Competitor analysis is a must-do strategy for many business owners. Without it, you can't compete in the dynamic business landscape.

By examining your competitor's strengths and weaknesses, you can make informed decisions to enhance overall business strategies. 

This article will delve into the importance of Competitor Analysis, the crucial questions to ask, and how various businesses can effectively employ competitor analysis framework to strive further.

What is a Competitor Analysis?

Competitor analysis involves exploring and investigating your rival companies' fundamental business strategies. This strategy is especially important when your products or services closely resemble other companies.

By asking the right competitor analysis questions, you can assess your position relative to your competitors in the market. In doing so, you can also create a distinctive value proposition that is pivotal to capturing target consumers.

Competitor Analysis Questions You Should Ask

To get you into the proper competitor analysis framework, here are some questions you need to answer during your research process.

Who are your competitors?

Let's begin the journey by spotting your rival companies. It can be both direct and indirect competitors.

However, if you're aiming for the most effective competitor analysis strategy, dig further deeper. Don't stop after sizing up your obvious competitors.

Take a look at the underdogs. Smaller companies might have a  smaller slice of the market now, but they could snatch out more business in the future.

It's also important not to forget fringe competitors and substitutes. For example, if you are a car company, you might also need to take note of other vehicle manufacturers or even public transportation companies.

After all, competitor analysis isn't just about who holds the current market share. It's also about anticipating the game-changers, be it new players on the scene or cutting-edge technologies that might shake up your entire industry.

So, stay one step ahead by recognizing these potential disruptors.

What are your competitor's strengths and weaknesses?

Recognizing other companies' strengths and weaknesses can help you pinpoint what you need to improve and what opportunity you can try to seize.

This process not only gives you a sharper grasp of the market dynamics but also unveils what your business can do to stand out.

McKinsey & Company research found that companies creating blue oceans outperform competitors 14 times on average over a decade. Blue oceans allow them to escape the intense competition in existing markets (red oceans) and forge new paths to profitability.

In addition, by dissecting your competitor’s business strategies, you can also avoid costly mistakes they have made before. It will help you save time and money to invest in other profitable strategies.

What are the opportunities and threats in your industry?

A holistic competitor analysis includes a PESTEL analysis. The acronym stands for political, economic, social, technological, environmental, and legal. 

This analysis is basically an examination of the external factors affecting the industry.

For example, changing political landscapes can impact regulations and trade agreements. Natural disasters also have a knack for shaking up supply chains and altering consumer behaviors. 

(Need an example of how important regulation compliance is for Indonesian business? Read this article about Akulaku paylater service freeze, or reach out to connect with our subject matter expert.)

Extending your competitor analysis questions to encompass these external dynamics means you're strategically foreseeing the future. It also helps you formulate a counter strategy to protect your business if, in the end, you can't avoid these external factors.

What are your and your competitors' target customers?

The fascinating thing about business is that even if your products are similar, it's possible that you and your "competitor" are actually targeting different market segments.

Therefore, understanding both of your target customer base is essential.

Sure, there's bound to be a bit of overlap between your ideal customers and those coveted by your competitors. However, it's also possible that you likely have your own niche within the market.

If so, continue to hone on your niche. A HubSpot study revealed that businesses focusing on a specific niche are "more likely to generate qualified leads and achieve higher ROI".

(Need help in conducting a market research in Indonesia? Learn more about Askpert.id’s Consumer Insight service here.)

Also, some companies might actually be a potential business partner for you. Business is a dynamic ecosystem, and sometimes, your rivals today could be your allies tomorrow.

So, keep your eyes wide open and allow unexpected synergies to form in the future.

Why Should You Revisit Competitor Analysis Questions?

With these main competitor analysis questions in mind, you're already a step further to improve your business strategy. Remember that a competitor analysis is not just a one-time activity.

It's a continuous process, and you can apply it in different aspects of your business, be it marketing, product development, customer service, or risk management. So, don't stop or neglect this strategy after establishing your brand in the market.

Make it a ritual to revisit these competitor analysis questions regularly.

In the ever-shifting landscape of business, where rivals come and go, consumer behaviors morph, and technology propels forward, staying on your toes is not just advised; it's essential.

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