Product F, Service G	Lower, similar, similar	SEO, content marketing, PPC ads	Small businesses, startups	Website, YouTube, Twitter

This table includes columns for the competitor name, products or services offered, pricing, marketing strategies, target audience, and online presence. By filling out this table with information about your competitors, you can easily compare and contrast their strengths and weaknesses and use this information to inform your own business strategy.

What To Do With This Information

Once you have gathered and analysed information about your competitors, you can use this information to make informed decisions about your own business strategy. Here are some key actions you can take:

Identify opportunities for the business to improve its products/services, pricing, and marketing strategies: 

By analysing your competitors’ strengths and weaknesses, you can identify areas where your own products or services may be lacking. For example, if your competitors offer a wider range of products or services, you may want to consider expanding your own offerings. Similarly, if your competitors offer lower pricing, you may need to adjust your own pricing strategy to remain competitive.

Develop a unique selling proposition (USP) based on areas where the business can differentiate itself from competitors: 

Based on your analysis of your competitors’ strategies and offerings, you can identify areas where you can differentiate yourself from the competition. Use this information to develop a unique selling proposition (USP) that highlights your business’s strengths and sets it apart from the competition.

Adjust business strategy to better align with the needs and preferences of target audience: 

By understanding your competitors’ target audience and marketing strategies, you can adjust your own business strategy to better meet the needs and preferences of your target audience. For example, if your competitors are targeting young adults through social media advertising, you may want to consider increasing your social media presence to reach this audience.

Stay up-to-date with industry trends and adjust business strategy accordingly: 

By regularly monitoring your competitors’ online presence and staying up-to-date with industry trends, you can adjust your business strategy to remain relevant and competitive. For example, if your competitors are shifting towards a more eco-friendly approach, you may want to consider incorporating sustainable practices into your own business.

What Tools To Use

To conduct a thorough competitor analysis, it is important to use a variety of tools to gather information about your competitors. Here are some of the most useful tools for small business owners:

Google Search and Social Media: 

One of the easiest ways to research your competitors is to search for their business online and on social media. Look for their website, social media profiles, and online reviews. Analyze their online presence, including how they engage with customers, what content they post, and what promotions they offer.

Competitor Analysis Tools: 

There are several powerful tools available for conducting a competitor analysis, including SEMRush, Ahrefs, Moz, SimilarWeb, and SpyFu. These tools provide in-depth data on your competitors’ website traffic, backlinks, keyword rankings, and more. This information can be used to identify your competitors’ marketing strategies and tactics, and to benchmark your own performance against theirs.

Survey Monkey or Google Forms: 

To gather customer feedback on your competitors’ products or services, you can create a survey using tools like Survey Monkey or Google Forms. This can be a useful way to gather insights on what your competitors are doing well, what they could improve on, and what customers are looking for in your industry.

In addition to these tools, it can also be useful to attend industry events, read industry publications, and network with other small business owners to stay up-to-date on industry trends and changes.

Summary

Conducting a competitor analysis is crucial for small business owners who want to stay competitive and relevant in their industry. By understanding your competitors’ products, pricing, marketing strategies, and target audience, you can identify areas where your business can differentiate itself and offer unique value to your target audience.

By conducting a competitor analysis, you can also identify opportunities for growth and improvement, develop a unique selling proposition, align your business strategy with the needs and preferences of your target audience, and stay up-to-date with industry trends and changes.

So if you haven’t conducted a competitor analysis yet, it’s time to take action! Use the tools and strategies outlined in this post to gather information about your competitors and use this information to inform your own business strategy.

Remember, a competitor analysis is not a one-time event. It’s important to regularly monitor your competitors’ strategies and adjust your own business strategy accordingly. By doing so, you can remain competitive and relevant in your industry.

If you want to learn more about competitor analysis, there are plenty of additional resources available to you. You can attend industry events, read industry publications, network with other small business owners, or seek the help of a business coach or consultant.