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How to track competitors more effectively with competitive monitoring

Learn the basics of competitive monitoring, how it can highlight opportunities and threats, and where to apply it in your due diligence.

Strategic planning for businesses is built on careful market research and analysis of your industry, which in turn requires careful tracking your competition. In today’s market environment, one of the most effective frameworks through which to understand your product and its potential value to customers is based on its positioning within its space.

Assessing your product in relation to its competition is encompassed in the process of competitive monitoring, a due diligence strategy and competitor analysis tool that can help your company better pinpoint potential opportunities and threats. Here we will explain what competitive monitoring is, its benefits to your business, and best practices for teams looking to make the most of the competitive monitoring tools we outline below.

What is competitive monitoring?

Competitive monitoring is the process of studying primary and secondary competitors to inform product development, business strategy, and other data-driven endeavors.

With this competitor analysis tool, your team can:

  • Research competing product offerings, positioning, marketing, pricing, and more
  • Track the competition and create a more well-rounded image of other companies in your space
  • Use the collected data as the foundation for contextualizing your business’ own metrics
  • Build a clearer picture of where your company stands among the competition
  • Make qualitative observations like how quickly your company adapts to new technology compared to others in the industry
  • Identify overlapping and divergent client segments with competitors
  • Create a business strategy on a solid foundation informed with information informed by the rest of the space

Why is competitive monitoring important?

Competitive monitoring is a foundational step in market research; even if your team hasn’t formally engaged with the framework, it’s likely that they’ve applied elements of it as part of their due diligence. Strategic decision-making is almost never made in a vacuum without considering the competition, but with competitive monitoring, this effort to account for your company’s surrounding environment can actually be codified and backed up with added rigor and structure.

Competitive monitoring gives your team the groundwork to assess and enumerate strengths and weaknesses, not only for your company, but also for competitors. For example, the fact that your company didn’t engage in M&A for the last two quarters may not seem like a significant data point on its own. However, if your competitive monitoring reveals that all other companies in your space did recently participate in M&A, then this figure now takes on a new meaning and can serve as the basis for further inquiries.

Using competitive monitoring to find gaps in your strategy can be an effective use of the framework, but your team can also use it more proactively in your corporate development strategy as well. Rather than try to find your company’s weaknesses and attempt to correct them, your team can instead use competitive monitoring to highlight competitor vulnerabilities worth acting on. An example of this might be a specific region or client segment they’ve left unaddressed, which your company might be able to capture by developing a new product or adjusting messaging to include them.

Taking a step back from individual companies, competitive monitoring can also be used to highlight industry trends and analysis, helping your team anticipate future developments. Metrics like investment count, AUM, and revenue, collected from enough competitors, can help you get a better picture of the current state of your surrounding market environment and how other companies are reacting to it.

Challenges to competitive monitoring

Competitive monitoring can encompass a broad spectrum of metrics, data-gathering methods, and intended outcomes and it’s this open-endedness that can pose as both a draw and a source of potential pitfalls. Given the incredibly vast amount of companies your team can research and the number of data points therein, it can be a difficult and time-consuming endeavor to collect information on competitors or even know what data and how much of it should be gathered.

Alongside the issue of resource expenditure that comes with competitive monitoring is the question of timeliness, especially when trying to observe a larger group of competitors. It may be that by the time you’ve collected data on all the competitors you wish to analyze, the information you’ve collected on them is outdated and no longer actionable.

These aforementioned challenges occur during the data collecting process, but even getting to this point can prove difficult to some teams. Without proper direction, you might not even know what competitors are worth tracking as part of competitive monitoring and what companies could be considered part of your space. Add to this the difficulty of collecting information on private companies using the majority of data providers and you’ve got a considerable uphill struggle if you don’t have the right tools.

How market intelligence platforms like PitchBook can assist competitive monitoring efforts

As the most trusted public and private market intelligence platform, PitchBook not only offers all the data your team could need to participate in competitive monitoring, but also a wealth of competitor analysis tools that can cut down on your time spent conducting due diligence.

One of our tools that can assist your competitive monitoring is our Market Maps data visualization feature, which provides a bird’s-eye view of your industry and those around it. Market Maps comes with extensive customization options to reflect the markets as you see and experience them and is invaluable for showing how both primary and secondary competitors intersect with your company. This market mapping solution will help you home in on the companies you should be focusing your competitive monitoring on, keep an eye on industry newcomers, and capture the latest metrics from your space.

Platform features like our Emerging Spaces tab can also help you understand your company’s position in the market and allow you to identify new industries that may be emerging either in or adjacent to your own vertical. Having this advance knowledge of new technologies to look out for can not only help your team identify new opportunities to buy, build, and partner, but also get ahead of competitors looking to do the same.

PitchBook is also uniquely positioned among other data providers due to its private market coverage. Data on private companies is historically opaque and difficult to gather, but PitchBook’s industry connections and rigorous research methodology gives our corporate clients access to information they won’t find anywhere else. This exclusive data allows PitchBook clients to conduct more thorough competitive monitoring than companies using other providers and analyze the market from a unique angle.

Patents are another distinctive facet of our data, which we make available on our company profiles. With patent data, our clients are able to get an advanced look at potential competing products, which gives them a lead over companies without this data and time to reposition and strategize. Patent data might then also inform your team’s own product development, signal new potential markets, and, when looked at in the composite give you an indication of where your industry is headed.

Which competitors should you track with competitive monitoring?

As businesses become more global and have the potential to cover a greater number of industries, it’s more important than ever to be thorough and track both direct and indirect competitors. Simply because a company isn’t flagged as being part of your industry now, doesn’t mean that they don’t have the potential expand into it or make adjacent investments that may still affect you.

Your competitive monitoring should include both direct competitors, which are businesses with a functionally similar product to yours, and indirect competitors, whose product is not as comparable but may have overlapping clients or some other ability to impact your sales. In our rapidly evolving market environment, you may see companies fluidly change from being direct and indirect competitors over time, which is why it’s important to cast a wide net with your competitive monitoring.

What should you track with competitive monitoring?

Different teams will have different priorities when engaging with competitive monitoring, like finding out about patents or a competitor’s change in industry. Here are three commonly considered areas that are a good place to begin with.

Financial analysis of competitors

  • Monitoring funding rounds
  • Tracking funding amounts, valuation changes, participating investors
  • Industry trends and analysis

Strategic initiatives and investments

  • Monitoring exits - IPOs, mergers, acquisitions, divestitures and patterns across the market
  • Analyze exit valuations/multiples
  • Track recent investments made by competitors (types of investments, who received, and amount)
  • Identify strategic partners/collaborators

Emerging opportunities and threats

  • Monitor activities of startups and new market entrants
  • Assess potential impact on the market
  • Identify trends/technologies

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Competitive monitoring is the foundation of business tactics and execution, it’s what companies lean on to inform strategic decision-making and anticipate a competitor’s next move. This framework’s open-endedness allows corporate teams to track a vast amount of other companies and an equally large quantity of metrics relating to them. As a self-directed process, competitive monitoring has no shortage of potential traps and areas of inefficiency, but having a data platform like PitchBook can help you simply your due diligence and get more form it than your competitors.

Want to learn more about PitchBook’s market intelligence tools?

Check out our Private Market Intelligence Guide