Competitor Analysis Framework Benefits from Market Strategy Approach

Competitor Analysis Framework Benefits from Market Strategy Approach

4 Steps to Reach Your Best Competitive Position

For many brands, assessing the competition with a competitor analysis framework is helpful to develop a winning strategy for an existing or new brand.

Step 1 of Market Strategy Approach to Competitor Analysis Framework: Understand the Goal

Clarifying the goal of the competitor analysis framework upfront will save a lot of time and avoid wasted resources.  Sometimes, the competitor analysis is the primary objective, perhaps to predict competitor’s likely actions and strategies, and perhaps to benchmark the brand’s own performance.  For example, a competitor analysis of leading cruise brands examined 17 different areas and used a Blue Ocean strategy framework approach.

In other situations, the competitor analysis is a part of the overall brand strategy development, but not the primary objective.  For example, in brand positioning development, it’s important to understand how the competitors are currently positioned. 

In one of the first brand positioning assignments I saw as a young market strategy consultant, this step was omitted. This led to the need to completely rework the brand positioning because the positioning that was initially recommended was already taken by a primary competitor.  Of course, consumers often are not following the competitive positioning landscape in great detail, and just because a competitor has done some amount of work in a positioning space does not mean they own it.  Still, I think most brand strategists would agree that duplicating a competitor’s positioning is something to avoid!

Competitor Analysis Framework Benefits from Market Strategy Approach

Step 2 of Market Strategy Approach to Competitor Analysis Framework: Select the Relevant Competitive Set

In Insight to Action’s experience, it’s typical for a leadership team to consider between three to 15 competitors to analyze.  To allow deeper study, we’d suggest honing the list down to no more than six.  One way to approach this is to group competitors into types. 

For instance, in the retail environment, one way to group the competitors might be

  1. examples of pure play eCommerce firms competing with
  2. hybrid bricks and mortar organizations

A competitor from each of these two groups might be selected. In the case of the hybrid, the choice might be to go a step further, by separating:

  • (2a) firms with large national retail footprints compared with
  • (2B) those who have only one or two retail outlets    

Another example may be to select competitors that have different levels of brand awareness, price points or consumer targets.   Consider how different outdoor brands approach positioning strategy.  Patagonia, for instance, is a $1 billion+ brand that targets “people who respect the outdoors as much as they love it.”   Arc’teryx is a smaller brand with estimated revenues of $206 million that targets “mountain enthusiasts, especially climbers, hikers and skiers.”  L.L. Bean is a $1.6 billion+ brand that targets “Outdoor Family Enthusiasts.”  Each of these competitors has a distinct target.    A niche brand that is more focused on performance athletes may find Arc’teryx a more helpful competitor than L.L. Bean.

Competitor Analysis Framework Benefits from Market Strategy Approach

Step 3 of Market Strategy Approach to Competitor Analysis Framework: Define the Focus of the Analysis

Because we focus primarily on market strategy, we typically start with understanding the brand’s target customer, their value proposition and benefits offered, their positioning and innovation strategy.  We will use a tool like the brand positioning framework, as shown in this Banana Boat positioning example.

Another typical tool is SWOT assessment (strengths, weaknesses, opportunities, threats) for the competitor overall.  This can be a good collaborative exercise for a leadership team. One approach is to break into a few smaller teams and for each team to tackle a competitor and perform the SWOT assessment.  The first-cut SWOT assessments can then be shared with the larger group and refined.  While I haven’t seen any breakthrough strategies come out of this process, developing a shared factbase as a team is important as a foundation to creating breakthrough strategies.

Completing the analysis requires data gathering.  Over the years, this has become much easier, with the Internet providing many basic facts with a quick search.    We recommend supplementing this type of desk research with customer interviews, expert interviews, secondary research studies, and other data sources. 

A new B2B data set that became available through propublica.org during COVID, for example, is the PPP loan amount, lender and date for any organization that took funds.  The amount of the loan gives the size of the payroll and also the number of employees, which is valuable information!

Competitor Analysis Framework Benefits from Market Strategy Approach

Step 4 of Market Strategy Approach to Competitor Analysis Framework: Summarize and Develop Implications

Competitor analysis that is focused on benchmarking may have some very obvious implications.  If the brand finds that its average order value or conversion rate lags key competitors, it will need to take actions to become more competitive.  

Another obvious implication is the common situation where an industry is consolidating, and competitors are acquiring other firms to gain scale and access to new customers.  In these situations, competition often intensifies and reduces profitability for some of the mid-sized players, implying that there may be a need to acquire or be acquired. 

For more examples of competitor analysis, visit our resources page.  Or join us at an upcoming office hours to share new approaches.

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