Marketers are regularly tasked with making decisions that are influenced by the competitive market structure – Which new product(s) will give us a competitive advantage? How do we address new entries in the market? What is the best positioning for this product? To help answer questions like these and gain a competitive advantage, researchers should begin by identifying the competitors and completing a competitive analysis. A competitive analysis is key because it reminds business decision makers that consumers often have many options in the marketplace and enables companies to assess their strengths and weaknesses relative to the competition.

Identifying the Competition via Your Consumers

It makes sense that to conduct a competitive analysis, you need to start by identifying who your competitors are. To do this, focus on the consumer needs your product or service satisfies, instead of how similar the physical products/services are. Companies that understand the competitive market structure are informed about the competitive set of their brands, potential marketplace opportunities, and the consumer decision criteria (do they consider price first then features, vice versa, or something else entirely?) The market structure can be assessed at various levels (industry, company, product line, brand, etc.) depending on the decision that needs to be made and the appropriate level of analysis. For example, if you’re a brand manager making a tactical decision, you would examine competition between brands reflecting day-to-day consumer decision making. However, for strategic decision making, you would also need to understand the competition between product types or categories. Market structure has two parts: attitudinal structure, which relates to consumer attitudes or perceptions, and behavioral structure, which is based on what consumers actually do and evaluates the overall decision criteria hierarchy. By studying your consumers, you’re in a better position to construct the correct competitive framework and, as a result, develop appropriate marketing tactics and strategies that reach your target audience (e.g., advertising that positions your product against the competition, strategies that target competitive product users).

Conducting Brand Positioning Research

Understanding your product or service’s unique imprint in the consumer’s mind enables you to assess your competitive positioning. Positioning research can be conducted among new concepts, current products, or entire brands/companies. As a result, you may learn that the intended position is not the actual, current position; however, positioning may be changed with effective repositioning strategies. Keep in mind that there are two ways to use the term “positioning”. Intended positioning refers to how you want consumers to see your brand. It is based on research that identifies the optimal image a product must have in order to appeal to the target audience (e.g., benefit segmentation research, which tells you what attributes will entice a target segment into purchasing). Actual positioning is the image your brand actually has in consumers’ minds, which can only be learned through consumer research. Large-scale survey data, often in the form of brand tracking surveys, must be collected to conduct a wide assessment of your brand’s actual positioning. The resulting data can be one of three kinds:Brand-by-brand attribute rating data:

• The most relevant brands used in the category, and the attributes that consumers use to distinguish among them, are identified through qualitative research.
• In a quantitative survey, respondents are asked to rate the brands they are familiar with on each of the attributes using a rating scale.

Brand-by-attribute appropriateness data:

• The most relevant brands used in the category, and the attributes that consumers use to distinguish among them, are identified through qualitative research.
• In a quantitative survey, respondents are asked to indicate “yes” or “no” on whether the attribute label appropriately describes each brand they are familiar with.

Similarity/Dissimilarity data:

• In a quantitative survey, each possible pair of brands is presented to respondents, and they indicate how similar/dissimilar they think the brands are via a scale.
• Note that no attributes are provided so each respondent could be considering a different set of attributes when answering.
• Conversely, the results are not limited by a predetermined set of attributes and, therefore, reflect a respondent’s full perception.

Regardless of type, the data are often analyzed using an appropriate multivariate procedure and are presented graphically. Attribute scores can be presented as snake plots (best used for a limited number of brands), comparative importance/performance plots, and spider charts. Multivariate perceptual maps can be shown as brand-by-attribute ratings (factor analysis, discriminant analysis), brand-by-attribute checklist (correspondence analysis), and similarities/dissimilarities data (multidimensional scaling).AYTM has developed a unique Competitive Topography question type that offers three different ways of visualizing the data: Multidimensional Scale, Topography View, and Quadrant Analysis. With this question, you can explore several brands that can be rated on a list of attributes, giving you an important understanding of consumers’ perceptions of each brand, perceived similarities/dissimilarities between them, and a visual comparison of ratings among the brands in aggregate, as well as individually by each attribute.

The Takeaways

The core of your competitive analysis concentrates on your target consumers: identifying their perceptions and/or actions towards your brand and their decision-making hierarchy when shopping the category. Brand positioning research, such as brand tracker studies, seeks to understand your product’s unique imprint in the consumer’s mind and helps you understand your competitive positioning. Because conducting a competitive analysis requires a lot of data – which needs to be organized and processed in some systematic way – your company may consider creating a competitive intelligence system. How this is done depends on management’s needs, the type of industry, and the available resources.