When you have an idea for getting a brand off the ground, one of the most important things to consider first is your competition.
Before developing any particular brand or product strategy, having a clear understanding of the needs your brand will fill is paramount. To determine where your brand can play, you’ve got to find your opportunity spaces. These are the openings your brand can fill where people’s needs aren’t currently being met by the competition, or where your brand could meet those needs better. To know your brand’s opportunity spaces, a solid competitive analysis is a must.
A competitor analysis should be executed with as much data as possible to prove what’s working for them, what isn’t, and where your brand can come in. In order to start running your competitive analysis though, there is one basic question to answer: Who are your competitors? Defining your competitors can be simple if you’re entering a slim market, but if you’re entering a wider playing field, consider the following:
The biggest brand isn’t necessarily your biggest competitor.
It’s tempting to think that the brand with the biggest market share will be your biggest competitor. However, just because there’s a larger company making more than your brand, it doesn’t mean that they should be in your direct line of sight.
For example, if your brand sells freshly pressed fruit juice, your biggest competitor will probably be another natural juice brand, not a global manufacturer of highly processed juice. And drilling down even further when it comes to flavor, if your freshly pressed juice is all orange juice, your biggest competition might be other fresh-pressed orange juices, even before you start to conquer the apple juice segment.
Focus on brands with similar target audiences
Categories will have a lot of players within them, and you can’t take down every one of them. To define your closest competition, you should understand your consumer and how they relate to your competition; you should understand which brands have the most similarities to yours in terms of target audience. If you’re a deodorant brand, you may not need to worry about the competitor targeting 65+ if your brand is for teens. But you may want to keep a close eye on the new brand that just launched for young people in their 20s.
Keep an eye in front and an eye in back
You might want to take down a brand slightly larger than you, that targets a similar audience as you. Great. Go for it. But don’t forget this: You should always keep an eye focused backwards too. Smaller, emerging competitors have the power to make gains, notice shifts in the market and react quickly. Therefore, when running a competitive analysis, don’t just choose the competitors you see yourself gaining ground on. Check your rearview mirror and study some of those brands too.
Assess your competition
Now that you have a better idea of who your competitors could be, it’s time to start evaluating what can be valuable for your own success, and where you’ll need to forge your own path.
See if you can answer the following questions:
Who are my competitors’ target audiences? Deeply understanding who your customers are and how to consistently deliver what they need is a process that takes time. Taking advantage by observing who your competitors communicate to could spark some ideas of what to do and what to avoid. Understanding just how similar your competition’s target audience is to your brand will help you diagnose just how much of a threat they could be to your business.
What are my competitors’ propositions? Every brand’s central selling point lies in what they promise their target audience. What problem is your competitor promising to solve with their brand? How well are people listening and reacting to their solution? Monitor their offering as well as the public response, then act accordingly.
Where are each of my competitors sold and how will I compete there? To gain on the competition, you need to tailor your in-store strategy so that your brand remains relevant in each channel and to each shopper. Often that means developing a product and pricing architecture that fits the retail outlet. For example, in convenience stores, you might create more trial size or smaller sized portable products. And in larger grocery stores or even big box stores you might create larger, family sized offerings.
What’s the best price to charge to stay competitive? Understand the product and price mix of your closest competitors versus the category average price in market to determine if your competitors sell more premium-priced products. When setting your own retail price, it’s important that the cost-quality equation always tilts in the favor of your consumer – they must feel like what they get from your brand is greater than the cost they had to pay for it each time. So take a look at the way your product looks at shelf, the benefits it delivers and its performance to gauge whether or not you should price in line with the category average, or at a slight premium or discount to that.
What are my competitors’ product offerings? Consider if there are any gaps between your own product benefits and the product benefits of your competitors. What needs are they trying to fill and how are they communicating those needs? Is there a noticeably positive difference between your own product and theirs that you could push to the surface as a differentiator? Think about your brand’s most positive points of difference versus your competition and then consider how you might flex those differences to make your product stand out from the crowd.
How are my competitors speaking to people and in what media channels? It’s extremely important that your brand has a unique and authentic voice in market. So, understanding how your competitors communicate, what they say and where they say it is key. During your competitive analysis, understand the media channels your close competition advertises in and determine if you’ll directly compete there, or whether you’ll differentiate your media strategy. Listen to how your competitors speak to their target audience – what benefits are they promoting and what claims are they making? Ensure that when you develop your own communication plan you focus on promoting the benefits of your product people will find most desirable using claims language which positions your product as top in its category.
Getting answers to all of these questions is a step towards a high-quality competitive analysis. Developing a strong gauge on your competition is the most certain way your brand will maintain its success in market. Running a competitive analysis, however, is not a one-time job. As competitors come and go, keep a fresh perspective on who your competitors are and deeply understanding how they present themselves.
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Interested in learning more about how to build your brand from the ground up? Take a look at our guide, “How to Build a Brand Strategy,” for more info.