How to write a marketing plan: Situation Analysis (Part 2)
Last week, we began our How to write a marketing plan blog series with the first part of the Situational Analysis. We delved deep into how to write a SWOT Analysis for your business to begin to work out where you sit in the current market. Once you're happy with your SWOT Analysis, it's time to complete the second part of your Situation Analysis.
The next step is to assess your rivals in a Competitor Analysis.
So, let’s get started.
What is a Competitor Analysis?
When you’re building a marketing strategy, it’s important to have all the information before you begin, not just about your own company but about other businesses with stakes in the same market. Through a Competitor Analysis, you begin to understand the what, where, how and why of the businesses around you and can learn from their successes and faults.
Find your competitors
First, if you haven’t done so in a while (or at all!), do some research into businesses who offer similar or the same products as you and list them down. A competitor can be a business at any level (locally, nationally or internationally) that has the potential to encroach on your target audience.
Write an exhaustive list to begin with, then whittle it back to a shortlist of direct competitors. Direct competitors are those who play in the same space as you; similar sized businesses going after the same niche as your own. For example, if you are a sole trader who creates and sells handmade jewellery and trinkets online and at local markets, it’s unlikely your direct competitor will be Michael Hill or Tiffany & Co.
Summarise each business
When you have pared back your list to no more than 10 direct competitors, it’s time to look into why they are a competitor. You will likely have thought about this while making your shortlist but now you can put pen to paper. So, being as succinct as possible, come up with a short description of the business and how it competes with yours. Include how prominent they are in the market and what products and services cross over with your own. Are they roughly the same size as your business or are they larger/smaller?
Note down their pricing
While you are writing your summaries, make sure you take note of your competitors’ prices. Are they similar, or do they pitch to a slightly higher or lower market? Do they bundle their products and services? Do they offer payment plans? Is shipping free or do they charge extra? This is all important information when it comes to differentiating your own brand within the market. Once you have listed it down, make a note of how your pricing compares to each competitor.
Compare target audiences
Now, we dig a little deeper. Your target audiences are bound to overlap but it’s important to understand how. By assessing their marketing material, you should be able to figure out who they are targeting and how it crosses over with your own advertising. Think about demographics, like age and gender, income and/or profession, and geographical location.
Can you tell which age range they are targeting by the messaging? Is it the same bracket as your own target audience?
Looking at the language, imagery and general tone of the advertisements, do they seem to be targeting a specific gender? Or is the advertising material generalised for both sexes? Perhaps they target both genders but with different marketing communications?
Are they targeting a specific location? Do they speak on a local, national or international scale?
Can you tell by the tone of their marketing messages whether they are pursuing a budget-conscious audience or a more high-end group? You can also use the pricing information you’ve noted down to help you with this. Persuasive language like ‘cheap,’ ‘affordable,’ ‘sale’ and ‘discount’ tend to be used to target the crowd on the lower end of the scale; while words like ‘exclusive,’ ‘luxury’ and ‘exceptional’ all point to products better suited to the high-income earner.
Marketing is about solving buyer problems. Take a look at your competitors’ marketing messages. What are the problems they are attempting to solve for their consumers? Are they drawing attention to a particular feature of their product or service? If so, why? Think about the types of people attracted to that feature. This information will give you more detail about who they are targeting.
Are the marketing messages different for different groups? For example, are there a set of messages for men and a separate set that change in tone for women? Maybe the segmentation is by age or perhaps it’s interest-based? See if you can find patterns emerging in your competitor’s advertising.
Scope out their strategy
Now it’s really time to put your detective’s cap on. In this step we want to become more granular in the way we look at your competitors’ advertising messages. We’re looking at how they execute their marketing; what platforms do they use and how do they use them? For this, you’ll have to break each competitor’s marketing down into the following streams:
A website is the online version of a bricks and mortar storefront. It’s how customers recognise a brand. Take a look at your competitors’ website. What to you immediately notice? Is it the text or the images (or maybe it’s video)? Do they use testimonials? Is the design basic or detailed? What features does it have? Note it all down.
Then open an incognito window and search for keywords related to your industry. Does your competitor’s website rank on page one? Jot down some bullet points and move on.
Check to see if your competitors are using blogs to draw traffic to their website. If so, how often are they posting? Are they posting regularly or sporadically? Have people left comments on any of the posts? Do you notice if these posts have been shared to social media? Keep making notes and shift your focus to social media.
A social media presence has become essential to brands in the modern marketing realm, especially for B2C businesses. Search for your competitors on social media and note down the platforms they appear on. Also observe how often they post and the type of content they produce. What is their audience like? Do they have a large following? Check their likes, comments and shares.
Try to find out whether each business puts a budget behind boosted posts and paid advertising on social media. This has recently become very easy on Facebook as, when browsing on a desktop, there is now a tab called ‘Info and ads’ that you can click to see all the promotional content.
This one is a bit harder to trace but you want to get a sense for whether or not your competitors used Search Engine Marketing. Again, using an incognito window, search for keywords related to your business. Track whether or not their business website shows up in the sponsored results. You can identify which links are ads and which are organic listings by the little, green ‘Ad’ icon to the bottom left of the link.
Email direct marketing requires a quality list of subscribers to be effective. You can check out what your competitors are sending their database by subscribing to their email list.
Identify their USP
USP stands for Unique Selling Proposition. It is what sets a brand apart from the rest and gives them a competitive advantage. It’s hard to be objective about the businesses you’re competing against but you need to investigate what makes them stand out. What’s something about them that other brands in the same field (including your own) don’t have? You have to think reasonably about why customers would choose them over your brand. Note your findings down.
List their strengths and weaknesses
Just like you did for your own business, make a list of all the things your competitors have going for them and also what isn’t working for them. Using the research and observations above in combination with online reviews and testimonials, write a summary of their strengths and how your business is specifically equipped to compete. You don’t have to outdo them directly in each consideration. You may decide they’ve won the battle on one front, but you can do twice as well on another, as long as you have a plan of attack that leaves you with something to act upon.
Now do the same for their weaknesses. Do these downfalls present an opportunity for your business? But also, if they overcome their weaknesses, how will it affect your business?
So, there you have it; a complete guide to writing a competitor analysis. With all this intel, you will be better informed to make reasonable choices when it comes to your marketing plan. The next step is to define your target audience but, in the meantime, if you have any questions about the types of digital marketing available to your business, get in touch with an online solution provider today.