Competitor analysis is like studying other players before a big game to understand how they play, what they’re good at, and where they might struggle. For online businesses, this means looking at other companies that sell similar products or services.
A competitor analysis framework is like a toolkit, helping you understand the other vendors that directly and indirectly compete against your business.
It helps businesses gain insights into their competition, inform strategic decisions, and identify opportunities and threats. One of its goals is to find ways to make yours special. Maybe it’s faster shipping, better customer service, or exclusive products.
In this blog, we’ll discuss six competitor analysis frameworks.
1. SWOT Analysis Framework
SWOT Analysis helps businesses identify their internal strengths and weaknesses, external opportunities and threats. This framework can be particularly useful for online businesses to understand their competitive landscape and strategic positioning.
Identify Strengths
- Brand Reputation: Assess the strength of the competitor’s brand in the market. How well-known and trusted are they?
- Unique Products/Services: Determine what makes their offerings unique. Do they have patented products, exclusive features, or superior quality?
- Customer Loyalty: Look at their customer retention rates and loyalty programs. How engaged are their customers?
- SEO Rankings: Evaluate their visibility on search engines. Are they ranking highly for relevant keywords?
- Website Usability: Analyse the user experience of their website. Is it easy to navigate? Is it visually appealing and fast-loading?
Identify Weaknesses
- Website Performance: Identify technical issues like slow loading times, broken links, or poor mobile optimisation.
- Customer Service: Look for negative reviews or complaints about their customer service. Are there recurring issues?
- Product Limitations: Assess if their products have limitations or shortcomings that customers frequently mention.
- Market Reach: Determine if they have limited geographic reach or market penetration.
- Brand Perception: Check for any negative perceptions or reputational issues.
Identify Opportunities
- Market Trends: Identify emerging trends in the market that the competitor could leverage. Are there new consumer preferences or technologies?
- Untapped Markets: Look for geographic regions or customer segments the competitor hasn’t fully explored.
- Partnerships: Consider potential partnerships or collaborations that could benefit the competitor.
- Product Development: Identify opportunities for new product lines or enhancements to existing products.
- Digital Marketing: Explore innovative marketing tactics or platforms the competitor could use to reach more customers.
Identify Threats
- New Entrants: Assess the likelihood of new competitors entering the market and their potential impact.
- Regulatory Changes: Identify upcoming regulations or laws that could negatively affect the competitor.
- Economic Conditions: Consider how economic downturns, inflation, or changes in consumer spending might pose risks.
- Technological Disruptions: Evaluate the threat of new technologies that could make the competitor’s products or services obsolete.
- Competitive Actions: Monitor aggressive moves by other competitors, like price cuts or major marketing campaigns.
2. Porter’s Five Forces Framework
Porter’s Five Forces helps businesses understand the competitive forces at play in their industry, influencing profitability and strategy.
Threat Of New Entrants
- Barriers to Entry: Evaluate how difficult it is for new businesses to enter the market. Consider factors like high startup costs, strict regulations, and brand loyalty.
- Economies of Scale: Determine if existing competitors benefit from economies of scale that new entrants would struggle to achieve.
- Access to Distribution Channels: Assess the availability and control of distribution channels.
- Brand Identity: Consider how strong brand identity and customer loyalty deter new entrants.
- Technology: Evaluate the technological requirements and whether new entrants can easily access them.
Bargaining Power Of Suppliers
- Number of Suppliers: The fewer the suppliers, the more power they have. Assess the concentration of suppliers in the industry.
- Unique Products: Determine if suppliers offer unique products that increase their bargaining power.
- Switching Costs: Evaluate the cost of switching suppliers. High switching costs increase supplier power.
- Supplier Integration: Consider if suppliers are vertically integrated, which could give them more power.
Bargaining Power Of Buyers
- Number of Buyers: The fewer the buyers, the more power they have. Assess the concentration of buyers in the market.
- Product Differentiation: Determine if products are highly differentiated or if buyers can easily switch between competitors.
- Price Sensitivity: Evaluate how sensitive buyers are to changes in price.
- Buyers’ Knowledge: Consider how much buyers know about market prices and product quality.
Threat Of Substitute Products Or Services
- Availability of Substitutes: Assess how many substitute products are available and their quality.
- Switching Costs: Determine the cost for customers to switch to a substitute product.
