Competitor research in strategic management and marketing is an analysis of the strengths and shortcomings of potential and existing competitors. This analysis gives both a defensive and offensive strategic context to identify threats and opportunities. In a strategic management context, it considers two competing approaches in the same domain: a negative and a positive one. The negative strategy kills the opportunity while the positive strategy creates a need for an expansion of the opportunity. Competitor research is designed to help companies identify how their direct and indirect competition operates.
There are many reasons why companies conduct competitor research. The first reason is usually to reduce their R&D budgets and spend them on more important endeavors. Second, some companies want to develop new technologies that will give them a distinct competitive advantage over their rivals. Third, some companies want to expand their market share by introducing new products or services.
Competitor research is conducted in different ways, depending on the objectives of the study. Some researchers conduct a comprehensive survey of market dynamics, looking at everything from product pricing, brand loyalty, technology to customer preferences. Others conduct interviews with key customers or competitors, asking them about their strengths, weaknesses, opportunities and threats, and how they perceive the overall industry picture. Still others compare internal documents and sales reports with samples from various companies and draw their own conclusions. A few choose to go straight to the source, contacting key suppliers and competitors to get personal information and discuss strategy.
Competitor research is usually very thorough and includes a number of indicators. One popular indicator is to determine the strength of each company’s market position relative to the other in terms of key product categories. Another indicator looks at company weaknesses in one or more areas in the industry. Other factors that might be examined include strengths in a competitive design, technology, innovation, distribution channels, and financial strength.
Competitor research can produce important results if it is conducted properly. For instance, if a manufacturer produces products that are largely dependent on one or two key keywords, then competitor research that discovers these keywords can indicate opportunities for expansion. Likewise, if a company has a strong brand name but lacks key keywords, then competitor research may uncover gaps in the marketing mix that can lead to gaps in sales. If a company is relying heavily on keywords, then competitor analysis will provide evidence of how competitors are targeting particular words and phrases in their campaigns. It will also show how competitors have been reducing their use of key words in their marketing, and this reduction in keywords has reduced competition in those areas.
There are some areas where competitor research will not provide sufficient data, such as those areas where users do not visit competitors’ websites. In these cases, a more user-based approach may be necessary. User experience studies look at the behavior of users in response to various features and functions of particular websites. For example, if a user finds a website enjoyable but does not find any relevant content on the site, then they are less likely to make a purchase or visit the advertiser’s website in the future.
In other instances, there may be a social media presence, but no market research data to confirm this. Social media has come under fire recently for many of its strategies (such as over-promoting to Facebook and MySpace), but it is important to remember that the primary purpose of social media is to connect people with things that interest them. This means that a competitor does not need to conduct market research on every social media site in order to verify whether the site is popular. Instead, they should concentrate on social media that is significantly popular and try to convince consumers to join their community.
Whatever approach is taken, all companies should conduct competitor research so that they can determine how their competitive landscape is evolving. This allows them to adapt their digital marketing strategies to stay ahead of their competitors and create new niches in markets where they may be weaker. In addition to conducting research, these companies should also be careful to use their research results to improve their strategy. The goal of this analysis is not to frighten off potential customers but to help companies identify opportunities to create value for their consumers and position their company as the leader in a particular area.