Purpose of Competitor Analysis

Competitor analysis refers to the process of systematically collecting, sorting, analyzing and evaluating competitors' products, services, prices, channels, marketing, finance, technology, innovation, culture, etc. The purpose of competitor analysis is:

Understand the strengths and weaknesses of competitors and assess their competitive position and potential;

Identify competitors' strategies and trends, predict competitors' future actions and possible reactions;

Identify competitors' weaknesses and loopholes, and look for competitors' strategic gaps and opportunities;

Learn from the successful experience and lessons of competitors, learn from the excellent practices and innovative ideas of competitors;

Develop differentiated and advantageous competitive strategies to improve their competitiveness and market share.

Steps for competitor analysis

The steps of competitor analysis generally include the following four stages:

Identifying competitors: screening out direct and indirect competitors based on criteria such as product or service similarity, market overlap, and customer substitutability, and determining the scope and object of analysis;

Collect information: use various channels and methods, such as network, media, reports, surveys, interviews, observations, etc., to collect relevant information about competitors, such as basic information, product characteristics, price strategies, channel layout, marketing activities, financial status, Technical level, innovation ability, corporate culture, etc;

Analysis and evaluation: use various tools and models, such as SWOT analysis, Porter's five forces model, value chain analysis, core competitiveness analysis, etc., to organize, summarize, compare and evaluate competitors' information, find out competitors' strengths and weaknesses, analyze competitors' strategies and trends, and evaluate competitors' threats and opportunities;

Formulate strategies: According to the results of competitor analysis, combined with its own resources and capabilities, formulate suitable competitive strategies, such as cost leadership strategies, differentiation strategies, focusing strategies, etc., and corresponding action plans, such as product development, price adjustment, Channel expansion, marketing innovation, etc., to achieve competitive advantage and market goals.

Tools for competitor analysis

There are many tools for competitor analysis, and here are two commonly used tools: SWOT analysis and Porter's Five Forces model.

SWOT analysis: SWOT analysis is a tool to assess internal strengths (Strengths) and weaknesses (Weaknesses), as well as external opportunities (Opportunities) and threats (Threats). SWOT analysis can help enterprises identify their core competitiveness, find the external competitive environment, and make reasonable strategic choices. The general steps of SWOT analysis are as follows:

List their own strengths and weaknesses, such as product quality, technical level, brand image, cost control, customer satisfaction, etc;

List external opportunities and threats, such as market demand, policies and regulations, competitors, social changes, technological progress, etc;

Analyze the matching degree between advantages and opportunities, and determine the opportunities that can be used, such as developing new products, expanding new markets, increasing market share, etc;

Analyze the match between weaknesses and threats, and determine the threats that need to be avoided, such as reducing costs, improving efficiency, and improving services;

Analyze the relationship between strengths and threats, and identify threats that can be resisted, such as enhancing brand, increasing innovation, and strengthening cooperation;

Analyze the relationship between weaknesses and opportunities and identify weaknesses that can be improved, such as training employees, introducing technology, and optimizing processes.

Porter's Five Forces Model: Porter's Five Forces Model is a tool for analyzing the structure and intensity of competition in an industry, proposed by Michael Porter, a professor at Harvard University in the United States. Porter's five forces model believes that the five main forces that affect industry competition are: competitors in the industry (Rivalry among existing competitors), potential entrants (Threat of new entrants), substitutes or services (Threat of substitute products or services), suppliers (Bargaining power of suppliers) and buyers (Bargaining power of buyers). The general steps of the Porter's Five Forces model are as follows:

Analyze competitors in the industry, examine the number, size, strength, strategy, dynamics, etc. of competitors, and assess the intensity and impact of competition among competitors;

Analyze potential entrants, examine the barriers and attractiveness of entering the industry, such as capital requirements, technical barriers, policies and regulations, brand loyalty, etc., and evaluate the threat and impact of potential entrants on industry competition;

Analyze substitutes or services, examine the price, performance, quality, availability, etc. of substitutes or services, and assess the threat and impact of substitutes or services on industry competition;

Analyze suppliers, examine the number of suppliers, concentration, differentiation, substitution costs, steering costs, etc., and assess the bargaining power and impact of suppliers on industry competition;

Analyze the buyer, examine the buyer's quantity, concentration, differentiation, price sensitivity, turning cost, etc., and evaluate the buyer's bargaining power and influence on industry competition;

Formulate strategies: According to the results of Porter's five forces model, analyze the competitive structure and intensity of the industry, determine the attractiveness and profitability of the industry, and choose the competitive positioning and competitive methods suitable for itself, such as cost leadership, differentiation, focus, etc. And corresponding action plans, such as reducing supply costs, improving product quality, increasing service value, etc., to achieve competitive advantage and market goals.

Case for competitor analysis

There are many cases of competitor analysis, here to Shangpu consulting company as an example, shows how to grasp the development trend of enterprises through competitor analysis, improve the competitiveness and market share of enterprises.

