Competitive Analysis – What is it and how to easily get started?
Competition is fierce out there, right? You’re not alone in thinking so. A surprising 60% of businesses are turning to competitor analysis to get an edge. This guide is your roadmap to understanding competitor analysis—what it is, why it matters, and how to do it effectively, with handy templates and tools included. Ready to outsmart your competition?
What is competitive analysis?
So what’s all the buzz about competitive analysis? Competitive analysis, sometimes called competitive research, is your secret weapon for understanding the battlefield that is your industry. It’s not just about knowing who your competitors are but diving deep into their operations. You’re looking at their marketing moves, customer reviews, and even the nitty-gritty details like their pricing strategies. Ever wondered how Brand X is killing it with their new product? A competitive analysis can give you those answers.
This isn’t a one-size-fits-all process. You can go broad, looking at the overall market landscape, or get super specific, like dissecting a competitor’s social media campaign. The goal? To find your own company’s strengths and weaknesses and see how they stack up against the competition. It’s like doing a SWOT analysis but for the entire neighborhood, not just your own house.
So, whether you’re trying to understand your industry better, find different types of competitors, or even reevaluate your current marketing strategy, competitive analysis gives you the benchmarks and insights you need. Ready to play detective?
What is Competitive Market Research?
Competitive market research is the process of gathering and analyzing data about competitors, industry trends, and market dynamics to better understand your business environment. This research focuses on identifying the strengths, weaknesses, opportunities, and threats within the competitive landscape, helping businesses make informed decisions about positioning, product development, and marketing strategies.
By studying competitors’ pricing models, customer reviews, marketing campaigns, and operational practices, businesses can uncover valuable insights into what resonates with the target audience. Competitive market research not only helps in benchmarking against rivals but also provides a roadmap for identifying gaps in the market that can be exploited. This proactive approach ensures that businesses remain agile and responsive to industry changes, giving them a sustainable competitive edge.
Competitive Analysis vs. Market Research
Although competitive analysis and market research are closely related, they serve distinct purposes in strategic decision-making:
Focus:
Competitive analysis specifically examines direct and indirect competitors, focusing on their strengths, weaknesses, strategies, and market positioning. Market research, on the other hand, has a broader scope, analyzing the entire market, including customer behavior, industry trends, and potential opportunities.Objective:
Competitive analysis aims to understand rivals to identify areas of competitive advantage. Market research focuses on understanding the market landscape, customer needs, and external factors like economic or regulatory changes.Data Sources:
Competitive analysis relies heavily on competitor data, such as marketing campaigns, product pricing, customer reviews, and industry benchmarking. Market research includes data from customer surveys, focus groups, demographic studies, and macroeconomic analyses.Outcome:
Competitive analysis results in actionable insights for outperforming competitors and strengthening market position. Market research helps businesses identify growth opportunities, refine their product offerings, and better serve their target audience.
In essence, competitive analysis is a subset of market research, providing focused insights on competitors within the larger context of market dynamics. Both are critical for developing a comprehensive business strategy.
What is included in competitive analysis?
Business & Company Metrics
Firstly, it's essential to examine the financial and operational metrics of your competitors. This includes profitability, market share, and growth rates. Look at public financial reports, industry reports, or LinkedIn to gauge metrics like profitability, funding, and growth rates.
Product
For product analysis, start by making a list of competitor products and their features. Use customer reviews and feedback to assess quality and performance. If possible, purchase the product yourself for a hands-on evaluation. Take note of what sets popular products apart.
Customers & Awareness
To understand customer base and market awareness, monitor social media channels, customer reviews, and public surveys. Use tools like Google Trends or social listening platforms to gauge public awareness and sentiment. Pay attention to the demographics they are targeting and how effectively they are engaging their audience.
Marketing Strategy
Lastly, evaluate marketing strategies by subscribing to competitors' newsletters, following them on social media, and tracking their advertising campaigns. Use tools like SEMrush or Ahrefs to analyze their SEO and PPC strategies. This will give you a clearer picture of their marketing reach and effectiveness.
Why Perform a Competitive Analysis?
