Businesses spend a great deal of money to understand market demographics, customer psychographics, including activities, interests, and opinions as well as market segments in order to properly position and efficiently manage their brands. For consumers, a company’s brand is equivalent to the company’s reputation and credibility, its culture, and even its legacy. Thus, a competitive analysis in conjunction with market positioning is a critical element in attracting the target market.
Companies use competitive analysis to collect and study data regarding their competitors (e.g. strengths and weaknesses, products) so that they can evaluate their market position, improve their products, and better their marketing strategies. Competitive analysis is an integral part of every businesses’ marketing plan. Through this, enterprises will be able to know the attributes that make their product or service one of a kind, thereby using this knowledge to engage and entice more consumers. The main objective of a competitive analysis is to understand the company’s competitors and to think like them so that when creating a strategy, it will be partly based on the competitor’s possible actions.
In the market, competitive products are products that function as the “other choice” that consumers can use as a substitute. Understanding this concept will help enterprises, especially start-ups, and new products in effectively penetrating the market and in ensuring that new products will be preferred over competitive products. Basically, there are three classifications of competitive products: direct competition, substitute products, and similar products.
Products or services that are classified under direct competitors are those that offer similar advantages and are focused on the same target markets. An example is Coca-Cola and Pepsi. On the other hand, substitute products are described as products that let consumers acquire the same benefits but through a different channel. An example is a smartphone and a telephone. There is also similar products which are products that have identical functions but are used in different situations. Examples are staples and nails.
Conducting a Competitive Analysis
Conducting a competitive analysis involves four steps: research, data gathering, data analysis, competitive analysis.
- Perform a research
Focus groups and questionnaires can give businesses valuable data about their competitors. Through this research, companies can identify their top competition and its marketing strategies, pricing structures, competitive advantage, and promotional strategies. It will also give insights on the competitor’s full range of product and service offerings and its market share, growth rate, and sales volume, among other things.
- Gather data
Auxiliary information from sources such as advertisements, sales brochures, newspaper and magazine articles, annual reports, and databases are suggested to be also utilized when creating a competitive analysis.
- Analyze Data
Data analysis will show the competitor’s product information, market share, and their strengths and weaknesses. It also involves identifying their market objectives and marketing strategies. Ideally, companies should observe their competitor’s actions over time.
- Competitive Analysis
In here, the business will identify the company’s market position, specify and talk about product areas that have the competitive advantage and disadvantage, give a rundown on the obstacles and opportunities the business will face or is facing, and consolidate all the analysis in order to create and enforce a marketing strategy that will bolster and intensify the company’s market position.
Market positioning is the manipulation of a brand in order to make a positive impression on the public. Its objective is to showcase the company’s product in the best way possible. Remember that a well-positioned business can defeat the competition that offers the same set of goods or services. In positioning the enterprises’ products or services, positioning themes to be developed must depend on the business’ capacity and abilities, consumers’ needs, and knowledge of markets. Common causes of failures in positioning strategies include not being able to fully understand the target market; pointless and trivial positioning; and differentiation that is imperceptible and does not add value.
Market positioning is a competitive strategy. If you don’t differentiate your brand, your competitor will use it against you. The product’s market position depends on how differentiated it is. In positioning your brand, there are elements businesses need to consider. These are pricing, quality, service, distribution, and packaging.
Pricing refers to the nature of the product’s competitive price. Is it a luxury or relatively cheap?
● Quality pertains to how well-produced the product is. It also takes into account the product’s quality control and quality claims.
● Service addresses the customer value, service, and support.
● Distribution relates the channel by which the product is received by the consumers.
● Packaging involves not only the overall outer packaging element but also the brand messaging and brand delivery.
Generally, positioning strategies are utilized as a marketing tool in order to engage and interact with customers in a teeming marketplace. To do so, companies have to exploit ways on how to make a distinction between their competitors and demonstrate a cause why customers should choose their product. Services and/or products can be positioned according to its advantages, uses or applications, target consumers, price, or quality.
Here is a list of commonly used positioning strategies:
● Against a Competitor or Away from Them – In against a competitor, the product is positioned directly against the competing brand by asserting superiority. On the other hand, away from the competitor positions the product opposite the competitor in order to acquire brand recognition in a market teeming with big competitors.
● Product Attributes and Product Categories – Using the product’s best feature or comparing it with other brands to establish a differentiation are encompassed in this strategy.
● Usage Occasions and Users – Usage occasions put an emphasis on the frequency and the manner by which the product will be used while users strategy focuses on a specific characteristic of a consumer and use it to position the product.