Shangpu Consulting Company is a company specializing in consulting services in the fields of corporate strategy, organization, operation, market, and technology. Founded in 2020, it is headquartered in Beijing and has about 200 employees. The customers it has served include well-known domestic and foreign Companies such as Huawei, Alibaba, Tencent, Baidu, Jingdong, Apple, Google, Amazon, etc.

The competitor analysis of Champu Consulting is as follows:

Identify competitors: There are three main types of direct competitors of Shangpu Consulting: First, internationally renowned consulting companies, such as McKinsey, Boston, Bain, etc. These companies have deep accumulation and extensive influence in the consulting field, but they are also Faced with problems such as high costs, lack of localization, and difficulty in expanding the SME market; the second is domestic mature consulting companies, such as China, China Intelligence, Zhilian, etc, these companies have strong competitiveness and brand recognition in the domestic market, but they also face problems such as unstable service quality, insufficient innovation capabilities, and difficulty in cross-border services; third, emerging domestic consulting companies, such as Bona and Yi Si, Huisi, etc., these companies have novel concepts and flexible models in the consulting field, but they also face problems such as small scale, insufficient experience, and limited resources. There are two main types of indirect competitors of Shangpu Consulting: one is companies that provide other types of consulting services, such as accounting, law, human resources, etc. These companies have professional advantages and customer bases in their respective fields, but they also face problems such as narrow service scope and difficulty in forming overall solutions; the second is companies that provide other forms of corporate services, such as training, software, data, etc., these companies have innovative technologies and products in their respective fields, but they also face problems such as difficult to quantify service effects and difficult to form long-term cooperation.

Information collection: Shangpu Consulting Company collects relevant information of competitors through various channels and methods, such as official website, social media, industry reports, customer evaluations, media reports, market research, industry activities, business intelligence, etc., covering the basic situation of competitors, product characteristics, price strategy, channel layout, marketing activities, financial status, technical level, innovation ability, corporate culture, etc.

Analysis and evaluation: Champ Consulting used SWOT analysis and Porter's five-force model to organize, summarize, compare and evaluate competitors' information, identify competitors' strengths and weaknesses, analyze competitors' strategies and trends, and assess competitors' threats and opportunities. The specific analysis results are as follows:

SWOT Analysis:

Advantages of competitors: the advantages of internationally renowned consulting companies lie in their brand influence, professional level, global network, high-end customers, etc.; the advantages of domestic mature consulting companies lie in their market share, localized services, medium and large customers, etc.; the advantages of domestic emerging consulting companies lie in their innovative ideas, flexible models, small and medium-sized customers, etc; the advantages of companies that provide other types of consulting services lie in the advantages of their professional fields and customer base, etc.; the advantages of companies that provide other forms of enterprise services lie in their innovative technologies and products, etc.

Competitors' disadvantages: the disadvantages of internationally renowned consulting companies lie in their high costs, lack of localization, and difficulty in expanding the SME market; the disadvantages of domestic mature consulting companies lie in their unstable service quality, insufficient innovation capabilities, and difficulty in cross-border services; the disadvantages of domestic emerging consulting companies lie in their small scale, lack of experience, and limited resources; the disadvantage of companies that provide other types of consulting services is that their service scope is narrow, it is difficult to form an overall solution, etc., and the disadvantage of companies that provide other forms of enterprise services is that the effect of their services is difficult to quantify, it is difficult to form long-term cooperation, etc.

Competitor opportunities: Competitor opportunities mainly come from market growth, customer needs, policy support, and technological advances. For example, with the development and transformation of China's economy, the demand for consulting services by enterprises is increasing, especially in the fields of strategy, organization, operation, market, technology and so on, which need professional guidance and help; with the diversification and personalization of customers, enterprises need to provide more customized and differentiated consulting services to meet the different needs and expectations of customers; with the encouragement and support of policies, enterprises can enjoy more concessions and subsidies to reduce the cost and risk of consulting services; with the development and innovation of technology, enterprises can use more tools and platforms to improve the efficiency and quality of consulting services.

The threat of competitors: the threat of competitors mainly comes from the intensification of competition, customer changes, policy restrictions, technology substitution and so on. For example, with the development and expansion of the consulting industry, the number and strength of competitors are increasing, the intensity of competition is increasing, the ways and means of competition are changing, and the results and influence of competition are changing; with the improvement of customers' knowledge and experience, customers' requirements and standards for consulting services are increasing, customers' loyalty and satisfaction are decreasing, and customers' conversion and loss are increasing; with the change and adjustment of policies, enterprises may face more restrictions and constraints, such as industry access, market supervision, tax collection, etc., affecting the feasibility and legitimacy of consulting services; with the renewal and substitution of technology, enterprises may face more competition and challenges, such as artificial intelligence, big data, cloud computing, etc., affecting the advantages and value of consulting services.

-Porter's Five Forces Model:

Competitors in the industry: There are many competitors in the consulting industry, high competition intensity, diverse competition methods, uncertain competition results, and competitors have a greater impact on industry competition. Shangpu consulting companies need to compete effectively with different types of competitors, such as competing with internationally renowned consulting companies for brand and specialty, competing with domestic mature consulting companies for market and local, competing with domestic emerging consulting companies for innovation and flexibility, and competing with companies providing other types or forms of enterprise services for difference and value.