You might be wondering, “Is competitive analysis really worth my time?”. We definitely think so.
Competitive analysis isn’t a magic wand, but it is a valuable tool. It helps you identify opportunities and threats in your market landscape, enabling you to make decisions that are not just reactive to what your competitors are doing, but also proactive in shaping your own path. In a business environment where knowledge is power, competitive analysis offers you a way to gather that crucial information.
Now that we’ve touched on the ‘why,’ let’s explore the specific benefits this practice can offer.
Benefits of Competitive Analysis for your company
Whether you’re a small business owner wearing multiple hats or a marketer in a larger organization, the importance of competitive analysis can’t be overstated.
Here’s why it should be on your radar:
- Identify Strengths and Weaknesses: For small business owners, this is your chance to see how your brand stacks up in the community. For marketers in larger firms, it offers data-driven insights to refine your marketing strategies.
- Win Competitive Deals: Businesses that conduct competitive analyses have a 20% higher chance of winning competitive deals. For a small business owner, this could mean landing that crucial contract. For a marketer, it could translate to outperforming competitors in a campaign.
- Identify Your USP: Small business owners can use this information to carve out a unique space in the local market. In contrast, marketers in larger organizations can use it to differentiate their brand on a larger scale.
- Understand Your Market and Spot Market Gaps: Knowing your competitors helps you identify market gaps. For a small business, this could mean offering a new service that the community needs. For a large corporation, it could mean breaking into a new regional or demographic market.
- Spot Industry Trends: This is your chance to be a trendsetter or a fast follower, depending on what suits your business model and risk tolerance.
- Set Benchmarks for Future Growth: For small business owners, this provides a roadmap for where you could be in 5 or 10 years. For marketers in larger organizations, it offers KPIs against which to measure campaign or quarterly success.
When and how often should you perform competitive analysis?
The frequency of your competitive analysis will depend on various factors, such as the volatility of your industry and the resources you have at hand. For small business owners, a quarterly review might suffice to keep tabs on local competitors. On the other hand, marketers in fast-paced industries like tech or fashion might find monthly or even weekly analyses more beneficial. The key is to make it a regular part of your business strategy. It’s not a “set it and forget it” kind of task. Market conditions change, new competitors emerge, and consumer preferences evolve. Regular competitive analysis allows you to adapt and pivot, ensuring you’re not left behind.
How do identify your competitors when doing Competitor Analysis?
Identifying who your competitors are is the foundational step in any competitive analysis. Doing it wrong can lead to misguided strategies, wasted resources, and missed opportunities.
Here’s a guide on how to get it right and who to track as your competitor:
Direct and Indirect Competitors: Start by listing businesses that offer similar products or services. These are your direct competitors. Also, consider companies whose products or services could substitute yours; these are your indirect competitors.
Online Search: A simple Google search can reveal a lot. Use keywords related to your industry to find businesses that appear in search results.
Industry Publications and Reports: These can provide insights into market leaders, emerging players, and even potential disruptors in your industry.
Customer Feedback: Listen to your customers. They often compare you to your competitors and can provide valuable insights.
Social Media and Forums: Platforms like LinkedIn, Reddit, or industry-specific forums are good places to find discussions about competitors.
Competitors Finder Tool: Tools like Competitors Finder can automate this process, providing you with a list of competitors based on your industry and other parameters.
By using a combination of these methods and tools, you’ll get a well-rounded view of who your competitors are, setting the stage for a more in-depth analysis.
How to perform Competitor Analysis in 6 Steps
Step 1: Define Your Competitors
Use the Competitors App Competitor Finder to identify who you're up against in the market.
Step 2: Get Started with a Free Trial
Sign up for a Competitors App Free trial account to unlock a wealth of features designed to give you an edge.
Step 3: Add Your Competitors
Add your competitor domain on the field. Competitors app will automatically detect their social media, most important website pages, and reviews
Step 4: Review New and Historical Activity
Start diving into the historical activity of your competitors. This will give you a clearer picture of their past strategies and performance metrics. At the same time keep an eye for new updates.
Step 5: Benchmark Yourself
Use Competitors App Dashboard and the data you've collected to benchmark your company against the competition. This will help you identify your strengths and weaknesses in the market.
