As the saying goes, keep your friends close, and your enemies closer. This couldn’t be more true in business. In an increasingly cut-throat business environment, making the right decision is all about analyzing what your competitors are doing, and taking the initiative to stay ahead of the curve. The key to this? SWOT competitor analysis.
💡 Read: Competitive Analysis: All You Need to Know
A competitor SWOT analysis is about understanding your competitor’s chess moves. It’s a powerful tool that helps you gain important insights about their strengths, weaknesses, opportunities, and threats.
All this allows you to understand where you stand and take the next step to carve your niche and dominate in your respective market.
Here are 5 easy steps to kickstart your SWOT competitor analysis.
What is a SWOT competitor analysis?
SWOT stands for strengths, weaknesses, opportunities, and threats. The process puts you in your competitor’s mindset. On the one hand, you analyze the strengths your competitor has that are currently helping them achieve their goals and the weaknesses that are hurting their progress.
You also look at external factors, namely, your competitor’s opportunities and threats. You examine the market opportunities your competitor can exploit. Finally, you also explore what the threats are and how this could affect their decision-making in the future.
When should you conduct a competitor SWOT analysis?
There are various reasons why you might feel it’s the right time to take a deep dive into your competitor’s mindset and strategy. Here are some of the most common ones:
Stagnation: Your business growth may have reached a plateau that you’re unhappy with. In this case, a SWOT competitor analysis can help get things moving by providing a fresh take on things.
Marketing strategies: If you’re working on a marketing campaign or simply updating your current marketing strategy, looking at what your competitors are doing is a good way to up your game. This not only ensures you’re getting a return on investment on your marketing spend but also helps you take your campaigns and strategy to the next level.
New product: Launching a new product comes with many risks. A competitor SWOT analysis can help you answer questions like:
- What features are customers looking for?
- What price are they willing to pay?
- Is there anyone else offering the same product?
New market: It’s safe to say that you need to do your homework before entering a new market. A SWOT analysis not only helps you understand how to approach the market but also saves you precious time, money, and resources.
5 Steps to Successfully Conduct a Competitor SWOT Analysis
1. Identify who your competitors are
This step goes without saying, but having a clear idea of who your competitors are goes a long way in ensuring your SWOT analysis is successful.
Start by identifying your direct, as well as indirect competitors.
Direct competitors are the ones offering similar products to your target market. Conversely, indirect competitors are those who offer different solutions to the same problem and target audience.
The number of competitors will largely depend on your industry, and also on your product, service, & location. If you’re operating in a niche market, you may only have one or two direct competitors and a few indirect ones. If you’re competing in a larger market, your list will be more extensive.
Choose four or five of the most relevant ones applicable to your specific use case. For instance, if you want to revamp your marketing strategy, choose those competitors who are crushing their marketing and PR game.
Read A Step-By-Step Tutorial for Writing a Competitor Analysis Report for Your Company
2. Gather information
Once you’ve selected your competitors, it’s important to do as much research as possible to ensure that you have all the relevant data.
- Read their blogs, product packaging and social media posts.
- Visit their website to learn all about their products, pricing strategies, USPs and roadmap.
- Subscribe to competitors’ newsletters to understand what value they are providing their email list with, branding and tone of voice being used, and even observations of how they format their email signatures.
Pay close attention to product specifications, and any promotional offers and marketing campaigns they rolled out in the past. Check their tech stack and identify gaps in their website. For instance, if their website takes ages to load, research alternative managed hosting options that can help with your own site speed to enhance your user experience.
Customer feedback is another important aspect, as it tells a lot about the product and the company-client relationship. Instead of visiting every customer feedback website in existence, you can use tools like Determ to scan the digital media space, monitor brand sentiment, and get detailed reports that will help you in the next step.
3. Conduct a SWOT competitor analysis
Now that you’ve compiled your competitors’ playbook, it’s time to delve deeper and conduct a SWOT analysis for each individual competitor:
Strengths: Identify where your competitor’s strengths lie. Extract what makes your competitor stand out, and in which areas they’re one upping you. This could include strong brand recognition, innovative marketing strategies, a loyal customer base, a product with superior features, and so on. Analyze how all these strengths contribute to their competitive edge.
Weaknesses: Pinpoint the areas where your competitors are falling short. These can range from poor customer service to underqualified staff. Assess how these vulnerabilities can be used to your advantage.
Opportunities: Analyze your competitor‘s potential growth opportunities.
- Are there any particular marketing trends that will benefit your competitor?
- Are they planning strategic partnerships that will boost their business?
- Are there untapped customer segments?
Think about how your competitors might capitalize on these opportunities.
Threats: Evaluate any external factors that may mitigate each competitor’s success in the market. These can include changing legal requirements, inflation, wars or sanctions, and shifting consumer preferences, to name but a few. Assess how these will affect your competitor in both the short and long term.
4. Analyze your findings
An important part of SWOT is the actual analysis. So once you’ve finished writing down all your competitors’ strengths, weaknesses, opportunities and threats, it’s time to analyze the findings.
Identify business trends and patterns that can lead to strategic insights. Look into what weaknesses your company can exploit, and what opportunities you can leverage instead of them.
Think about how you can use their weaknesses to your advantage, and how you can mitigate potential market threats. A thorough analysis is essential to ensure that you don’t make rash decisions that could actually harm your company, rather than help it.
Read What Is Competitor Mapping and How to Use It for Your PR Campaigns
5. Take action!
Armed with all these valuable insights, it’s time to take action and formulate strategies that will strengthen your position in the market.
First, it’s important to recognize your own strengths and actually strengthen them, before investing in anything else. You may be tempted to jump straight into leveraging your competitors’ weaknesses, but actually boosting what you already have can go a long way.
Working on your weaknesses is next. Whether it’s training your employees, or adjusting your marketing strategy, it’s important to hone in on the things you’re currently missing to improve your business performance.
Read 5 Ways AI Social Listening Supercharges Business Insights
While you’re working on supercharging your strengths and tackling your weaknesses, it’s crucial to seize the external opportunities you’ve identified in your SWOT competitor analysis. Whether it’s introducing new features, forging a strategic partnership, or exploring a new customer segment, exploring these opportunities before your competitors do so will help you stay ahead of the game.
Opportunities don’t come without their risks. Therefore, it’s important to develop contingency plans to mitigate any risks and safeguard your business. Doing so will ensure your company can weather any storm that comes its way.
Conclusion
Conducting a competitor SWOT analysis is not just a strategic exercise; it’s a crucial step toward ensuring your business’s long-term success. Most importantly, it helps you read the market, understand where you stand compared to your competitors, and ultimately, ensure you’re always one step ahead of the rest.
