What is a Competitive Analysis — and How Do You Conduct One?

Competitive analysis is an important part of any business plan, whether you’re a small business or competing with big brands. It helps you understand where your brand stands in the market, what your competitors are doing right or wrong, and where your business can grow.

In this article, we’ll guide you step by step through the process of competitive analysis (also known as “competitor research“), offering tips along the way. You can choose to follow each step or focus on specific parts that will help you understand your competitors better and stay ahead in the market.

What is Competitive Analysis?

Competitive analysis involves comparing your competitors to your brand to learn about their strengths and weaknesses. It helps you see how they position themselves in the market, what strategies they use, and how they grow their business. By doing this, you can learn what works and find ways to improve your own business.

Remember, competitive analysis isn’t about copying others or just looking for their mistakes. It’s about learning from what they do well and avoiding their mistakes. It’s a way to understand the market and make smart decisions for your own business growth.

Why Should You Do a Competitor Analysis?

If you’re wondering whether it’s worth the time, competitive analysis gives you a full view of the market and your place in it. Here are six reasons why you should do a competitor analysis.

1. Find Competitors’ Strengths and Weaknesses

What are your competitors doing right? By studying their strengths, you can learn what they did to grow and succeed. Identifying their weaknesses can also show you areas to improve in your own business.

Tip: Check customer reviews to spot weaknesses your competitors haven’t addressed, then use these insights in your own marketing or product development.

2. Identify Opportunities

Analyzing competitors can help you spot new opportunities for your business. Look at their messaging to see what works for them, and think about how you can use similar ideas in your own marketing.

Tip: Don’t just copy competitors. Focus on what fits your business and will truly help you grow.

3. Find Your Differentiators

Competitor analysis is a great way to reflect on your business and figure out what makes you different from others. You’ll spot ways to set your business apart and see new ideas to try.

Tip: Don’t just focus on the biggest competitors. Look at businesses closer to your level for a more honest view.

4. Understand Your Target Audience Better

By studying your competitors, you can learn more about your audience’s preferences and complaints. This helps you understand their needs and find ways to satisfy them.

Tip: Social media, reviews, and surveys are great places to find out what your audience likes and dislikes.

5. Discover New Competitors

Sometimes, you might miss competitors that are not on your radar. Searching online for industry-related terms can reveal other businesses that target the same audience, even if they don’t offer exactly the same products.

Tip: Look for businesses that rank high on Google for your keywords — they could be your competitors.

6. Set Benchmarks for Success

A competitive analysis lets you set realistic goals based on your competitors’ growth. You can use this information to track your progress and see if you’re on the right path.

Tip: Check your progress regularly, every few months, to see how your business is doing compared to your competitors.

What is Competitive Market Research?

Competitive market research is a process where you analyze your competitors to better understand the market and how your business fits in. It’s more than just comparing products or services. It looks at what makes your offerings different from others and how you can use those differences to your advantage. This research helps you create a strong marketing and sales strategy, setting your business apart in a busy market.

Next, we will guide you through the steps to do a competitive analysis that fits your brand. But first, let’s cover the key aspects you need to look at.

Key Aspects to Include in Competitive Analysis

Before diving into the details of competitor research, here are the main points you should cover for each competitor:

• Overview: A brief description of the company—location, target market, and audience.
• Primary Offering: What they sell and how it compares to your brand.
• Pricing Strategy: Compare your prices with theirs for similar products.
• Positioning: How they present themselves in the market.
• Customer Feedback: What customers say about them.

How to Conduct Competitive Analysis in 5 Simple Steps

Here’s a quick look at how to do competitive analysis. After this, here we discuss each step with more detailed advice. The main goals are to:

• Find gaps in the market.
• Develop new products and services.
• Identify trends in the market.
• Improve your marketing and sales.

With tools like AI helping with research, competitive analysis has become easier and faster than ever. In fact, 33% of marketers say AI is the most helpful tool for research, according to HubSpot’s 2024 report.

1. Identify and Categorize Competitors

The first step is to recognize all possible competitors, including lesser-known ones. It’s important to understand everyone in the market. Once you’ve listed competitors, organize them into these categories:

• Direct Competitors: These brands offer the same products or services to the same target audience. They are your biggest competitors.
• Indirect Competitors: These brands solve the same problem but with different solutions, which can offer opportunities for your brand.
• Legacy Competitors: These are established companies with a solid reputation in the industry.
• Emerging Competitors: New brands with fresh business models and unique offerings that may disrupt the market.

