Definition and significance of competitor analysis

Competitor analysis is a market research method that refers to the systematic identification, collection, analysis and evaluation of competitors in the competitive environment to understand their strengths, weaknesses, strategies, dynamics, threats and opportunities, so as to formulate effective competitive advantages and differentiation strategies. The purpose of competitor analysis is:

Understand competitors' products, services, prices, channels, promotions, brands, positioning, target markets, customer needs, satisfaction and loyalty to discover their own strengths and weaknesses, as well as competitors' strengths and weaknesses.

Understand the strategic intent, strategic objectives, strategic choices, strategic execution and strategic effectiveness of competitors to reveal their strategic logic, strategic models, strategic priorities and strategic changes.

Understand the dynamic changes of competitors, market behavior, competitive reactions, competitive means and competitive results, etc., in order to predict the future actions of competitors, competitive situation and competitive trends, as well as their own impact and threats.

Based on the results of competitor analysis, develop their own competitive strategies, competitive actions and competitive measures to improve their competitiveness, competitive advantage and market share, as well as to reduce competitive risks and competitive costs.

Steps and techniques for competitor analysis

Competitor analysis is a cyclical process that requires continuous collection, analysis, evaluation and updating of competitor information to adapt to market changes. Generally speaking, competitor analysis can be divided into the following eight steps and techniques:

Identify competitors

Competitors are other enterprises that provide the same or similar products or services in the same market or market segment, meet the same or similar customer needs, or affect their own interests and goals. Competitors can be divided into the following types:

Direct competitor: An enterprise that provides the same or very similar products or services in the same market segment, meets the same or very similar customer needs, or has a direct competitive relationship with itself. For example, Champ Consulting's direct competitors include other consulting agencies that provide services such as market research, investment consulting and IPO consulting, such as Analysys Consulting, Huasheng Consulting, and CIC Consulting.

Indirect competitor: An enterprise that provides different or slightly different products or services in different market segments, meets different or slightly different customer needs, or has an indirect competitive relationship with itself. For example, Champ Consulting's indirect competitors include other companies that provide data analysis, financial auditing, legal services, etc. related to or complementary to consulting services, such as Efonda, Deloitte, and King & Wood Mallesons.

Potential competitors: refers to enterprises that have not entered the same market or market segment at present, but have the ability, willingness and possibility to enter in the future and pose a threat to themselves. For example, potential competitors to Champ Consulting include other consulting agencies with the strength and resources, such as McKinsey, Bain, Boston, etc.

Alternative competitor: An enterprise that provides products or services in a different market or segment that can replace or meet the same or similar customer needs, or that affects the customer's purchasing decisions and behavior. For example, alternative competitors to Champ Consulting include other products or services that provide market information, investment advice and listing guidance, such as Baidu Index, Snowball, and Sina Finance.

There are several techniques for identifying competitors:

Through industry associations, chambers of commerce, exhibitions, forums, media and other industry channels, understand the development of the industry, market size, market share, market trends, market opportunities and other information, identify the main participants and leaders of the industry, and analyze whether they are their own competitors.

Through third-party channels such as customers, suppliers, distributors, partners, competitors, industry experts, etc., understand their views, evaluations, feedback and suggestions on themselves and competitors, and analyze whether they are their own competitors.

Through their own experience, judgment, intuition and creativity, speculate and imagine the possible existence or emergence of competitors, and analyze whether they are their own competitors.

After identifying the competitors, you need to classify and rank the competitors to determine the focus and priority of the analysis. A common approach is to divide competitors into four categories: leaders, challengers, followers and newcomers, based on their market share, growth rate, competitiveness and threat level, and adopt different analytical and coping strategies.

Collect competitor information

Collecting competitor information is the basis of competitor analysis, and it is necessary to obtain as much, complete, new and accurate competitor information as possible through a variety of channels, methods and tools, including the basic situation of competitors, products or services, market situation, financial situation, strategic situation, dynamic situation and other information.

There are several techniques for collecting competitor information:

Use public information sources, such as competitors' official websites, annual reports, prospectuses, press releases, advertisements, recruitment information, social media, customer reviews, etc., to obtain competitors' official information, such as the company's history, vision, mission, and values, Organizational structure, management team, product or service introduction, market positioning, brand image, partners, customer groups, performance data, development plans, etc.

