Competitor Analysis Framework: Definition, Benefits and Types
Competitor analysis is an important part of a company's marketing strategy. By analyzing the competition, companies can identify market trends and find areas of growth. A competitor analysis framework is a tool that groups competitor data and research in an organized way. In this article, we explain what a competitive analysis framework is, list the benefits of using one and provide five common framework types.
Read more: How To Plan a Marketing Strategy
What is a competitive analysis framework?
A competitive analysis framework is a model or tool marketing professionals can use to compare their business plan or marketing strategy with their competitors'. This model can create a visual structure for a marketing competitive analysis. A competitive analysis describes a company's competitors and provides detailed information about their sales, business strategies and marketing efforts. A framework gathers the information from the analysis in an organized way.
Read more: What Is a Competitive Analysis?
Benefits of using a competitive analysis framework
There are many potential benefits to using a competitive analysis framework. Conducting a competitive analysis and gathering the research into a framework can help a marketing or financial professional in the following ways:
Identify market gaps within an industry: Analyzing your competitors can help you find gaps within your target industry. This can help you create a business plan for a new idea or marketable product.
Find market trends and patterns: When creating a market strategy or business plan, it's important to learn more about the market trends and patterns. A framework can reveal customers' demands or interests. This can help you design an effective growth strategy for your target audience.
Analyze effective marketing strategies: Analyzing successful campaigns from your competitors can help you see what works well in your market. You can use this information to create or refine your own plan.
Identify measurable goals: A competitive analysis framework can help companies create specific goals. Marketing teams can use the data from their competitors to set specific, measurable performance goals for their next quarter or year.
Organize analysis data: A framework keeps research and competitor data neat. This can make it easier to notice trends or find gaps.
Make data more visually appealing: Frameworks can include graphics or charts. Displaying information in a visually appealing way could help you discuss the analysis with a marketing team, investors or business leaders.
Focus on a specific marketing area: A framework can focus on one or two marketing areas, which can help a marketing team research and discuss specific goals and strategies.
Read more: How To Create Strategies in a Marketing Plan
Types of competitive analysis frameworks
When conducting a competitive analysis, there are several frameworks to choose from. Some companies may choose to use several of these frameworks to track various market trends. Here are five popular frameworks that can help you organize and display competitor analysis data:
A SWOT analysis analyzes a company's positive traits and areas of growth. The SWOT chart organizes information into the following four categories.
Strengths: Strengths are internal positive factors that affect a business. For example, positive workplace culture and highly trained staff are internal strengths.
Weaknesses: A weakness is an internal factor that represents an area of improvement or a challenge. For example, a new company might have a small marketing budget. This is a challenge the company must work with.
Opportunities: An opportunity is a positive external factor that represents room for growth. For example, an opportunity might be a new technology that could increase your online sales.
Threats: Threats are external challenges a company must face. This includes competition and costs of goods. For example, if your company produces cars and the cost of car parts is increasing, this is an outside challenge.
Many marketing teams conduct a SWOT analysis as part of a larger competitor analysis. A SWOT analysis can show how many competitors there are in the threat section. A marketing team can also conduct a market SWOT and analyze the strengths and weaknesses of various competitors to identify trends and gaps.
Read more: SWOT Analysis Guide (With Examples)
Strategic group analysis
A strategic group analysis shows the competitors in a map, graph or chart. This framework involves creating strategic groups. Companies may group their competitors by characteristics, market shares, services or products. Then, the marketing team or business owner plots these groups into a graphic display. For example, a coffee shop owner might create a graph showing the average cost of coffee and the number of total sales. They can then add other coffee shops to this graph. This can help show market trends and gaps.
Growth share matrix
A growth share matrix ranks products in relation to their market shares, or the percentage of the market that the company controls. This matrix, originally designed for investors making portfolio decisions, can also reflect market trends. A business or marketing team can use this chart to determine which marketing strategies produce higher market shares. They can also focus on a few competitors over time and see which competitors are growing their market shares. This can help them refine and adjust their marketing strategies.
Porter's five forces
This framework involves analyzing the competition by focusing on five categories. A marketing team or business can use this framework to analyze an industry or specific market. It includes the following factors of competition:
Buyers: This involves how many buyers there are and how they affect pricing.
Suppliers: In this category, a marketing team assesses how the industry supplies can change prices.
Substitutes: This looks at how many alternative products there are within the market.
Rivalry: This section lists how many competitors a company has and their relative strengths.
New entrants: This category shows how easy it is for new businesses to join this market.
This framework can help a company analyze an entire market or industry, which can help them create targeted goals and a strategic plan. For example, if there are a lot of substitutes in the industry, a marketing team can think of ways to make their product unique.
Read more: A Guide to Using Porter's Generic Strategies
Perceptual mapping, also called position mapping, shows a company and its competitors on a plot graph. To use this framework, a marketing team can choose two factors they want to focus on. Often, this involves tracking quantity and quality, although companies may choose to create specific measurements related to their services. After choosing two elements, a company can plot its own position as well as the positions of its competitors. This can help identify market trends and gaps.
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