2. Determine Each Competitor’s Market Position

Now that you know who your competitors are, it’s time to assess where they stand in the market. This helps you understand your own position, too. You can create a graph with two factors: market presence and customer satisfaction. This will show where each competitor falls:

• Niche: Companies with a low market share but high customer satisfaction, usually target specific segments.
• Contenders: Brands with a strong market presence but low customer satisfaction.
• Leaders: Companies with a large market share and high customer satisfaction.
• High Performers: Newer brands with high satisfaction but lower market share.

3. Benchmark Key Competitors

With a clearer picture of who your competitors are and where they stand, it’s time to dig deeper into what they do well and where they can improve. Benchmarking involves looking at several factors:

• Quality: Compare product features and customer reviews.
• Price: Compare pricing strategies and get feedback on value.
• Customer Service: Examine how they handle customer support.
• Brand Reputation: Understand how they are perceived in the market.
• Financial Health: If possible, analyze financial data like revenue and profits.

4. Analyze Their Marketing Strategy

Understanding how your competitors market their products is essential. Take a look at all their marketing channels and how they communicate with their audience. Key areas to focus on include:

• Website: Look at the structure and messaging.
• Email: Subscribe to learn about their email campaigns.
• Paid Ads: Check if they run ads on search engines.
• Thought Leadership: See if they use content like podcasts, webinars, or articles to build authority.
• Social Media: Analyze their presence on social platforms.
• Partnerships: Look at any strategic partnerships they may have.

5. Conduct a SWOT Analysis

The final step is to conduct a SWOT analysis for each competitor (and your own brand). This helps you identify:

• Strengths: What advantages does your brand or a competitor have?
• Weaknesses: What areas need improvement?
• Opportunities: What market trends or niches are available?
• Threats: What risks could harm your business or theirs?

By comparing your strengths to your competitors’ weaknesses, you can see where your brand can improve and where you can stand out.

How to Do a Competitive Analysis: A Simple Guide

1. Identify Your Competitors

The first step is to figure out who you’re competing with. It may not always be who you expect. Start by asking your internal team and even your customer service staff who they see as competitors. You can also look at what other brands come up when searching your main keywords online.

Tools like SparkToro, SEMRush, or Ahrefs can help you find competitor data on keywords, rankings, and engagement. The goal is to find names that keep showing up and some surprises along the way, as these could be competitors you hadn’t thought of.

2. Check What Products Competitors Offer

Once you have a list of competitors, check out their products and services. Look at what they offer, how much they charge, and what discounts they provide. David Hunter from Local Falcon suggests looking at their customer reviews, FAQs, and even forums for hidden product details that may not be visible on their website. Understanding their pricing, sales approach, and product packaging can give you an edge.

3. Research Sales Tactics and Results

Next, look at how your competitors sell their products. Sign up for free trials, visit their sites, and subscribe to their newsletters to understand how their sales process works. Pay attention to their sales funnel – do they offer free trials, discounts, or special promotions? Use tools like Meta Ads Library or Google Ads to see how they run ads. Also, asking clients who’ve switched from competitors can give you valuable insights into their sales methods.

4. Look at Their Pricing and Perks

Price is key, so compare your competitors’ prices with yours. If your product has extra features or quality, you might consider setting a higher price. If you want to attract budget-conscious customers, you might go lower than your competitors. Don’t forget about perks like warranties or loyalty programs that could influence customers’ buying decisions.

5. Check Their Shipping Costs

High shipping costs are a common reason for customers abandoning their shopping carts. Check what your competitors charge for shipping and if they offer free shipping or special deals. Understanding their shipping strategies can help you stay competitive.

6. Understand Their Marketing Strategy

Analyze where and how your competitors market their products. Look at their website, ads, and social media presence. Tools like SEMrush can help you understand which marketing channels are working for them. Pay attention to their ads and messaging and think about how you can improve your own marketing approach.

7. Examine Their Content Strategy

Take a closer look at the content your competitors create. Do they have blogs, videos, or podcasts? Are they posting regularly? By studying their content, you can figure out what works and what doesn’t. Pay attention to the tone, frequency, and engagement with their content to see where you might improve.

8. Check the Technology They Use

Understanding the technology your competitors use can help you improve your own business. Tools like BuiltWith and Wappalyzer reveal what software they use for marketing, customer service, and more. Knowing their tech stack can give you an edge, especially if they’re scaling quickly.