Use non-public sources of information, such as competitors' insiders, customers, suppliers, distributors, partners, industry experts, consulting agencies, research institutions, government agencies, etc., to obtain unofficial information about competitors, such as corporate culture, atmosphere, values, strategic intentions, strategic goals, strategic choices, strategic implementation, strategic effects, advantages and disadvantages of products or services, prices, channels, promotions, brands, positioning, target markets, customer needs, satisfaction and Loyalty, market share, growth rate, profit margin, cost structure, risk factors, innovation capabilities, competitive response, competitive means, competitive results, etc.

Use your own information sources, such as your own insiders, customers, suppliers, distributors, partners, industry experts, consulting agencies, research institutions, government agencies, etc., to obtain your own information, such as your own strengths, weaknesses, strategies, Dynamics, threats and opportunities, etc., in order to compare and analyze with competitors' information.

After collecting competitor information, it is necessary to organize and summarize the competitor information for easy analysis and evaluation. A common approach is to use a competitor analysis matrix to classify and display competitor information according to different dimensions and metrics.

Analyze competitor strategy

Analyzing competitor strategy is the core of competitor analysis, which requires a variety of methods and tools to deeply understand the characteristics of competitor's strategic logic, strategic model, strategic priority and strategic change, so as to reveal the competitor's strategic intention, strategic goal, strategic choice, strategic implementation and strategic effect.

There are several techniques for analyzing competitor strategies:

Using SWOT analysis, analyze the strengths, weaknesses, opportunities and threats of competitors to understand their internal conditions and external environment, as well as their strategic choices and coping strategies.

Using Porter's five forces model, analyze the degree of competition, profitability, attractiveness and development potential of the industry in which competitors are located to understand the competitive advantages and disadvantages of competitors, as well as the competitive pressures and opportunities of competitors.

Using value chain analysis, analyze the main business activities and support activities of competitors to understand the value creation process and value delivery methods of competitors, as well as the cost structure and profit sources of competitors.

Using VRIO analysis, analyze the resources and capabilities of competitors to understand the value, scarcity, difficulty in replication and organization of competitors, as well as the core competitiveness and sustainable competitive advantage of competitors.

Using strategic group analysis, analyze the strategic group of competitors, that is, according to the strategic similarity of competitors, competitors are divided into different groups to understand the strategic differences and strategic changes of competitors, as well as the strategic competition and strategic cooperation of competitors.

Use strategic map analysis to analyze the causal relationship between competitors' strategic objectives, strategic measures, and strategic results to understand competitors' strategic logic and strategic efficiency, as well as competitors' strategic strengths and weaknesses.

Using strategic balanced scorecard analysis, analyze the strategic objectives, strategic indicators, and strategic measures of the four dimensions of competitors' finances, customers, internal processes, and learning and growth to understand the strategic balance and strategic performance of competitors, as well as their strategic strengths and weaknesses.

After analyzing the competitor's strategy, it is necessary to evaluate and compare the competitor's strategy to determine the advantages, disadvantages and threat opportunities of the competitor's strategy. A common approach is to use a competitor strategy evaluation matrix to evaluate and compare competitor strategies according to different dimensions and indicators.

Evaluate Competitor Strengths and Weaknesses

Assessing the strengths and weaknesses of competitors is an important part of competitor analysis, and it is necessary to objectively measure and compare the strengths and weaknesses of competitors through a variety of methods and tools to understand the competitiveness and competitive posture of competitors, as well as the competitive threats and opportunities of competitors.

There are several techniques for assessing the strengths and weaknesses of competitors:

Use strengths and weaknesses analysis to analyze the strengths and weaknesses of competitors' products or services, prices, channels, promotions, branding, positioning, target markets, customer needs, satisfaction, and loyalty to understand competitors' market competitiveness and market attractiveness.

Use profitability analysis to analyze the strengths and weaknesses of competitors in terms of operating income, operating costs, operating profit, net profit, profit margin, cost structure, source of profit, etc., to understand the financial competitiveness and financial soundness of competitors.

Use innovation capability analysis to analyze the strengths and weaknesses of competitors in terms of the launch of new products or services, the development of new markets, the establishment of new cooperation, the occurrence of new events, and the display of new trends, in order to understand the innovation competitiveness and innovation vitality of competitors.

Using the core competitiveness analysis method, analyze the resources and capabilities of competitors to understand the core competitiveness and sustainable competitive advantage of competitors, as well as the value, scarcity, difficulty of replication and organization of competitors.

After evaluating the advantages and disadvantages of competitors, it is necessary to summarize and compare the advantages and disadvantages of competitors to determine the competitive advantages and disadvantages of competitors. A common method is to use a summary table of competitors' strengths and weaknesses, which summarizes and compares competitors' strengths and weaknesses according to different dimensions and indicators.

