A competitor SWOT analysis is a decision-making tool which helps brands to develop a simple marketing strategy. This tool aims to help businesses create a better overview of a competitor’s business situation. From the results of the analysis, brands can gain many opportunities to stay ahead of trends. In this article, brands can learn the importance of completing a competitor SWOT analysis.
What exactly is a Competitor SWOT Analysis?
Competitor SWOT analysis is a framework developed by a group of marketing experts, therefore making it one of the most reliable tools that a brand can use to put together a corporate strategy. This is a tried and tested method which allows brands to get a better understanding of a competitor. SWOT represents Strengths, Weaknesses, Opportunities and Threats.
How to Determine Strengths and Weaknesses
These are internal factors relating to a brand’s organisation or specific project.
- List the major strengths of your competitors and how these give them an advantage. What is the competitor’s company doing, right?
Simply put, these are the marketing strengths which make a competing organisation attractive to the target audience. Place products and services side by side to see what a competing company is offering. From this point, try to find a comparative advantage. A brand should be the same – or even going beyond – tactics as the competitor. After reviewing their strengths, businesses need to think about their own unique selling proposition (USP) to make their company distinguishable from others.
- Define areas in which competitors may lack or are at a disadvantage. What are the competitive brands doing wrong?
Brands can learn a lot by simply listing down everything that the competition is doing wrong. Avoid factors such as negative reviews and customer complaints. Brands must note weaknesses which may be harmful to the market. Avoid these mistakes or use them to the brand’s advantage.
Ways of Identifying Opportunities and Threats
These are external factors which depend on the environment of the organisation or project.
- Pull together the collated information in order to consider aspects that the brand can exploit to create an advantage.
Opportunities are factors which may interest an organisation, therefore they offer a possibility for the business to prosper. External influences are extraneous variables reaching beyond a brand’s control. These affect a competitive company’s marketing strategy. Decision makers should be vigilant and make quick choices when dealing with any potential opportunity.
For example, look at how competitors prepare for special occasions such as Christmas and New Year. How do they prepare to meet increasing demands and improve market position during these busy seasons? How can your brand copy these strategies and implement them?
- Understand issues which could cause trouble for the business.
Stay ahead by planning how best to eliminate or counter these. The aim of identifying threats is to address the problem before it happens or becomes a serious issue.
Plot a typical SWOT analysis using a chart or quadrant map. To create a SWOT analysis, brands simply need to put together a grid which comprises four elements. Fill the grid in with data, which will therefore allow brands to learn more about where they are versus the competition.
How to perform a SWOT analysis of the competition
To do a competitor SWOT analysis, brands need to consider the following questions for each element:
- What factors show that the competitor does really well?
- What are the areas that a competitor is notable for?
- Which factors attract customers to competitors?
- Why do customers ultimately end up purchasing from the competition?
- Do the competitors’ customers regularly complain, and if so, what about?
- What issues did the customers experience when they “shopped” with the competitors?
- What products or services should the competitors have offered but didn’t?
- Are your competitors doing anything which presents an opportunity for your small business?
- Have they stopped carrying any products?
- Have they changed any of their services?
- Is the competitor doing anything that could be a threat to your brand, and if so, how can you combat it?
- Are they offering new products or services?
- Have they lowered their prices recently?
- Are they moving to a new location closer to your brand (for bricks and mortar stores)?
Evaluating the competition means being committed to finding out who they are and what they do. It is crucial to focus on direct competitors as they are the businesses which operate within the same geographic area and offer similar products to the same consumers. Once brands have a list of who the direct competition is, they can consider looking at their sales process, the products or services that they offer and their marketing tactics.
When assessing a competitor’s product or service, look at their entire line and compare it to what your brand is currently offering. Pay attention to their ideal customers, how they generate sales and how much market share they hold.
Going beyond the basic competitor SWOT analysis
If brands simply stop at gathering data, they may miss out on crucial actionable insights. To take competitor SWOT to the next level, brands should use some elements which will help to uncover additional opportunities.
For example, crossing Strength with Opportunities will help to reveal unmet needs, which can be a rich source of new customers.
What are the key uses of a competitor SWOT Analysis?
Building strategic plans
Firstly, a SWOT analysis is the best tool to help in brainstorming and strategic planning. A brand will get more value from a competitor’s SWOT when conducted with specific goals in mind. Some of these goals may be:
- Gain new opportunities.
- Respond to new trends and changes.
- Implementation of new strategy and tools.
Conducting a SWOT analysis of the competition will help brands to identify where mistakes happen. Brands can either avoid these mistakes or build their marketing strategy to take advantage of where the competition is failing.
A SWOT analysis of your competitors will help you identify areas to focus on in your own SEO efforts. By understanding where your competitors are strong and where they are weak, you can create a more effective SEO strategy that will help you achieve quick wins.
Using SWOT analysis to identify top keywords
A SWOT analysis matrix can also help identify the best keywords to use for ranking, therefore brands can input high-ranking keywords into the Strengths field, and those that have poor ranking in the Weakness field. Place keywords with a good search volume but low competition in the Opportunities field.
This technique can give brands four sets of keywords which have differing values, liabilities and strategic value for the company. It helps the brand to choose the best keywords and, ultimately, helps the company rank higher.
Using a competitor SWOT analysis to develop a marketing strategy
A key part of creating a marketing strategy plan is to conduct a competitive SWOT analysis, therefore SWOT is a comprehensive and quick guide to determine the marketing efforts of a competing company.
As a strategic tool, SWOT analysis contributes to a business by preparing the framework of an effective marketing strategy. Focusing on promotions and what weaknesses to avoid are some of the most valuable assets for improving sales.
Identifying strengths can help brands attract new customers. Likewise, early identification of weaknesses and potential threats allows brands to avoid the same issues happening within their own business.