Potential entrants: The consulting industry has lower barriers to entry, higher entry attractiveness, more potential entrants, and a greater threat to industry competition from potential entrants. Shangpu Consulting needs to guard against the influence of potential entrants, such as improving its own brand awareness and loyalty, increasing its own professional level and service quality, reducing its own costs and risks, expanding its own market and customers, and forming its own core Competitiveness and differentiation advantages.

Substitutes or services: there are more substitutes or services in the consulting industry, the threat of substitutes or services is greater, and the impact of substitutes or services on industry competition is greater. Shangpu Consulting needs to meet the challenges of alternatives or services, such as understanding the real needs and expectations of customers, providing more customized and differentiated consulting services, improving the effectiveness and value of consulting services, increasing the added value and continuity of consulting services, and establishing long-term cooperation and trust with customers.

Suppliers: There are fewer suppliers in the consulting industry, suppliers have weaker bargaining power, and suppliers have less influence on industry competition. Shangpu Consulting needs to use the resources and capabilities of suppliers, such as selecting suitable suppliers, such as talents, technology, data, etc., to establish good supplier relationships, reduce supply costs, improve supply quality, optimize supply processes, and improve supply efficiency.

Buyer: There are more buyers in the consulting industry, the buyer's bargaining power is strong, and the buyer has a greater influence on the competition in the industry. Shangpu Consulting needs to meet the needs and expectations of the buyer, such as understanding the buyer's characteristics and preferences, such as industry, scale, region, culture, etc., and formulating appropriate pricing strategies, such as fixed fees, charging by effect, charging by time, etc., Provide high-quality service experience, such as communication, delivery, feedback, etc., increase the buyer's satisfaction and loyalty, and expand the buyer's scale and scope.

Strategy development: Based on the results of the competitor analysis, Champ Consulting has developed the following competitive strategy and action plan:

Competitive strategy: Champ Consulting has chosen a differentiated and focused competitive strategy, that is, to provide consulting services that are different from competitors, have unique value, and can meet specific customer groups in the consulting field, in order to achieve competitive advantage and market goals. Specifically, Champ Consulting's differentiated and focused competitive strategy includes the following:

Field differentiation: Shangpu Consulting Company focuses on consulting services in the fields of corporate strategy, organization, operation, market, technology, etc., and does not involve other types of consulting services, such as accounting, law, human resources, etc., to avoid providing other types of Companies that provide consulting services compete while improving their professional level and service quality in these fields, to distinguish it from competition from firms offering the same type of consulting services;

Customer differentiation: Shangpu Consulting Company aims at middle and high-end, transnational, innovative and potential enterprise customers, not low-end, local, traditional and non-potential enterprise customers, so as to avoid competition with consulting companies for different customer groups, and at the same time provide more customized and differentiated consulting services to meet the different needs and expectations of these customer groups;

Service differentiation: Shangpu Consulting Company provides all-round, integrated and continuous consulting services, and does not provide single, scattered and short-term consulting services to avoid competition with companies that provide other forms of corporate services. At the same time, improve the effect and value of consulting services to increase the added value and continuity of consulting services;

Innovation differentiation: Shangpu Consulting Company continues to innovate consulting concepts, consulting methods, consulting tools, consulting platforms, etc., and does not stop at traditional, regular, and modular consulting methods to avoid competition with consulting companies that lack innovative capabilities. At the same time, improve the level and quality of consulting services to win the leading position and advantage of consulting services.

Action Plan: Champ Consulting has developed the following action plan based on the competitive strategy:

Brand building: Shangpu Consulting Company publicizes and promotes its own brand image, brand concept and brand advantages through various channels and methods, such as official website, social media, industry reports, customer evaluation, media reports, market research, industry activities, business intelligence, etc., so as to improve its brand awareness and loyalty, and enhance its brand influence and competitiveness;

Professional promotion: Shangpu Consulting Company improves its professional level and service quality in the fields of corporate strategy, organization, operation, market, technology, etc. through continuous learning and research, such as participating in training, reading books, writing articles, participating in projects, etc. Enhance your own professional image and professional reputation, and increase your own professional advantages and professional value;

Market expansion: through various channels and methods, such as network, media, report, survey, interview, observation, etc., Shangpu consulting company understands and analyzes the market demand and changes, such as industry, scale, region, culture, etc., and formulates and implements appropriate market strategies, such as market positioning, market segmentation, market selection, market entry, etc, expand and develop mid-to-high-end, multinational, innovative and potential corporate customers, expand and maintain their market share and market position;

Service innovation: through continuous innovation and improvement, such as the introduction of new consulting concepts, consulting methods, consulting tools, consulting platforms, etc., Shangpu Consulting Company provides comprehensive, integrated and continuous consulting services to meet the different needs and expectations of customers, improve the effect and value of consulting services, increase the added value and continuity of consulting services, and establish long-term cooperation and trust with customers.