Identify competitor threats and opportunities

Identifying competitor threats and opportunities is a key part of competitor analysis, which requires a variety of methods and tools to objectively judge and predict future actions, competitive situations and competitive trends of competitors in order to understand their influence and threats, as well as their own influence and opportunities on competitors.

There are several techniques for identifying competitor threats and opportunities:

Use competitor analysis to analyze the dynamics of competitors, market behavior, competitive reactions, competitive instruments and competitive outcomes to understand the future actions and competitive dynamics of competitors, as well as their competitive threats and opportunities.

Use scenario analysis to analyze different scenarios and situations that competitors may face to understand their future actions and competitive trends, as well as their competitive threats and opportunities.

Use the war exercise method to simulate the possible actions and reactions of competitors to understand the future actions and competitive results of competitors, as well as the competitive threats and opportunities of competitors.

Use game theory to analyze competitors' interests, preferences, choices, and behaviors to understand competitors' future actions and competitive strategies, as well as competitors' competitive threats and opportunities.

After identifying the competitor threats and opportunities, the competitor threats and opportunities need to be summarized and compared to determine the competitor's competitive impact and competitive potential. A common method is to use the competitor threat and opportunity summary table, which summarizes and compares the threats and opportunities of competitors according to different dimensions and indicators.

Predict the future actions of competitors

Predicting the future actions of competitors is an important part of competitor analysis, and it is necessary to scientifically predict and speculate on the future actions, competitive situation and competitive trends of competitors through a variety of methods and tools to understand the future development and changes of competitors, as well as their own impact and threats.

There are several techniques for predicting the future actions of competitors:

Use trend analysis to analyze the historical and existing data of competitors to understand the development patterns and trends of competitors, as well as the future development and changes of competitors.

Using causal analysis, analyze the internal and external factors of competitors to understand the drivers and reasons for changes in competitors, as well as the future development and changes of competitors.

Using hypothesis analysis, analyze the different assumptions and situations that competitors may face to understand the likelihood of development and change of competitors, as well as the future development and change of competitors.

Using simulation analysis, analyze the different actions and reactions that competitors may take to understand the development choices and change choices of competitors, as well as the future development and changes of competitors.

After predicting the future actions of competitors, it is necessary to summarize and compare the future actions of competitors to determine the future impact and future potential of competitors. A common approach is to use a competitor's future actions summary table, which summarizes and compares competitor's future actions according to different dimensions and metrics.

Develop coping strategies

The development of coping strategies is the ultimate goal of competitor analysis, and it is necessary to develop their own competitive strategies, competitive actions and competitive measures based on the results of competitor analysis in order to improve their competitiveness, competitive advantage and market share, as well as to reduce competitive risks and competitive costs.

There are several techniques for developing coping strategies:

Use Porter's competitive strategy model to choose different competitive strategies, such as cost-leading, differentiation or centralization strategies, based on your competitive advantage and target market, in order to achieve leadership or dominance in the market.

Use the Ansoff matrix model to select different market strategies, such as market penetration strategies, market development strategies, product development strategies, or diversification strategies, based on your own products or services and markets, in order to achieve growth or expansion in the market.

Using the Boston matrix model, according to their own market share and market growth rate, choose different product strategies, such as harvest strategy, retention strategy, construction strategy or divestiture strategy, in order to achieve balance or optimization in the market.

Using the blue ocean strategy model, according to their own value innovation and market creation, choose different innovation strategies, such as elimination strategy, reduction strategy, promotion strategy or creation strategy, in order to achieve a breakthrough or disruption in the market.

After the coping strategy is formulated, the corresponding strategy needs to be implemented and monitored to ensure the effectiveness and efficiency of the coping strategy. A common method is to use the PDCA cycle method, namely plan (Plan), execute (Do), check (Check) and improve (Act), to achieve continuous improvement and optimization of coping strategies.

Monitor competitor changes

Monitoring changes in competitors is a necessary condition for competitor analysis, which requires continuous collection, analysis, evaluation and updating of competitor information through a variety of channels, methods and tools to adapt to changes in the market and changes in competition.

There are several techniques for monitoring changes in competitors:

Establish a competitor information base to store and manage competitor information according to different dimensions and metrics for easy query and use.

Establish a competitor information system to collect and update competitor information at different frequencies and methods for monitoring and analysis.

Establish a competitor information report to organize and present competitor information according to different topics and content for evaluation and decision-making.

Establish competitor information feedback, feedback and communicate competitor information according to different needs and goals for improvement and optimization.