4 Important Components of a Competitor Analysis Framework
Contents
This piece is a component of our resource center for competition analysis.
Business executives have spent many hours being guided through the CI process by Cipher’s competitive intelligence experts.
Once the necessary competitor data has been gathered, it’s time to undertake the competition analysis from which your organizational plans will be derived.
We want to provide you with a thorough grasp of how this can be done because CI’s main function is competition analysis.
What is a framework for competition analysis?
You can compare your company to its competitors using a repeatable process called a competitor analysis framework.
Ad hoc actions have dangers that are offset by a framework, which also produces a repeatable system with predictable outcomes.
A strong competitor analysis framework will also lessen the chance of overlooking important concepts or tasks.
A strong framework for competition analysis should include the following four elements:
- Five Forces in Porter
- Business Models Using SWOT Analysis
- Mapping the Customer Journey
Learn more about the four traditional fundamental elements that any competitor analysis should take into account
Five Forces in Porter
Michael Porter, a professor at
4 Important Components to a Competitor Analysis Framework, outlined five competitive forces that affect a company’s profitability in 1979.
They are all directly related to assessing a company’s market competitiveness.
The factors themselves apply to any industry, wherever in the world, even though the data you want and your success indicators will be particular to your situation.
The forces include:
Rivalry in the marketplace: How many competitors does your company have, and how do their products and services stack up against yours?
Supplier power includes finding possible suppliers, determining how distinctive a product or service is, and assessing cost-effective alternatives.
Buyer Power: Can consumers influence or lower prices?
Cost per customer, the total number of customers, average purchase, and buyer power.
The threat of Substitution: Are your competitors easily accessible to customers?
How readily available are substitutes?
The threat of New Entry: Knowing how simple it is for new players to enter your market and what could or might not happen when they do is crucial for CI data.
Each of these five forces affects competitor analysis, as you can see.
Finding your relevant data, collecting it, and performing analysis on it are crucial steps in determining how you choose to approach the market.
SWOT evaluation
Many departments do SWOT analyses, which are frequently employed while making important business choices.
SWOT analysis, when used in competitive intelligence efforts, can be internal (looking at your own company) or external (looking at other companies) (conducted on competitors).
You will employ the same four components in both cases; a SWOT analysis evaluates:
- Strengths: What does the business excel at?
What advantages exist compared to rivals?
Every resource, including people, assets, and more4 Important Components to a Competitor Analysis Framework - What are the company’s weaknesses, exactly?
- What do they lack, and where do they fall short or outperform in the market?
- What are the resource limitations?
- Opportunities: Where should growth take place?
Where are there opportunities for expansion due to a need, platform, or lack?
- Threats: Which new rivals or dangers are entering the market?
Changes to rules, legislation, or standards are there?
What poses a risk to the company?
Since the 1960s, the SWOT analysis has been the benchmark for corporate consulting.
It can produce exceptional insights into how you can more effectively compete against your competitors when incorporated into your competitor analysis strategy.
Commercial Models
Three of the most crucial strategic actions you’ll engage in are mapping business models (we like the business model canvas), building new business models, and managing business models.
Using tools like Strategyzer, a large portion of this has been digitalized.
Modeling using CI data can assist in this visualization process, which considers rivals while outlining a key revenue-boosting plan.
Traditional business models come in a variety of forms, and they differ greatly depending on the industry.
The four sorts of business models for commerce enterprises, for example, are B2B, B2C, C2B, and C2C.
Pricing and expenses, both of which are an element of competition research, are the foundation of all business models.
Your corporate strategy will be influenced by a critical piece of information about how similar goods or services are priced in the market.
Business models frequently go through testing cycles and have a larger range of applications than CI.
When employed more broadly, however, what executives know about rivals forms the basis of a successful corporate strategy.
Customer Journey Mapping In today’s highly digitized and competitive world, customer-centricity is emerging as one of the most crucial projects for the majority of businesses.
Buyers now have more selections and better information than ever thanks to the internet.
Your bottom line will directly be impacted by how you handle your consumers.
Any brand’s purchasing process should be carefully considered.
The harm that a bad customer experience will cause to your organization is well documented in the era of cell phone cameras.
Positive customer experiences can help you stand out from the competition and are frequently the catalyst for something “going viral.”
Mapping exercises are used to keep track of every step of the journey.
When layers and different circumstances are identified, journey mapping can get fairly complex.
I advise starting with these four fundamental tasks:
Determine the steps a client takes
Awareness, consideration, acquisition, service, and loyalty are some examples.
On a customer journey, stages form the top layer from which all other aspects are categorized.
Determine the steps a consumer takes at each stage of the buying process.
These statements can serve as examples: “wants to purchase our goods,” “finds the website,” “makes the purchase and checks out,” “receives the shipment,” “receives a delivery confirmation email,” “gets rating request,” and “posts review.”
These are the steps that the client takes.
Find the touch points.
There will be different touchpoints—interactions between the buyer and seller—during each stage and step.
For instance, building new website pages or placing ads; a buyer requesting a demo; managing orders; asking for comments; etc.
Assign departments touchpoints.
The last step is to designate the group or team that is most qualified to help the customer at each touchpoint with responsibility for that touchpoint.
It will be simpler to create assignments if you were more detailed in the preceding exercises.
There are various ways to visually represent this, and doing so can be an interesting and sharing approach to explain to everyone in every department what a client can and should go through as they transition from prospects to buyers.
To better understand why potential consumers would choose your competitors over you, try to grasp their customer journey
The definition of a market, understanding how you stack up against the competition, and fostering positive, recurring customer experiences are all essential components of competitor analysis.
The messaging surrounding the product or service itself is the final crucial component of a competition analysis approach.
How you sell is as important as what you sell and how much it costs.
Analyzing competitors cannot be done without considering marketing.
Value propositions explain what makes your product or service unique and why a customer should work with you.
A value proposition is a clear explanation of how and why your product is better than competing products and how it will benefit the customer more.
A value proposition that is well-written will:
- List all the advantages your product or good gives.
- Describe the value these features will have for your customer.
- Describe the issue or suffering your buyer is having.
- Link the value of your product to the resolution of the issue
- Promote your product as the go-to option.
It is not sufficient to simply have a clear value proposition; you also need to know how yours compares to that of your competitors.
This crucial exercise will yield enormous benefits.
To perform this particular task, we prefer to use the value proposition designer.
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