9. Analyze Engagement on Their Content

It’s important to look at how their audience interacts with their content. Track likes, comments, shares, and overall sentiment to understand what resonates with their audience. This can help you create content that better engages your own audience.

10. Look at Their Content Promotion

How your competitors promote their content can tell you a lot. Do they use paid ads, influencers, or partnerships? Tracking backlinks and promotions can help you spot opportunities to improve your own content promotion strategy.

11. Study Their Social Media Strategy

Social media is a powerful tool for engagement. Look at how often your competitors post, what kind of content they share, and how their followers respond. Are they focusing more on building awareness or driving sales? Their strategy can help you refine your own approach.

12. Conduct a SWOT Analysis

Finally, perform a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. This will help you understand where your business stands compared to your competitors. It’s about identifying your strengths, their weaknesses, and the opportunities and threats in the industry. This analysis helps you create actionable strategies to stay ahead in the market.

Competitive Analysis Templates: A Simple Guide

Competitive analysis can be tricky, especially when you’re comparing several companies and products at once. To make it easier, we’ve created 10 free templates to help you see where you stand against the competition and figure out how to gain more market share.

When you download these free templates, you will get access to:

• Two-Feature Competitive Landscape Chart
• Competitor Strategic Overview
• Content Marketing Analysis Template
• You vs. Competitor Side-By-Side Comparison
• Competitor Battle Card
• Multiple Competitor Feature Comparison
• Multiple Competitors Scoring Card
• SWOT Analysis Template
• Categorical Feature Comparison Template
• Competitive Product Analysis

What is Competitive Product Analysis?

Competitive product analysis is different from the overall competitive analysis we’ve talked about. It focuses on comparing products, looking at the key differences and similarities between products in the same market. The goal is to avoid losing market share to competitors with similar products.

Here’s how competitive product analysis works, using an example:

1. Assess Product Pricing

First, look at how much your product costs compared to your competitors. For example, Nintendo offers different models of its Switch console with prices ranging from $199 to $349. Meanwhile, Sony’s PlayStation 5 models range from $349 to $699.

2. Compare Key Features

Next, compare the important features like processing power, memory, and storage. This shows how your product stacks up against others.

3. Identify Differentiators

Look for what makes your product unique. For example, the Nintendo Switch can be used both as a handheld and a docked console, offering flexibility. The PlayStation 5 focuses on exclusive games to attract customers.

4. Find Market Gaps

The last step is to look for gaps in the market. For example, cloud-based gaming is becoming more popular. Companies like Nvidia and Google are already making progress, and this could be a potential area to explore if bandwidth and latency issues are resolved.

Frequently Asked Questions About Competitive Analysis:

1. What is a competitive analysis framework?

A competitive analysis framework is a structured way to evaluate competitors. It helps businesses identify their strengths, weaknesses, and market position to make better decisions.

2. How do you do a good competitive analysis?

A good competitive analysis involves:

• Identifying your competitors
• Analyzing their products or services
• Checking their market position
• Reviewing their marketing strategies
• Assessing their financial health
• Gathering customer feedback
• Regularly updating your analysis

3. What are the five parts of a competitive analysis? The five key parts are:

• Company Overview: A brief look at the competitor’s background.
• Product/Service Analysis: A comparison of what they sell.
• Marketing Strategy: Their promotional approach and target audience.
• Operational Analysis: How they manage operations, supply chain, and customer service.
• Strengths and Weaknesses: What they do well and where they’re vulnerable.

4. What are the 3 C’s in a competitive analysis? The 3 C’s are:

• Company: Your own business’s strengths and weaknesses.
• Customers: Understanding your target market.
• Competitors: Analyzing your direct and indirect competitors.

5. Is SWOT analysis part of competitive analysis?

Yes, SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a part of competitive analysis. It helps identify where your competitors are strong or weak, allowing you to adjust your strategy.

Conclusion: Why Competitive Analysis Matters

Competitive analysis is key for business growth. But it starts with understanding your own position. Before comparing competitors, assess your business with the same criteria you’ll use for them. This self-assessment will give you a clearer picture of your strengths and weaknesses.

Remember, competitive analysis isn’t a one-time task. Markets change, and competitors evolve. Keep your analysis up-to-date to stay ahead of trends and adapt your strategies.