Competitor Analysis Matrix – What Are The Process Involved

Competitive analysis is a compulsory step for any company wishing to build a market study, carry out a business plan or adopt a new marketing strategy. How to clearly identify your competitors? What data is essential to collect? And what steps should be taken to carry out this study?

Competitive analysis is a study of the situation of a company (existing or in the process of being created), in its market environment to know the intensity of competition. It is an important component of market research and strategic analysis of an organization. It makes it possible to establish a map of the players present on the targeted market and to diagnose their strengths and weaknesses in order to adopt a differentiating positioning and strategy.

Competitive analysis also makes it possible to verify the viability of a project . Indeed, this study can reveal a saturation of the market by the competition with an overflow of offers compared to the demand or the presence of a giant monopolizing the market in question. In these two cases, it seems difficult to impose itself on the market even with relevant tools and a well-established marketing strategy.

It is therefore essential to conduct a competitive analysis before launching a new offer. To carry out this study in the best conditions, it is advisable to establish an analysis plan and to divide the process into 4 key stages:

  1. Establish the framework of the study: clarify the objectives and know what information to collect
  2. Identify competitors and collect study data
  3. Analyze the information collected
  4. Interpret the results and establish a coherent strategy

Competitor Analysis Matrix

Step 1: Clarify the objectives and establish a study framework

Before embarking on the actual competitive analysis , it is essential to define the research framework by first clarifying the objective . Even if the objective of a competitive analysis may differ depending on the size of the company, its age or even its sector of activity, its purpose is almost always the same: to gain market share. By going a little deeper, it is possible to focus the lens on a particular point:

  • Check the viability and sustainability of a project (business creation, launch of a new offer)
  • Identify an opportunity (niche market, new trend)
  • Adopt a distinctive positioning (quality, image, price)
  • Refine or redesign a marketing or communication strategy (means, graphic charter, messages)

After having defined the objective more clearly, it is time to identify the main competitors and their degree of competition in relation to the company’s product or service.

Step 2: Identify competitors and collect data

Before listing your competitors, it is essential to understand that there are different degrees of competition: direct, indirect and potential.

Direct Competition: The direct competitors are the entities that provide the same offer. In general, these are the ones that come to mind first when thinking about the competition. Direct competition is all the stronger when the competitor is located in the same geographic sector.

For example, for a pet store, another pet store will be a direct competitor.

Indirect Competition: The indirect competitors are companies that meet the same demand but not the same way. Indirect competitors should be watched closely because they can quite decide to strengthen their competing offer and thereby gain more market share. For a pet store, a supermarket is an indirect competitor because it is possible to find equivalent products in this type of sign.

Potential Competition: The potential competition is more hypothetical. It brings together potential new entrants, whether from diversifying companies or from new competing companies. In the case of pet stores, it can be the arrival of a new online pet store or a botanical store that is diversifying its offer.

Having integrated these three types of competition, the company can now list its competitors. It is recommended to build a table which will gather a certain amount of information on the companies studied: identity, creation date, size, price range, positioning, media and non-media means … It is of course necessary to prioritize all of these competitors and do not mix direct, indirect and potential competitors.

Build a list of Competitors

The team mobilized on the competitive analysis can already establish a list of the obvious competitors who make up the environment of the company. There are bound to be names that come to mind immediately. It will be necessary to complete this information by using tools and carrying out research, in particular on to obtain the factual data (date of creation, size, level of turnover, etc.).

The Internet is a very useful source for gathering information about its competitors . Just by typing in a few keywords that match the company’s offer on search engines like Google, Bing … a number of competing websites will appear. Determining the keywords that reflect the offer of a company is also a step not to be overlooked.

Today, many companies are present on social networks. These social media are a gold mine of information. They say a lot about the image, positioning, marketing strategy and customer satisfaction of a company.

It is also possible to use paid means such as professional databases or the purchase of market research by sector of activity.

Finally, to prioritize the competition, it may be useful to carry out surveys using a panel of consumers .

The brand awareness survey is a good idea for a competitive market study. The consumer is invited to spontaneously list the brands that come to mind on a given theme (for example: pet store). The first answer is called Top of mind, the one that comes to mind immediately. The rest of the consumer’s responses are no less important. This type of survey can bring out very valuable data that may not be available from research. It must be borne in mind that it is the consumers who constitute demand and therefore who govern the market. The notoriety survey is essential to properly monitor your brand image .

Points to Analyze

To comprehensively analyze the offer of competition , we must look at the three main aspects that make it up:

  • Products: a certain number of attributes which define the product or service are to be studied like the price, the range of products, the quality, the distinctive characteristics. This information can be easily found by doing some research on the Internet.
  • Sale: any product or service goes through sales channels that must be decrypted: points of contact with consumers, recurring promotions, the existence of a physical or web sales force… To obtain these data, the company can for example consult the annual reports of its competitors.
  • Marketing: competitors’ sales strategy can be analyzed via social networks (social ranking), websites, television commercials. These data will be rather subjective and focused on the perception of a brand by its customers.

Step 3: Data analysis

Once the data has been collected and classified, it is time to analyze it. This step is also called competitive benchmark . A competitive benchmark is a study that results from the observation and analysis of competitors’ practices.

There are several tools that help achieve this benchmark. Each tool brings out different information. It is therefore necessary to refer to the objectives set at the start to choose the most relevant method:

  • Competitive mapping: this is a graph made up of two axes. Each axis reflects a variable chosen according to the objective of the analysis. The goal for the company that performs the analysis is to identify a market segment that differentiates it from other companies.
  • SWOT analysis: this matrix is ​​made up of 4 boxes which allow a complete diagnosis of the market to be established: strengths, weaknesses, opportunities, threats. The SWOT matrix provides a global overview of the situation of the company in its market environment.
  • The BCG method: this matrix makes it possible to classify competitors into 4 categories according to the degree of maturity of their offer on the market.
  • The competitive analysis grid: this grid allows you to note the strengths and weaknesses of each competitor in order to compare them and deduce an analysis.

It is quite possible to combine several of these tools to obtain a more exhaustive analysis.

Step 4: Interpret the results of the competitive analysis

The results of the competitive analysis should be used to identify the best place the company can occupy in the market and what opportunities it can seize. This study also highlights key success factors. Depending on the results, the company will establish a specific and relevant marketing plan. Competitive analysis and the resulting strategy are obviously to be integrated into the company’s business plan and into the overall market study.

While the competitive benchmark is done in one-shot, it is important to keep in mind that the competitive analysis is conducted over the long term . It is important to carry out regular competitive intelligence to keep abreast of changes in competition within the market and adapt its strategy to always be efficient.