A good way to break down competitor analysis also gives a solid platform for a review of your own business. When you sit down with a blank piece of paper to begin the review, it’s helpful to have a starting point – a grid to start scribbling in, on which you can ‘weigh’ positives and negatives. A simple 2 column list of ‘pros’ and ‘cons’ may suffice but another commonly used launching pad for this review is SWOT analysis. Looking at the SWOT analysis of a competitor alone wastes a chance to directly compare their SWOT characteristics with yours.
The analysis is an imperfect science as it’s unlikely you’ll have all the information you need to do an exhaustive study. Nor is it necessary to do so, if it triggers a new thought process or opens a new avenue for further investigation, then the time could be a good investment in your future. Keeping hold of them also gives you a great starting point when the next review comes around, as whilst some of the factors may have started off as strengths, over time they may become weaknesses and vice versa.
What is SWOT?
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The first thing to understand is that not all of the these are within your control and they could also change over time.
For example, a company selling pine cone wreaths has a weakness that their offering is seasonal. The flip side is that in winter, their strength is that they focus on an item popular at that time of year.
Another theoretical example is that a shopping center has no vendors selling snacks. There is a clear opportunity for a business opportunity but also a threat that someone else wins that opening first.
The two easiest approaches are:
- Build one matrix for your company and a separate one for your competitor(s)
- Build one matrix which compares the business aspects directly
The common way to fill in the matrix is with bullet points of one or two words rather than expand on them. This process is similar to a ‘brainstorming’ session in the office where a ‘big picture’ is painted and the details can be drilled into later.
Over-thinking the analysis is easy and trying to predict the future is impossible. The SWOT analysis does however give a framework to start discussion and has been used successfully by countless teams globally.
Analyzing the weaknesses of a competitor can jump start the thought process on an opportunity for your own business.
It’s also important to realistically assess your potential. If a rival is so strong in one niche of the marketplace that you know you will not be able to bring in the revenue you need, you can learn from their business strategy and look at how you must differentiate yourself enough to attract customers. It’s always best to be authentic to your own vision than to merely copy and take influence from others.
When you have an online component to your marketing, SEO competitor analysis can feed directly into a SWOT matrix to illustrate areas which are opportunities for your business, they can help in decision making and can weigh likely results against investment.