How To Conduct Market Research and Competitor Analysis

Market research and competitor analysis are two sides to the same coin. They provide essential information that can guide your business, product, and marketing strategies, allowing you to tailor your approach and build a stronger, more resilient company.  

While there’s sometimes carryover between the two, market research typically relates to helping you find customers, while a competitive analysis helps you make your business unique or stand out. You’ll learn how they work and how to get started on this page.

Market Research

Market insights allow you to understand who your buyers are and meet them where they are. To a certain degree, market research also allows you to deliver value in a way that no other business is, though you’ll see components of this when you perform your competitor analysis, too.

Components of Market Research

When you perform market research, you’ll be evaluating the components outlined below.

Demand

A lack of market demand is the second greatest cause of business failure, according to Forbes. Of all the businesses that close within the first five years of operation, two in five can trace their issues to a lack of demand. 

Market Size

Market size pertains to how many people could potentially be interested in your offerings. 

Economic Indicators

Economic indicators, such as income range and employment rate, make it easier to assess whether your intended audience has the means to patronize your business.

Location

Location components of market research take into account where your customers live and how far your business can reach.

Market Saturation 

Market saturation refers to how many products or services that are similar to yours exist in the same market. This is one area where you’ll see carryover into your competitor analysis.

Pricing

Pricing also carries over into your competitor analysis. This typically involves assessing what customers pay for alternatives as well as what customers are willing to pay specifically for your solution.

Types of Market Research

A variety of research methods can help you answer questions related to your market and customers.

Direct 

Direct research allows you to get feedback from your customers or people like them.

• Surveys are typically the easiest way to gain customer insights because they can be sent digitally and are cost-effective.  
• Focus groups that are typically performed with your current customers or people like them allow you to gain insights that may allow you to improve your offerings.
• In-depth interviews with people who fit your buyer profiles that allow you to get firsthand accounts of why people make certain decisions while observing their body language. 

Indirect

You can also use research conducted by third parties, such as the government, to gain insights into your market and customers.

• General business statistics that can help you learn about your industry or business conditions from sites like NAICS, USA.gov, or U.S. Census.
• Consumer statistics that can help you learn about consumer markets and potential customers using data from sources such as the Federal Reserve or Consumer Product Safety Commission. 
• Demographic information that can aid in segmentation and targeting via sites like the Census Bureau or Bureau of Labor Statistics.
• Economic indicators that provide insights on loans granted, unemployment rates, and more via the Consumer Price Index and Bureau of Economic Analysis.
• Production and sales statistics that can help you understand demand, consumer spending, and costs via the Bureau of Economic Analysis (BEA) Consumer Spending report and BEA Gross Domestic Product (GDP) report.
• Industry-specific statistics via the Census Bureau.

How to Perform Market Research

Performing market research isn’t necessarily a complicated process, though you’ll want to go about it in an organized fashion to ensure the data you obtain is relevant and usable. 

Define Your Personas

Begin by defining your customer personas. Think of a persona as a dossier of a fake customer that might actually patronize your business if they were real. Make a note of demographic information, details of where and how they research potential solutions, and objections they might have before accepting your solution as their choice.

Identify Which Persona You Want to Engage

Each persona behaves uniquely. Because of this, your market research should zero in on a specific persona. If you choose to engage more than one persona at a time, ensure you can segment their data afterward.

Determine Your Methods and Approach

Map out which methods you plan to use to conduct your market analysis. Note that it may be better to begin with indirect methods to gain a general understanding of potential consumers, as this can help you tailor your approach when trying to engage them directly.

Execute

Carry out the research using your preferred methods. 

Summarize Your Findings

Develop a summary of your findings that makes it easy to understand the data, drivers to action, and potential roadblocks along the customer journey. 

Competitor Analysis

Your competitor analysis is more about identifying what types of businesses compete with you and how you can make your business stand out from them as the leading choice. 

Components of Competitor Analysis

Competitor analysis involves doing a deep dive into specific aspects of other businesses. You may not be able to find details related to each element covered below because of this. However, you should aim to create detailed profiles of your competitors that include as much of the information below as possible and any other details that are relevant to your competitive positioning.   

Location

Where is the competitor headquartered, and what is their reach? For instance, a competitor may offer services or products in your location but be headquartered in another state or country. 

Target Customer

Who is this business trying to reach? Note that although they may be targeting the same or similar personas, there could be minor differences in the age ranges or financial status of their target personas. Be as specific as possible when gathering these details, as it can help you carve out your niche even if there seems to be a carryover. 

Revenue and Market Share

If possible, gather information related to their annual revenue and market share. This can help you better understand how challenging it will be to compete against them.

