Competitor Analysis Framework and Why It is Important

The UAE has a highly competitive business environment, and enterprises must bring their A-game to survive and outperform their competitors. Businesses looking for a welcoming environment to develop and build their brand have found considerable attraction in the quick pace of technological advancement. However, given the abundance of companies, you cannot afford to overlook your competitors. This article explores different frameworks for evaluating your rivals’ actions to guarantee your position at the top of the UAE market.  What is Competitor Analysis Framework? A competitor analysis framework is a tool an organization can use to create a visual structure for comparative analysis. The framework compares your strengths, weaknesses, strategies, and other relevant differences against your competitors’ to derive a comprehensive, in-depth insight into their business. Thus, you can find opportunities and leverage the information to grow. Difference Between Benchmarking and Competitor Analysis Framework Competitor analysis and competitor benchmarking are often confused. However, they are different concepts. A competitor analysis framework enables you to conduct an in-depth analysis of every move your competitor makes to understand their strengths and weaknesses and improve your business strategy. On the other hand, the competitor benchmarking framework studies the business process to understand how it measures against industry leaders to identify areas of improvement and develop best practices for the business. Thus, the difference between competitor analysis and benchmarking is that the latter concentrates on understanding your rivals’ tactics, whereas the former gauges your company’s progress. Benefits of Using a Competitive Analysis Framework There are various advantages to analyzing your rivals’ strategies. They include: Identify Market Gaps It helps you discover gaps you can fill by creating a new product or service or improving your existing offering. Create an Effective Marketing Strategy Understanding your competitors’ marketing strategy enables you to map out areas for improvement to create a better plan. Find Market Trend Some frameworks help you understand customers’ interests and create strategies to meet the rising needs of your audience. Data Organization Competitor analysis frameworks enable businesses to organize relevant data for easy processing and usage. Avoid Mistakes You can learn from your competitors’ mistakes, preventing you from wasting time threading an unfruitful path. Create Measurable Goals Companies can create measurable performance goals to foster business growth using the information gathered. Six Competitor Analysis Frameworks 1. SWOT Analysis SWOT is a well-known framework for evaluating four key areas: strengths, weaknesses, opportunities, and threats. The SWOT analysis enables a company to identify its areas of strength and weakness, prospects, and risks, and which areas it might be able to leverage. 2. Porter’s Five Forces Michael Porter designed this structure to evaluate the elements of the market affecting a given sector. ●       Threat of New Entrants: Examines entrance obstacles to ascertain competitor market accessibility, either easily or difficult. ●       Bargaining Power of Buyers: Looks at how customer negotiation potential might affect price. ●       Bargaining Power of Suppliers Evaluates how goods and services are priced under suppliers’ influence. ●       Intensity of Competitive Rivalry Analyses the competitiveness and intensity of competition among businesses. ●       Threat of Substitutes Thinks about the likelihood of customers picking another brand over yours. 3. 7 Marketing P’s The seven marketing P’s expands upon the traditional 4 P’s of marketing. The framework helps a company to make sure its marketing initiatives encompass all facets of the client experience and enhance its efforts. There are seven P’s: Location and means of distribution: Product and service marketing and promotional techniques abound. People: Customer contacts and staff members influencing the client experience For various products, the above chart shows the relationship between market share (on the Y-axis) and market growth (on the X-axis). Every product is represented by a bubble whose size denotes its relative significance or contribution. Bigger bubbles indicate more important goods. For instance, whilst “Product C” has a greater market share but less growth, “Product E” displays high market growth and a somewhat strong market share. 4. Growth-Share Matrix The Growth Share Matrix was created by Boston Consulting Group (BCG). This framework categorizes a company’s product or service based on market growth rate and market share, two key factors. It benefits large organizations with various product offerings, enabling them to choose which product to invest in, develop, or divest. The four quadrants used to classify products are: ●       Stars These are high-growth, high-market share products that need investing. ●       Cash Cows Have low growth but high market share, generating more cash to fund other investments. ●       Question Marks These products have high growth and low market share. ●       Pets Low growth and low market share products. They don’t generate any returns. Quadrant Product Name Market Share Market Growth Strategy Stars Product A High High Invest for growth   Product C High High Continue to grow and dominate Cash cow Product C High Low Maintain market share and grow   Product D High Low Use profits to invest in Stars Question Marks Product E Low High Evaluate and decide whether to invest or divest   Product F Low High Invest cautiously for potential growth Pets (Dogs) Product G Low Low Divest or reposition in the market.   Product H Low Low Minimize investments, consider exit The above table shows how products are categorized based on their market share and market growth, with the strategy column providing an idea of what companies should do with products in each quadrant. Strategic Group Analysis Strategic Group Analysis categorizes companies within an industry into groups based on similar strategies, market shares, and customer bases, depending on what metric you are interested in. These strategic groups are drawn using graphs or charts to enable you to figure out areas to improve or imitate. For example, if you discover that the top three most successful companies in your niche are all grouped into the same pricing strategy, it may be time to change your plan. Perceptual Mapping Perceptual mapping or position mapping is a visual tool that shows how customers perceive your company and its competitors to help you understand your