A Beginner's Guide to Your First Competitive Analysis in the Beauty Industry

The global beauty industry is massive! The latest reports suggest it's worth more than $450 billion, with no signs of slowing down. As you can imagine, there's intense competition that's forcing everyone from small indie brands to huge conglomerates to push for constant innovation. It's tough for new and established brands, and no one can rest on their laurels in this industry.

While larger conglomerates once held a dominant position in the market, that's no longer the case. Competitive analysis in beauty is leveling the playing field, giving even the smallest companies a chance to make a splash. 

Beauty industry competitive analysis goes beyond simply knowing who your biggest rivals are. It's about understanding their strategies, strengths and weaknesses, gaining the insight you need to ensure that your brand stands out.

Contrary to popular belief, beauty brand competitor research doesn't require an enormous budget or complicated tools. In this blog, we'll cover how beauty marketers, product developers and brand founders can use competitive analysis to gain the upper hand in an increasingly challenging market.

Why Beauty Brands Need Competitive Analysis

Beauty market analysis is notoriously difficult. This industry is fast-paced, with trends emerging and fading quickly. Traditional beauty market research isn't enough to gain an advantage. If you want to have an impact, your brand needs to perform competitive analysis.

Competitive analysis helps brands identify new opportunities, avoid potentially saturated spaces and position products more effectively in a crowded market. It's all about understanding what your rivals are doing, including learning about their pricing strategies, marketing, distribution channels and product development pipelines.

This research paints a clearer picture of the challenges you need to overcome. It can also highlight market gaps where brands aren't meeting consumer needs. Those white space opportunities can lead to great success, even for new brands.

Cosmetic competitor analysis can guide everything your brand does, empowering teams to make data-driven decisions about product formulas, marketing messages, go-to-market strategies and more.

Understanding Your Direct and Indirect Competitors

During your research, you can unveil insights that help you learn more about both your direct and indirect competitors. Direct competitors are brands that offer products similar to yours at similar price points. A good example includes one of the many clean beauty brands in the prestige market. Meanwhile, indirect competitors are companies that serve the same customer needs as your brand, albeit in a different way. For instance, mass-market brands or products from adjacent categories to yours would qualify as indirect competitors.

As a beauty brand, you likely have a few obvious rivals. However, you should also view any brand vying for your target customers' attention and wallet as a competitor. Success depends on your ability to meet customer needs better than both direct and indirect competitors.

Not all of your rivals will be apparent to you or your consumers. That's why competitive analysis is so important. Brands can use customer surveys, keyword research and social media monitoring to identify beauty competitors, revealing what they're truly up against.

Identifying Market Segments and Price Positioning

Like any other industry, beauty is monolithic in terms of pricing and competition. The market is split into different segments, each with unique competitive dynamics based on mass market, masstige, prestige, and luxury distinction.

This segmentation is murky, especially in recent years. Spate uses low/medium/high price point segmentation based on real product pricing instead. Either way, Spate can help you review brands across these segments to see which are succeeding daily or doing the best at catering to current trends. That's valuable information.

Every segment has different barriers to entry, margin expectations and competitive factors. Successful beauty industry competitive analysis involves understanding where other brands position themselves. Some will cater to just one segment. Others will have offerings for multiple through sub-brands and special product lines.

Whatever the case, knowing where brands position themselves in the market can help you determine where you fit. That information can guide pricing strategies, demographic targets and more, highlighting new opportunities while helping you be more competitive about where you place your brand.

Key Areas to Analyze in Beauty Brand Competitors

Competitive analysis in the beauty industry involves examining several key aspects of a brand's strategy and operations. Your goal is to paint a crystal-clear picture, unveiling what a brand does well and where they fall short. To achieve this, you need to consider several key factors. These include:

•Product Offering: Scrutinize the types of products competitors offer. Brands should learn about the products offered and consider how they meet current consumer needs.

•Ingredients: Do your rivals offer any special ingredients? Do the ingredients they use align with trending consumer interests?

•Claims: Every brand will make claims about its products to hook consumers in. Understand what claims your competitors are making and how they align with what consumers are looking for.

•Pricing Strategies: Study how rivals position themselves across the pricing segments to identify gaps.

•Distribution Channels: Keep track of which retailers are associated with your competition.

•Marketing Strategies: See how competitor brands are reaching consumers. What tactics are they using to market their products? Which platforms are they using to drive consumer engagement?

Beyond these factors, you should also do your due diligence to see how brands engage with shoppers. Study their social media profiles, explore influencer partnerships and examine community engagement tactics. It's also vital to read customer reviews and sentiment to understand what people love and hate about a brand.

Product Range, Ingredients and Innovation Tracking

To beat your competitors, you must understand everything you can about their product portfolio. Brands can use beauty market analysis to learn more about a rival's approach and strategies for investing development resources. 

Analyze product portfolios to identify any noteworthy patterns, such as trending ingredients they frequently use, common formats and the direction they're taking to innovate. Keep track of that information moving forward. You want to monitor the active ingredients your competitors use in their products, the claims they make and how they position their offerings.