- Price-Performance Trade-Off: Evaluate if substitutes offer a better price-performance ratio.
Rivalry Among Existing Competitors
- Number of Competitors: The more competitors, the more intense the rivalry.
- Industry Growth: Slow growth increases competition as companies fight for market share.
- Product Differentiation: Low differentiation increases rivalry as competitors compete on price.
- Switching Costs: Low switching costs increase competition as customers can easily switch between competitors.
3. PEST Analysis Framework
PEST Analysis helps businesses understand the macro-environmental factors that could impact their industry and competitors.
Political Factors
Political factors involve how government policies, regulations, and political stability affect the business environment.
- Regulations and Compliance: Ensure that your business adheres to all relevant laws and regulations, such as data protection (e.g., GDPR), e-commerce regulations, and tax laws.
- Trade Policies: Keep abreast of international trade policies and tariffs if you operate in multiple countries. This can impact your import/export operations.
- Government Stability: Monitor the political stability of the countries where you operate or plan to expand. Political instability can affect supply chains and customer confidence.
Economic Factors
Economic factors involve how economic conditions affect your business, such as growth rates, inflation, and consumer spending.
- Market Conditions: Analyse economic indicators like GDP growth, unemployment rates, and consumer spending habits. This helps forecast demand and adjust business strategies accordingly.
- Currency Fluctuations: For international businesses, keep an eye on exchange rates and how they impact pricing and profitability.
- Consumer Purchasing Power: Understand how economic conditions affect your target customers’ disposable income and purchasing behaviour.
Social Factors
Social factors involve demographic and cultural aspects that affect consumer needs and market potential.
- Demographic Trends: Analyse changes in demographics such as age distribution, education levels, and population growth. Adjust your marketing campaigns and product offerings to meet the needs of different demographic segments.
- Cultural Trends: Stay updated on cultural trends and social attitudes. This can influence product development, branding, and marketing strategies.
- Lifestyle Changes: Monitor changes in lifestyle, such as the increase in remote working, health consciousness, or online shopping habits. Adapt your business model to these changes.
Technological Factors
Technological factors involve innovations and technological developments that could impact your business operations and competitive landscape.
- Emerging Technologies: Stay informed about new technologies that could enhance your business operations or customer experience, such as AI, machine learning, or blockchain.
- E-commerce Platforms: Evaluate and invest in the latest e-commerce platforms and tools to improve website performance, user experience, and security.
- Digital Marketing: Leverage advancements in digital marketing techniques, such as SEO, social media campaigns, and data analytics, to reach and engage your target audience effectively.
4. Competitor Profiling Framework
Competitor profiling involves creating detailed profiles of your competitors to understand their strategies, strengths, weaknesses, and overall market positioning.
This framework helps online businesses to strategically position themselves and identify opportunities for differentiation. Here’s a comprehensive competitor profiling framework for online businesses:
Company Overview
- Basic Information: Gather key details about the competitor, including the company’s name, founding date, headquarters location, key executives, and overall size (number of employees, revenue).
- Mission and Vision: Understand their mission statement (what they aim to achieve) and vision (what they aspire to be in the future).
Product/Service Offering
- Product Range: List the products or services offered, including features and benefits.
- Pricing Strategy: Assess their pricing models, discount strategies, and perceived value.
- Unique Selling Propositions: Identify what makes their offerings unique.
Market Position
- Market Share: Estimate their market share relative to competitors.
- Target Audience: Define their primary customer segments.
- Geographic Reach: Determine the regions or countries they operate in.
Marketing Strategy
- Channels: Identify the marketing channels they use, such as social media, email, and content marketing.
- Campaigns: Analyse recent marketing campaigns and their effectiveness.
- Brand Messaging: Understand their brand message and positioning.
Sales And Distribution
- Sales Strategies: Evaluate their sales tactics, including direct sales, e-commerce, and partnerships.
- Distribution Channels: Identify their distribution methods and partners.
Customer Feedback
- Reviews and Ratings: Collect customer reviews and ratings from various platforms.
- Testimonials: Gather testimonials to understand customer satisfaction and loyalty.
5. Value Chain Analysis Framework
Value chain analysis helps businesses identify and analyse specific activities, like sourcing materials and inventory management, through which firms can create value and gain a competitive advantage.
