Background
In the digital business world, any organization that cannot define and measure its online competitors will likely have minimal or no long-term sustainability. Organizations that rely entirely on technology and the Internet should watch out for their competitive forces by employing strategies that systematically analyze their competitors’ methods, especially their strengths, weaknesses, and market positioning and utilization.
Competitor analysis is not simply examining other companies’ machines; it is about reaping the fruits of competition by looking inside and outside the organization. This situation warrants how your company can improve its competitive strategy and mobile mindsets to a paradigm shift in practice.
However, it is one thing to approach the analysis of the competition given by complementary firms. By joining forces with additive companies and utilizing this avenue, you can increase penetration into new markets, optimize costs, and generate more prospects for development.
An Insight on the Online Competitors
Online competitors are also referred to as market or industry competitors, and they are the other businesses in the same industry as yours that seek to target the same clientele. They can be direct competitors, your immediate rivals, and offer the same products or services as you do, or through indirect competitors who sell alternative products or services but cover a different market.
In this case, direct competitors refer to businesses selling the same product or service that you are targeting to bring to the people. For instance, if you operate an online shop dealing in clothes like me, the clothes shop websites dealing in items almost like your target market would be your direct competition. Indirect competitors, however, are those businesses selling products and services more or less similar to your business but focusing on a different market. For instance, affordable handbag-selling companies would be indirect competitors when running a luxury handbag shop.
Understanding the difference between direct and indirect competitors is critical because it allows you to locate the most dangerous businesses. Who is your main competition? Your main competitors are direct competitors since they are vying for the same customers as you are. Although indirect competition is less direct, it is also dangerous as they will likely be able to take some of the market shares away from your audience by providing similar products or services at lower prices.
Types of Online Competitors
There are two main kinds of online competition, namely:
Direct Competitors:
These businesses offer your products or services to the same target market. They are your primary rivals, competing for the same customers as you. For example, if you own an online clothing store, then you will have other online clothing stores selling the same apparel for your target audience as your direct competitors.
Examples of direct competitors:
Other websites sell the same kind of products to the same target group. Physical clothing shops retail the same product type to the same target market.
Retail stores offer the same products to the target market.
E-commerce websites offer products that are similar to those of the target market.
These are businesses providing similar or the same products or services as you in the same line of business but in different market segments. They may not be your direct competitors, but they can threaten you if they attract your potential audience. For example, if your business sells high-end shoulder bags, other businesses selling cheap shoulder bags or neckpieces will be classified as indirect competitors.
Examples of indirect competitors:
| Retailer Type |
|---|
| Retailers of cheap handbags or fashion ornaments |
| Retailers of expensive timepieces or ornaments |
| Retailers of clothes from the best fashion designers |
| Retailers of pre-owned high-end fashion items |
Competitive Analysis
Understanding the competition is the process of identifying and assessing the online business competition. It involves information about the products and services it offers, prices, marketing methods, and customer reviews. Looking at your competitors helps you discover what they are good at and the areas that they lack that you can take advantage of and improve your business.
Essential Aspects to be Focused On
While making a competitive analysis, the focus should generally be placed on the following areas:
Products and Services:
Product Offering:
What is the size and structure of the product or service portfolio? Is there reliance on a narrow set of products or a broad range of services provided?
Price:
How do their products or services compare in quality with yours? Are they more about quality, or are they more affordable?
Attributes:
What characteristics of their products or services make them stand out? How do they differ from yours?
Grasp of Trends:
Are they genuinely innovative in offering new products or services? Are new varieties or services introduced repeatedly in the market?
Target Market:
Demographics:
Who are the target customers? What is the age, gender, income, and area of residence of these buyers?
Psychographic:
What are their likes, beliefs, and way of life characteristics? And will these affect their buying behavior?
Buyer Needs:
What particular need or want do their prospective customers have? How does any product or service hope to serve them? Marketing Strategies:
Channels:
In achieving their objectives, which channels do they use to reach their target customers? Do they emphasize online platforms, mass media, or neither of the two methods?
Messaging:
What is their advertising communique? How are their values and offerings unique from the competitive landscape?
Budget:
What are their annual marketing costs? What is the return on this investment in this marketing strategy?
Pricing:
Strategy:
Which pricing mechanism do they pursue? Is it one of prestige? Is it a cut-throat strategy? A cost priority pricing?
Comparison:
How have their prices turned out to yours? Are theirs more than, less than, or equal to yours?
Promotions:
Are there any incentive schemes, deals, or cost reduction potentials? How do these move the prices?
Customer Reviews:
Sentiment:
What can be said regarding customer reviews on the products or services rendered? Do customers approve of the items bought?
Feedback:
What do consumers have to say regarding the concrete products or services BBQ provides? Where do they excel, and where do they fail?
Ratings:
What are the products in terms of average user ratings of the users across review sites? As compared to how your rankings are, what can one say of this?
Competitive Benchmarking
Competitive benchmarking helps identify what your business is lacking compared to its competition through evaluation. Such comparisons help you set reasonable targets for yourself and even monitor progress over time.
Metrics to be Benchmark with Your Competitors
If a company is to compare its performance with its competitors, there are basic metrics which should be compared, such as:
Market penetration:
Market share can be defined as the rate of a particular brand group about competitors. This metric paints how big or powerful a company is relative to the competition. Derived from the market share definition above, it will help one ascertain who is at the top and where in the market.
Customer Satisfaction:
How prevalent is a particular competitor’s offering of products or services? Customer satisfaction is an essential factor and constituent in a business unit’s overall performance. It is vital as it helps pinpoint where better offerings can be positioned to ensure competitive advantage.
Traffic:
For every such competitor, what is their traffic value?
This is one of the fundamental metrics for online businesses since traffic provides an idea about how people respond to offerings. Tools that show website traffic analytics can help track competitors’ traffic and find out which of them most potential customers seem to be interested in.
How engaged do customers get with competitors’ social media?
Then, engage social media engagement to provide ideas on how each company engages its intended market. So, social media engagement provides an opportunity to analyze the customer relations market share of the competition.\
How much profit does each competitor make?
Financial performance should help answer whether a company is sustainable in the long term. Therefore, an analysis of financial performance helps to identify the competitors who stand firm and those who cannot stand the market performance.\
Strive for Customer Satisfaction:
Always make efforts to meet your customers’ needs and expectations. Satisfied customers are likely to come back and recommend your business to others.
Harness Technology:
Ace your technology employment to re-engineer your operations, simplify workflows, and enhance how customers relate to your organization.
Remain Relevant:
Be aware of what is new in the market or the technology used in your field. This will ensure that you outperform your rivals and find new ventures.
FAQs
How can I find out who my online competitors are?
You can find your online competitors by looking for companies that sell similar products or services. You can also utilize tools like the Google Keyword Planner to look for relevant keywords within your industry and observe which companies are optimized for them.
What are the definitions and examples of direct and indirect competitors?
Direct competitors are those who have the same products and/or services as these target consumers, while indirect competitors deal with the same products and/or services but in a different market.
What is the procedure for performing a competitive analysis?
Performing a competitive analysis entails collecting all the relevant information about competitors’ products, services, prices, marketing approaches, and consumer opinions. You are advised to visit their websites, social media platforms, and product review sites.
What can I do to beat my competitors online?
To outdo your online competitors, you need to make your business unique, learn to keep your customers satisfied, utilize what technology has to offer, and keep yourself informed on the trends and modern techniques adopted in the industry.
With a competitive outlook towards your online competitors and good planning, you can make your business thrive in today’s world where competition is on the internet.
