Companies need proper tools, techniques, and talented teams to succeed—and also, an AI-powered competition analysis tool! Using this tool, you can uncover important insights about how your competition operates and its performance. Without it, you risk everything on guesswork.
We’ll talk briefly about how to use these tools and the key features they must have. But first—why is it so important to perform competition analysis?
The Importance of Competition Analysis
A good competition analysis reveals intel beyond the typical surface metrics that most companies get hung up on, like who has more social media followers. A top tool provides a wealth of information that the business can use for strategic decision-making. And putting together a comprehensive competition analysis takes considerable human effort.
These analyses encompass everything from extracting useful insight from a vast quantity of noise to putting that intel into action, all without overlooking game-changing discoveries you make along the way. Let’s drill into some additional benefits of competition analysis and why it’s crucial to your business:
1. Exceptional market understanding
The markets constantly shift due to changing consumer needs, business activity, macroeconomic factors, etc. And what you know about your market today may not necessarily be true tomorrow. Comprehensive competitor analysis surfaces new developments in the market, helping you stay informed.
Competitive intelligence tools are hard-wired with capabilities to reveal your competitor’s strengths and weaknesses. This shows you what works and what fails in the market at any time, guiding you through the decisions you make in your business. An example is performing market research for a new business or product and getting a solid overview of conversations happening in the space.
2. Identify market trends
Keeping pace with market movements is almost impossible without proper competitor analysis software. Market trend analysis involves observing and comparing industry data to recognize patterns to align your business with the industry’s general direction.
Analyzing competitor performance can reveal insights about shifting consumer behaviors and preferences. This information lets you predict consumer actions and purchase path indicators based on several psychographic filters.
3. Save business costs
During difficult economic times, research is among the first areas to be cut when seeking to save business costs. This hurts mission-critical functions such as establishing product market fit as breakthroughs are uncovered.
Far from being an expense, a comprehensive competition analysis can save your business time and money. Advances in modern technology have led to the development of competitive intelligence tools that are more accurate and efficient. Regular competition analysis exposes your team to better methods of accomplishing the research objectives, saving significant resources over time.
4. Develop your marketing strategy and cost allocation
Modern businesses know better than to start marketing without any form of strategy in place. However, many still don’t get the desired results because they lack the necessary information. With reliable data collected using an advanced AI-powered competition analysis tool, you can develop more effective marketing campaigns.
Analyzing competitor performance can help you discover strengths and weaknesses in your rival’s strategy – both of which you can use to your advantage. Some pointers you could glean from a watchful approach include a better-defined value proposition, clarity around necessary marketing responsibilities and accountability, and an adequate budget or better use of resources.
5. Establish industry benchmarks
The type of products, production costs, distribution channels, technologies, and how your business stacks up against the competition—each directly influences your company’s ultimate success.
Establishing benchmarks means comparing your business performance metrics with industry averages, which cannot be done efficiently without competitor analysis software.
It’s important to businesses at all stages as it helps improve operation efficiency, showcase what works, and support achieving those internal and external goals. Beyond what we’ve already discussed, some other industry benchmarks to track include the share of voice (SOV) and employee retention rate, as turnover is a huge, wasted expense.
Key Features of Competition Analysis Tools
Competitive intelligence tools may be designed differently depending on what they are meant to measure. For instance, some tools are specialized for specific social media networks, while others are built to track certain metrics.
Below are the key features that your competition analysis tool must have regardless of what it’s designed for:
1. Social listening
Social listening is the process of collecting and analyzing social conversations at scale to reveal business insights hidden in human speech. This includes conversations on social media, mainstream media, forums, blogs, discussion boards, and other online avenues. Closely related is social monitoring, which is the real-time tracking of said conversations.
When analyzing competitor performance, social listening is important for determining one’s share of voice (SOV). Share of voice refers to the amount of conversation that is taking place about a particular brand or topic. And you’ll want to see a side-by-side snapshot of mentions, net sentiment, and passion intensity captured about your brand or product and its closest competitors, as visualized below:
2. Sentiment analysis
The emotional content of consumer conversation is analyzed through sentiment analysis. This is the process of breaking down human conversation to uncover the underlying emotions. Leading competitor analysis software is equipped with advanced AI-powered natural language processing (NLP) technology to achieve this.