For online businesses, this involves examining all the steps required to deliver their products or services to the market. Here’s a detailed framework for conducting a value chain analysis for online businesses:
Inbound Logistics
- Sourcing: Evaluate how raw materials or products are sourced. This includes the relationship with suppliers and the efficiency of supply chain management.
- Inventory Management: Assess how inventory is managed, including warehousing, storage, and handling of materials or products before they are used or sold.
Operations
- Order Processing: Analyse how orders are processed from the moment a customer places an order to when it is ready for shipment.
- Product Development: If applicable, look at how products are developed or customised, including any manufacturing or assembly processes.
- Website and IT Infrastructure: Evaluate the technology and processes behind the website, including web hosting, software, and IT maintenance.
Outbound Logistics
- Packaging: Assess how products are packaged for delivery, ensuring they are secure and presentable.
- Shipping and Delivery: Evaluate the methods used for shipping products to customers, including logistics partners and delivery times.
- Order Tracking: Analyse how customers can track their orders and the efficiency of this system.
Marketing And Sales
- Digital Marketing: Look at online marketing strategies, including SEO, social media marketing, email campaigns, and paid advertising.
- Sales Channels: Evaluate the sales platforms used, such as the company’s website, mobile apps, and third-party marketplaces.
- Customer Engagement: Assess how the business engages with customers through digital channels, including promotions, content marketing, and customer reviews.
Service
- Customer Support: Evaluate customer service quality for each channel the business uses. It could be live chat, email, and phone support.
- After-Sales Service: Assess the support provided after a sale is made, including returns, refunds, and technical support.
- Customer Loyalty Programs: Look at initiatives designed to retain customers, such as loyalty programs, newsletters, and exclusive offers.
6. Blue Ocean Strategy Framework
The Blue Ocean Strategy is a different kind of framework as it focuses on creating new market spaces (“Blue Oceans”) rather than competing in existing markets (“Red Oceans”). There are generally four steps to this strategy:
Eliminate
- Industry Factors: Identify which factors the industry takes for granted that can be eliminated to reduce costs and complexity.
Reduce
- Over-Designed Products: Determine which factors should be reduced below the industry standard to create a simpler, cost-effective offering.
Raise
- Customer Pain Points: Identify which factors should be raised well above the industry standard to improve customer satisfaction and value.
Create
- New Value Propositions: Determine which new factors should be created that the industry has never offered to open up new market spaces and attract non-customers.
Conclusion About Competitor Analysis Framework For Online Business
Conducting a thorough competitor analysis is crucial for making informed decisions about the business, including marketing strategies, product development, and customer engagement.
Ultimately, an effective competitor analysis framework helps businesses stay ahead of the competition, adapt to market changes, and achieve sustainable growth.
At Best Marketing Agency, formerly known as Best SEO Marketing, we specialise in helping companies in Singapore boost their online presence. Our expert team provides comprehensive competitor analysis services to uncover critical insights and craft strategies tailored to your specific market.
We offer a suite of services, including on-page SEO, local SEO, content marketing, and social media marketing. Want to learn more about how we can help? Book a free 30-minute consultation today!
Frequently Asked Questions About Competitor Analysis Framework
How Often Should Businesses Conduct Competitor Analysis?
Businesses should conduct competitor analysis regularly to stay updated with market changes and evolving competitive dynamics. A quarterly or bi-annual review is generally recommended, but the frequency can vary depending on the industry and market volatility.
What Are The Tools Used For Competitor Analysis?
There are several tools available for competitor analysis, including Google Analytics, SEMrush, Ahrefs, Moz, and SimilarWeb. These tools help businesses track competitor activities and analyse website performance, keyword rankings, backlink profiles, and social media engagement.
What Are The Challenges Of Conducting Competitor Analysis?
Challenges of conducting competitor analysis include accessing accurate and up-to-date information, distinguishing between relevant and irrelevant data, and objectively evaluating competitors without bias.
Additionally, staying ahead in a rapidly changing market requires continuous monitoring and adaptation.
What Should I Do If I Discover A Competitor’s Successful Strategy?
If you discover a competitor’s successful strategy, analyse why it works and consider how you can adapt a similar approach to fit your business model. It’s important not to copy but to innovate and improve upon their strategy to provide added value to your customers.
