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How to Perform Competitor Analysis: A Guide for Beauty Brands

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With the beauty industry generating more than $100 billion in annual worldwide revenue, it’s no surprise that it’s such a competitive market. Thousands of beauty brands vie for a slice of that ever-increasing pie, from the established giants of the industry to fresh-faced startups looking to make an instant impact.

In such a competitive industry, then, it’s essential to understand your competitors, evaluate what they do well (and what they don’t), and identify where you might be able to gain a competitive advantage. That’s where competitor analysis comes in.

But just what is competitor analysis? Why is it so important? And as a beauty brand, how do you do it? Read on, as we address all of these questions.

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What is Competitor Analysis?

Competitor analysis is the process of assessing and evaluating the strengths and weaknesses of businesses and brands that offer similar products and services in the same industry or market.

This type of evaluation is important for companies and individual entrepreneurs in order to understand their competitive advantage and how they can effectively stand out from the competition.

Competitor analysis serves as a crucial step in the strategic planning process of a business. It involves researching the internal and external environment of competitors to gain a better understanding of the competitive landscape and to identify opportunities for growth.

For example, an effective competitor analysis can help a business identify potential threats, discover markets for their product or service, and uncover any gaps in the existing market.

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Why is Competitor Analysis Important?

Competitor analysis is an important and powerful tool that can help businesses and entrepreneurs understand their position in the marketplace and identify areas where they can capitalize in order to gain an edge over their competitors.

By conducting regular competitor analysis, beauty businesses can stay ahead of the competition and increase their chances of success. The benefits of competitive analysis include:

Identifying Areas of Opportunity

Performing a comprehensive competitor analysis can help a beauty business identify areas of opportunity where it can offer services or products that are underserved compared to competing businesses.

By recognizing these gaps in the market, the business can create a strategy to target these areas and build an advantage over its competitors.

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Evaluating Pricing

A beauty business can use competitor analysis to evaluate the pricing of competing services or products and determine how its pricing compares. This data can be used to either adjust pricing to better compete or to adjust the value proposition of the company’s services or products to better target customers.

Uncovering Market Trends

By analyzing the target markets of competing businesses, a beauty business can uncover customer trends that can be used to refine its own product offering and customer targeting strategies.

For example, by understanding the features that customers value most in competing services or products, the business can create products that better meet the demands of the market.

Strengthening Marketing Strategies

Competitor analysis can help a beauty business strengthen its marketing strategies by providing insights into how its competitors are marketing their services or products. This data can be used to understand the strengths and weaknesses in the business’s own marketing strategies and to adjust them accordingly.

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How to Perform Competitor Analysis: A Step-By-Step Guide

An effective approach to competitor analysis encompasses a number of key steps. This may make it seem like an arduous task — and it will require a great deal of planning and commitment, admittedly.

But it’s important to cover each of these areas in detail to ensure that you’re able to glean the most information from your competitors and identify opportunities to gain a competitive edge.

1. Identify Your Competitors

Before you can even begin conducting analysis of your competitors, you need to know who they are.

These won’t just be beauty brands offering very similar products or services — though these will represent your most direct competition — but also brands which might crossover with yours despite operating in a different market (for example, an online fashion retailer might also sell makeup and cosmetics, making it an indirect competitor).

You can find out who your competitors are in a number of ways:

  • Customer surveys: ask visitors to your store or website which other brands they buy (or would consider buying) from.
  • Keyword research: use an SEO tool like Ahrefs to explore keywords linked to your industry, and see which companies are already ranking for them.
  • Social media: scour social media platforms — using a tool such as Social Searcher — to see which brands and keywords are being mentioned most frequently.
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2. Research Their Product Offering

Once you’ve identified your list of competitors, you’ll want to closely analyze their products or services to understand what it is they’re offering and how their proposition differs from (or crosses over with) your own. From there, you can develop your own product strategy, determining which products to include in (or add to) your range.

Your competitor’s website is a good place to start, as it’ll give you insight into their most popular products and the ones they’re promoting heavily. You might even decide to purchase a few of their products and test them out for yourself, reviewing the quality, the ingredients, the packaging, and so on.

When conducting product-based research, seek to answer the following questions:

  • What are their key products and services?
  • Which products are most popular with their customers?
  • What are the main features and benefits of their products?
  • Who appears to be the target audience of their products?
  • What kind of language do they use to describe their products?
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3. Analyze Their Prices

A key aspect of competitive analysis is price monitoring. Understanding your competitors’ prices will inform your own pricing strategy and enable you to ensure you’re offering value to your customers.

Of course, this is likely to be a mammoth undertaking if done manually, but this is where web scraping can help — a technique which makes extracting data from websites quicker and easier. Find out more in this guide to data extraction from ScrapingBee.

Pricing analysis will also help you establish what end of the market each competitor sits at: for example, are they a high-end beauty brand selling premium products (with high prices to match) or are they at the budget end of the scale, offering more affordable everyday beauty basics?

You can then work out where your brand sits along this scale, helping you to tailor your marketing messaging and identify the right target consumer.

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4. Look Into Their Marketing Tactics

Another important aspect of competitor analysis is analyzing how your competitors market their products and services.

This will help you identify their target consumer — the copy and the visuals they use will give you a clue as to the demographics they’re going after — and enable you to learn more about their brand identity and core values. You can analyze their key marketing techniques in a number of ways:

  • Sign up to their email subscriber list, and analyze the frequency and content of their marketing emails
  • Follow their social media accounts, and keep a note of what (and when) they post, how they engage with their followers, and so on
  • Frequently visit their website to which promotional tactics they’re using: what are they featuring in their banners and images? Are they promoting offers and discounts?
  • Perform Google searches for specific brand-related keywords: are they running paid search ads? Are they appearing organically in search results?
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5. Assess Their Strengths and Weaknesses

Once you’ve performed the preceding five steps, you’ll have a wealth of information about your competitors that you can then turn into an examination of their overall strengths and weaknesses.

What do they do well? Where might they be falling short? Can you take inspiration from their successes? Look for opportunities to exploit their shortcomings by luring customers from their brand to yours?

This exercise will help you identify the key areas to focus your strategy on. For example, if your direct competitors have a great product but they’re not marketing it effectively, you can ensure your marketing content is more compelling.

Alternatively, they might be overpricing their products despite being great at promoting them, in which case you can undercut them by being more affordable.

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6. Establish Your Competitive Advantage

Ultimately, the point of all of this is to gain a competitive edge over other brands in your industry. What is the one thing (there may be more than one thing) that would convince a consumer to choose your beauty brand over a direct (or indirect) competitor?

Look back at each step of your competitive research and identify the key areas where you think you can outdo your competitors (if you aren’t doing so already). For example:

  • Do you have a unique product that none of your competitors are offering?
  • Can you offer a better overall customer experience than your competitors?
  • Can you undercut your competitors by offering more value for money?
  • Are you able to create more unique, more engaging marketing campaigns than your competitors to acquire new customers?

Whether your beauty business is new to the market or a well-established brand, competitor analysis is a key part of any growth strategy.

It enables you to gain a better understanding of the market, identify gaps and opportunities, and strengthen your own product and marketing strategies. It’s not something that should be overlooked.

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