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Over the past year, much has changed. Industries have experienced tectonic shifts, customer demands have evolved rapidly, and boundless new opportunities have presented themselves. With all these changes, the need for organizations to perform competitive analysis has only been heightened.

In our view, organizations of all descriptions should be conducting competitive analysis on a regular basis. There’s a multitude of reasons for this, which we’ve written about before in great detail. Typically, companies employ competitive analysis techniques to understand their market, learn more about their customers and their needs, and make better-informed decisions on the strategic direction of their business to provide a competitive advantage.

But given the events of the past year, the need to do a competitive analysis is much more urgent than before. Here are some of the key reasons you should do a competitive analysis in 2021:   

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Competitors Adopt New Priorities

The past year has been a tumultuous journey for many businesses. Some have struggled significantly, whereas for others, business might be booming. While there’s a good chance your competitors were impacted in a similar fashion to your own company, their reaction may have been entirely different to yours. 

Many of the changes we’ve seen in the past year have been accelerated versions of trends that were already happening. One example: eCommerce. One study found that the pandemic has accelerated the shift from physical commerce to eCommerce by five years. For that reason, many companies are shifting their priorities and strategy to focus on eCommerce and online presence. 

To adjust to changes in the market, organizations are restructuring their operations, reallocating capital and other resources into new product offering and efforts that support these newly emerging trends. It’s imperative that you understand not only where your competitors are, but where they’re headed in the future, and use those insights to shape your own strategy and marketing efforts.

The Financial Landscape Has Changed

There’s also a lot that may have changed in terms of your competitor’s financial position. Their balance sheet, P&L, and cash flow statements might look markedly different from a year ago, and if they’re publicly traded, you should definitely be taking time to conduct a thorough analysis on these documents. 

With unprecedented government stimulus, changing investment priorities, and a dramatically different market landscape, there could be any number of changes to your competitor’s financial position. Businesses that were previously strong might now be structurally weakened, while some businesses have seen their revenue and valuations explode. 

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The impact of the changing financial landscape is clear to see. Companies who have performed well are better positioned to pursue accretive M&A strategies, while those significantly weakened by the pandemic find themselves in a vulnerable position. By understanding where your competitors land on this scale, you’ll be able to better understand and predict their future strategies, and ensure your company is well-positioned in a competitive sense.

Changing Customer Sentiments

Many businesses have spent much of the last year putting out fires, and in doing so, it’s possible your competitors may have taken their eye off what matters most: their customers. This might be especially true in established, mature markets, where companies with comparable, interchangeable services regularly trade customers.

By investigating customer sentiment, you can uncover opportunities for your own business. Perhaps your competitor’s customers have felt let down over the past few months; the quality of service has dropped, deliveries have been arriving late, or their prices have increased. And don’t forget to consider this internally too - it’s entirely possible your own customer satisfaction has dropped too. By building an understanding of how a potential customer in your industry truly feels, you’ll be better positioned to attract them to your business.

Emerging Trends & Disruption

The rapidly changing market conditions have led to the emergence of new trends that promise significant impacts on huge industries. While more mature companies have been hit hard, many newer, tech-enabled businesses have emerged stronger from the past year.

We’re seeing these changes across a wide variety of industries, but one of the sectors that’s been impacted the most is the insurance industry. Previously dominated by large, mature companies, the insurance industry is experiencing a period of significant disruption, driven predominately by insurtech companies. In the last 12 months alone, insurtech companies Lemonde, Oscar, and Metromile have gone public, and venture capital firms invested a record-breaking $5 Billion in insurtech companies in 2020.

To continue to be successful, traditional insurance companies need to understand this new market segment of competitors and develop strategies to stem the loss of market share. The insurance industry is just one example; disruption like this is evident across all types of industries. It’s important companies understand all their competitors, including disruptive startups aiming to change entire industries. 

New Technological Developments

Technology is moving at a faster pace than ever, and despite the challenging environment of the past year, technological developments have only accelerated. Businesses continue to innovate new product offering and services at a fast pace, creating better experiences for their target customer. 

Crucially, many of these technological developments are tailored to improving customer experiences in light of their target market conditions changing. Customers have new needs and wants, and companies who can anticipate these and produce solutions to fit these unmet needs of their target audience will emerge victorious in the long-term. 

By making the investment in competitive analysis to understand new technological developments in your industry and competitive set, you can better position your company for long-term success. In a time of rapid technological change, that’s more important than ever.

Conducting competitive analysis is something that should always be top of mind for business leaders. The competitive insights gleaned from these endeavors provide valuable information that shapes the ongoing strategy of the business. 

Consistently building and reviewing competitive analyses is more important than ever in 2021. The past year has seen significant structural changes to many markets, and competitors have adapted their strategies, investments, and product pipelines in order to thrive in these new conditions. For your business to thrive too, it’s crucial you perform competitive analysis.  

Want to do a competitive analysis but not sure where to start? Cipher can help. Get in touch with our experts today

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