Because brands launch new products all the time, you must keep track of where your competition is heading. Study new launches closely to understand their product development strategy.

Marketing Strategies and Distribution Channels

Understanding your competition's marketing and distribution strategies can make a big difference. Marketing insights can reveal hidden opportunities, underutilized channels and messaging angles that a rival is missing. Spate analyzes what retailers and shopping-related terms consumers are searching for and hashtagging alongside brands to understand where they are looking to buy.

This approach helps identify where competitors are most closely associated from a consumer perspective, including online retailers like TikTok Shop, boutiques, subscription boxes and major retail environments like Ulta or Sephora.

Brands must also observe how their competitors are engaging consumers. Are they doing paid social media advertising? How about working with influencers, community building or content marketing?

Tools and Methods for Tracking Beauty Competitors

There are many ways to conduct beauty brand competitor research, and you don't need expensive tools or extensive resources to do so.

To explore marketing strategies and gain a deeper understanding of how competitors engage with consumers, turn to social media. Social media listening on platforms like Instagram and TikTok will help you see what other brands post and how they communicate with shoppers.

To perform a beauty and skincare competitive analysis that focuses on the attention brands receive in search results, use keyword research tools. They can highlight a brand's ranking for relevant queries and indicate how well it meets consumer needs.

Brands can also monitor brand and retailer websites to track pricing, promotions, product availability and consumer reviews.

As you can see, brands have considerable freedom in how they approach competitive analysis in the beauty industry. There are several sources for obtaining information and tracking data. 

Trend platforms can simplify things for brands of all sizes by centralizing that information in one place. Modern platforms like Spate bring social signals, search data, ingredient tracking and more together for greater efficiency and monitoring.

Social Media Listening and Consumer Sentiment Analysis

Social media holds significant power in the beauty industry. Many trends take off on platforms like TikTok, and gaining attention through a viral moment can lead to great success for brands. As a result, having a social media presence is a must for today's beauty brands.

Monitoring competitors' social media can reveal content strategies, engagement rates and overall customer sentiment. Every platform is different, so brands should track activity across all of them. A platform likeTikTok ismore effective at driving beauty discovery than alternatives like Instagram. Therefore, strategies will differ across the board. Monitoring all profiles will provide a complete understanding.

Read reviews and comments. Social listening can reveal to brands like yours what consumers honestly think about a competitor. Those are honest opinions, and they can be vastly different than the picture brands paint. Because sentiments can change rapidly, ongoing competitive analysis is essential. Track metrics like mentions, hashtags and conversations to see how consumer thoughts evolve.

Search Data and Trend Intelligence Platforms

It's not just social signals that brands should keep an eye on. Search data is also critical, as it reveals what consumers actively seek and desire. Pairing social signals with search data can provide valuable insights into which brands capture actual consumer demand and which don't. 

Brands can use search data to identify which keywords or categories a competitor dominates. It'll also help reveal white-space opportunities and market gaps that your rivals haven't yet capitalized on.

Keeping track of all that information can be overwhelming. Fortunately, trend platforms make it easier to manage that data and surface actionable insights. Platforms can help brands track ingredients, product types, benefits, brand names and more, centralizing that information into one accessible space.

Turn Competitive Insights into Strategic Advantages

Systematic competitive analysis in beauty is key to success in today's challenging market. Understanding your competition paves the way to better product development, stronger brand positioning and more effective marketing decisions. With those insights, your brand can shift from a reactive approach to more proactive strategies that provide a competitive advantage.

Brands use competitive analysis every day to make informed, data-driven decisions about formulas, identify new opportunities and refine their position against the competition. With Spate, you can do the same. Spate is a platform that democratizes market research for brands of all sizes. Use it to learn more about consumer needs and your competitors, taking steps towards success in the beauty industry.

Schedule your Spate demo today to see it in action.

Frequently Asked Questions (FAQs)

How do I identify my main competitors in the beauty industry?

The best way to identify beauty competitors is to perform in-depth competitive analysis. Analyzing search data, social signals and more can help reveal both direct and indirect competitors.

What are the most important factors to analyze about beauty competitors?

There are many factors to analyze when understanding your competition. Some of the most important include ingredients, formats, claims, benefits, concerns, pricing, and positioning.

How often should beauty brands conduct competitive analysis?

Competitive analysis should be an ongoing effort. Things change quickly in the beauty industry. Analyze new product launches and monitor social activity to stay in the loop. When changes occur and new opportunities arise, you'll know about them.

What tools help track beauty brand competitors?

Brands can use various tools for competitive analysis. Keyword research tools can reveal consumer insights and competitor rankings. Meanwhile, social listening tools make monitoring engagement a breeze. Intelligence platforms bring all that data together for easy accessibility and actionable insights.

How can small beauty brands compete with major conglomerates?

Small, indie brands can compete with larger conglomerates through competitive analysis. Information about the competition can highlight missed opportunities, untapped potential, and white spaces that other brands haven't yet capitalized on.

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