Are you skeptical about the merits of doing a competitive audit?
Many marketers are. One of our clients complained that the last audit their previous agency conducted was too costly and time consuming, and looked like “something my daughter could have done in high school.” Fortunately, we were able to convince them that using our methodology would yield a more insightful competitive audit.
Sure, you can buy SPINS and IRI data. And you’re deeply familiar with your category and your business. What can a thorough competitive audit tell you that you don’t already know?
Here’s the thing: Data is only half the equation. To derive meaningful insights — that you can base decisions on and drive business action from — you need analysis.
A competitive audit provides a realistic, unbiased assessment of your current state and your opportunities based upon competition, your company culture, and your brand’s strengths and weaknesses. This analysis, combined with a deep understanding of the changing nature of consumer preferences, provides the platform on which brand strategy is built.
Category Audit vs. Competitive Audit: What’s the Difference?
Marketers often confuse or conflate the category audit with the competitive audit, so let’s start by defining the two types of research. Both are useful, and we often run them sequentially for our clients.
A category audit is limited to a single aisle. Let’s say you’re a bread bakery. A category audit examines the communication conventions for bread brands on the shelf. It looks at design and positioning trends among bakeries by comparing bread brands to one another.
A competitive audit takes a wider and higher view to answer the question: What else is competing for the consumer’s dollar? Considering a bread brand, a category audit looks at what she might purchase instead of bread. If her family likes toast for breakfast, she might also consider cereal or granola bars. Or bagels or tortillas or muffins.
To call it a competitive audit is a bit of a misnomer: It isn’t about your competition, it’s about your brand.
What a Competitive Audit Can Tell You
A competitive audit accounts for the entire landscape in which your brand lives in the consumer’s world. It looks beyond the aisle and the category to identify your real competition, your real limitations, and your real opportunity.
While we often begin with purchased category and demographic data, our competitive audit process also includes online research. For example, shopping for your products on Amazon reveals other products consumers also look at or place in their carts — products that might surprise you. We’ll scour social media to identify what people are saying about your brand and others in your space. We also conduct in-store research like mystery shopping identifying: Where do consumers go after your category? What else do they buy? What else do they have to walk past in order to find you? What else is catching their eyes?
Compiling all this information is essential, but it’s not the end of the game. When we conduct a competitive analysis, we benchmark your brand against the market on seven key factors including your direct-to-consumer and social media marketing, your in-store presence, and your advertising and public relations.
If you’re a frozen meal brand, say, you may think you’re competing with other products in the freezer case. In fact, you’re competing against grocery meal kits and meal kit subscription services, and also fast casual restaurants. A thorough competitive audit will look at all of those brands and channels.
Competitive Audits Answer Pivotal Brand Questions
Our competitive audit process can answer key business questions for your brand, including:
- Where should we focus that we haven’t before?
- What are we missing that we didn’t see?
- Where should we stop spending money, and how should we invest instead?
- Are our mission and values aligned with the products we’re putting out in the world? Are they unique?
- Are we competing on price, features, and/or benefits?
- How do we need to talk with customers? Are we doing a good job telling our brand story? Do consumers even care?
When we began working with DRY Sparkling Soda, they were winning awards for their great packaging (and rightly so), but having difficulty translating that into sales. We started with an audit of the soda category then widened our scope to a competitive audit. That revealed both the problem and the opportunity: DRY was shelved next to brands like Fanta, but the product was very different: dry and lightly flavored. Consumers weren’t choosing DRY among flavored soda brands, and when they did, they were disappointed because the product was nothing like Fanta.
DRY didn’t have the right placement, so velocity suffered. Our category audit compared DRY to other flavored sparkling waters — and then we looked at the liquor aisle. We repositioned DRY as a premium alternative to San Pellegrino and LaCroix, not just as a standalone beverage but also a great cocktail mixer. DRY saw 20X growth in the first three years after our repositioning.
Why a Competitive Audit Seems Scary
Marketers are often wary of deep consumer research and analysis. They think they know the brand and its fans better than anyone and that spending on an audit is wasteful. They’re too immersed in group think and too invested in their current marketing strategies to consider alternatives.
Inevitably, a competitive audit will reveal that you’ve been making mistakes with the brand, pointing in the wrong direction, pursuing the wrong channels, innovating the wrong products. That may not be news you want to hear. But it is news you can act upon. We can guide you through the process and help you find hope and opportunity.