During a competitor analysis, sentiment analysis helps you understand how consumers feel about the competition, and you can use it to compare your brand perception. To fine-tune the results, you can apply a second scale, passion intensity, to measure the strength of those feelings (as seen in the image above!).
3. Real-time alerts
The competition analysis process is extensive, and things change fast as information travels. Facts may even change during your research—and brand or topic perception likely will as well. Without constant awareness of what’s happening in real-time, you risk compiling outdated data and making the wrong conclusions about the competition.
Thus, you must ensure your competition analysis tool can provide real-time alerts and allow you to customize notifications. For instance, real-time updates on when the competitors post or are mentioned help you keep pace with their activities.
4. Advanced reporting
In addition to effectively tracking and measuring, your competition analysis tool must be designed to present the findings in intuitive dashboards and reports. Modern competitive intelligence tools offer advanced reporting features such as automatic and customizable reports.
This means that when analyzing competitor performance, the tool will automatically compile the data in a report, complete with appropriate visualizations. And you can customize it to fit the target audience, e.g., CEO, heads of departments, or a project team.
5. Integration capability
Integrating information captured across the consumer journey is vital to business process improvement. Take the example of acquiring a new customer. It involves conversion, onboarding, service delivery, and transaction. In such a scenario, it’s common to find four siloed systems supporting this process, and the customer could drop out at any of those stages as there is also the post-purchase reality to consider.
So, it’s no surprise that leading businesses find value in integrating different tools and platforms to create a seamless flow in the purchase path.
Similarly, competitive intelligence tools work seamlessly when they are integrated. Good tools will promise to handle the vast demands of the competition analysis process, great tools will allow integrations with others better suited for certain tasks.
Analyzing Competitors’ Strategies
To properly understand your competition, you must use your competition analysis tool to determine their strategies. By gathering data about their online activities, customers, and other stakeholders and analyzing it on a business intelligence platform, you can reconstruct the image of their business strategy.
In particular, watch these three areas for clues on how to defeat your competition:
1. Brand strategy
The brand is the company’s personality and, therefore, one of modern businesses’ main strategic focus areas. Conducting a thorough brand analysis can help you understand your competition’s actions, improving your chances.
For instance, an example from a brand health analysis conducted using NetBase Quid® Intelligence Connector is below. Several airlines were compared across the same metrics to determine their competitiveness in the market.
See the complete breakdown on the website.
The scores are based on real consumer conversations. Thus, this is direct feedback on what travelers want from airline brands. A competing airline can use such a brand analysis to identify market gaps and leverage the insights to gain strategic advantage.
2. Product strategy
You examine competing product quality, features, functionality, availability, costs, and other essential aspects during product analysis to uncover its strengths and flaws. This reveals a great deal about the competitor’s strategy, including its target customer, production capacity, proprietary technology/information, etc.
In the following example, a leading fast-food brand compared its offerings to the competitors’, including the product’s qualities and the service delivery. The heat map is based on consumer sentiment about the different aspects of the brands.
A product analysis based on consumer sentiment.
Using this analysis, the brand identified areas of interest for closer investigation. Product analysis can also be done on a trend – e.g., the cannabis-infused beverage trend – and the insights leveraged to enter a new market before other brands.
3. Marketing strategy
A company’s marketing strategy is long-term and only unfolds in its actions. However, even without looking at it, you can tell that any competitor worth analyzing seeks to better understand consumer needs and gain a sustainable competitive advantage. You can better understand their future efforts by analyzing their activities and results.
The following table compares leading hotel conversations Using Rival IQ, the analyst found and sorted consumer conversations surrounding a particular topic to determine how each brand performed.
An analysis to reveal the competition’s marketing strategy.
A continuous analysis monitors the competitors’ activities in real time, showing you how they perform and the next steps in their strategy. With insight into their marketing strategy, you can act before their actions impact your business.
NetBase Quid® offers you a suite of tools, including a competition analysis tool, to help you outsmart your rivals in the market. If you’d like to see it in action, reach out for a demo today.