Products and/or Services

When evaluating products and services, consider specific benefits customers receive from selecting their solutions, places where the company falls short, pricing, packaging, and anything else that might set the business apart.

Marketing Approach

Consider how the business approaches marketing, including what channels it uses (website, social media, radio, etc.) and how it leverages those channels. For instance, a brand might have social media profiles on specific channels but only leverage free posts. On the other hand, it might also use paid ads on social media. 

Brand Voice

Make a note of how the brand speaks to customers. Is it professional or casual? How does it come across? Does the brand speak like its customers do?

Reputation

What are customers saying about the brand? Can you find information about what people say it does well or poorly?

Values

Modern consumers are concerned with the values of the brands they support. Find out if your competitors are involved in any charitable giving or if they support specific causes.

Types of Competitor Analyses

Most analyses focus on one of two things: industry positioning or content. 

Industry

A traditional competitor analysis involves examining businesses within your industry that offer similar products or services. For instance, you can start on a website such as G2 to explore businesses like yours. Reports from agencies such as Gartner or Forrester can also provide industry insights. Searches on social media may also be helpful in this regard.

Content

Nearly nine in ten consumers start their searches online, according to Retail Dive. Because of this, it’s equally important to consider which businesses might appear when people search for your products or services, even if they don’t directly compete with you. Companies that produce content similar to yours may make it difficult for your brand to stand out online, especially via search engine optimization (SEO) strategies. 

For example, an accountant will likely have accounting software companies among its content competitors, or a commercial building company may find residential building companies displaying in similar searches. 

You can use specialized tools to identify your content competitors or simply perform Google searches to see who stands out.

How to Perform Competitor Analysis

Most competitor research can be performed online. Be methodical in your approach to ensure your data can be segmented and used later.

Create a Template or Spreadsheet

It’s helpful to store all your data in a single spreadsheet, though you may want to create dossiers for your strongest competitors. Make a note of details such as:

• Company name
• Location
• Target customer
• Revenue
• Year founded
• Strengths
• Weaknesses
• Products and/or services (benefits, pricing, packaging, etc.)
• Marketing approach

Research

Make a list of potential competitors and add to it as you identify more. 

• Visit websites, social media properties, and anywhere else the business markets itself.
• Examine their content to see how they communicate, what they value, and how they position themselves.
• Use specialized tools to see which keywords they’re leveraging on their website and how they’re driving traffic to it.
• Leverage third-party resources, such as special reports and review websites, to learn about each competitor. 

How to Leverage Your Market Research and Competitor Analysis

You’ll likely begin generating ideas for leveraging your business intelligence as you conduct research. However, it’s most beneficial when leveraged as part of a cohesive strategy.

SWOT Analysis

Short for strengths, weaknesses, opportunities, and threats, a SWOT analysis helps you better understand your position in the market. To complete a SWOT analysis, you’ll simply draw two intersecting lines and place one of the four aspects in each corner, then add related values below it. 

Strengths

The top left corner is for strengths. This is where you’ll list:

• Competitive advantages
• Resources you can tap into
• Top-performing products or services

For instance, after conducting a customer and competitor analysis, you might note things like “local presence” and “strong customer loyalty.” 

Weaknesses 

The top right corner covers weaknesses. This is where you’ll list:

• Areas for improvement
• Underperforming products
• Areas where resources are lacking 

For instance, you might note “limited marketing budget” and “low visibility on Google Search” in this block.

Opportunities

The bottom left corner is for opportunities. This is where you’ll list:

• Ways to incorporate new technology 
• Options for expansion
• New segments, markets, or products and services you can test

For instance, you might note “new pricing tiers with subscription option” or “potential expansion into Canadian markets” in this block. 

Threats

The bottom right corner is for threats. This is where you’ll list:

• Changing regulations that may impact your business
• Changes in market trends
• What competitors are doing

For example, you might mention “reduced customer spending” or “competitor with upgraded product.”

Integrate Your Learnings in Your Strategy

Your research, paired with a thorough SWOT analysis, can help you develop stronger strategies. At the onset, you may want to focus more on places where your strengths and competitor’s weaknesses intersect. For instance, if you’re going up against a national brand with a strong presence online and in search engines, but your business has local appeal and greater customer satisfaction, you probably won’t “beat” them when it comes to traditional advertising. However, you can work with your existing customer base to gain referrals and generate new business through local SEO. 

Revisit on a Regular Basis

Perform market research and competitor analysis on an annual basis at a bare minimum. This will allow you to catch market shifts as they’re happening, so you can pivot quickly. Depending on the nature of your industry and business, it may be prudent to perform research more often, such as quarterly or monthly.

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