Step 6: Save insights and add notes to collect and explain the best competitor strategies
Finally, utilize one of our competitor analysis templates to compile all your findings into a comprehensive report. Share this with your team. It's important to add actionable tips at the end of the page.
Download our Free Competitor Analysis Template
Want to dive into competitive analysis but don’t know where to start? We’ve got you covered, our template library covers all the major processes you need to get your competitive function running smoothly.
Access the template for competitive analysis from here. For more templates, you can access our blog which includes 15 competitor analysis templates.
Competitive Analysis Techniques: Our Top 3 Picks
Competitive analysis is not an easy task. Instead, it’s a multifaceted approach that requires a deep understanding of various techniques and the right timing for each. Setting the techniques wrong could set you up for multiple hours of work without output. To save you time we collected our favorite techniques below:
SWOT Analysis
- What is it?: SWOT Analysis helps you identify Strengths, Weaknesses, Opportunities, and Threats related to your competitors. When to perform?:
- It’s a technique used for macro competitive analysis and is deal for the initial stages of a new project or when re-evaluating your market position.
- How to perform one?: Look at public data to understand your competitor’s size, team talent, and financial updates. All this can create a really strong overview of how your competitors compete.
Competitor Benchmarking
- What is it?: This involves comparing specific metrics like SEO rankings and social media engagement between you and your competitors.
- When to perform?: Best done on a monthly or quarterly basis to keep your strategies aligned with market trends.
- How to perform one? : Utilize Competitors App to track SEO rankings for specific keywords and to monitor social media metrics, providing a comprehensive benchmarking overview.
Customer Reviews Analysis
- What is it?: Analyzing customer reviews and feedback to understand what consumers like or dislike about your competitors.
- When to perform?: Continuously, as customer sentiment can change rapidly and impact your strategies.
- How to perform one with Competitors App?: Use Competitors App’s Review feature to collect and identify the best and worst competitor reviews. Ready to understand what people hate about your competitor?
Apart from these techniques, there are multiple other methods like market segmentation analysis, pricing analysis, and feature comparison. To learn more about these and other techniques, check out our blog post, “15+ Techniques for Comprehensive Competitive Analysis.”
Choosing the right competitive analysis tool
When it comes to competitor analysis, having the right tools at your disposal can make all the difference. These tools empower you to gain valuable insights into your competitors’ strategies and stay ahead in the game. To explore a comprehensive list of competitive analysis tools and learn how to use them effectively, visit our dedicated article on Competitive Analysis Tools. Whether you’re tracking SEO, social media, PPC, or more, these tools are your key to success in the competitive landscape.
Digital Competitive Analysis
Understanding your competitors’ online strategies is more important than ever. This isn’t just about who has the flashiest website; it’s about how effectively they’re using various digital channels. Here are the key pillars to consider:
Social Media Competitive Analysis
Examine your competitors' social media presence. What platforms are they on? How often do they post? What's the engagement like?
SEO Competitive Analysis
Look into how your competitors are performing in search engine rankings. What keywords are they targeting? How well are they ranking for those keywords?
PPC Competitive Analysis
Pay attention to your competitors' paid advertising strategies. Are they running Google Ads, LinkedIn Ads, or social media ads? What keywords are they bidding on and who do they target?
Website Competitor Analysis
Monitor your competitors' websites. What is their website speed? What changes are they making to their website? Do they have a blog or other content that adds value?
Competitor Business Analysis Examples
Suppose you’re part of a burgeoning startup that offers digital marketing services tailored for local bakeries. You recognize the need to understand your competitive landscape better, so you embark on a competitive analysis journey. Here’s a step-by-step breakdown:
Step 1: Start by identifying your competitors. A quick Google search for “digital marketing for local bakeries” can give you a list of companies to consider.
Step 2: Dive into their online presence. Examine their websites, customer testimonials, and service offerings. Use tools like Competitors App to get a sense of their SEO strategies.
Step 3: Analyze your own company’s strengths and weaknesses through a SWOT analysis. This will help you understand where you stand in comparison to your competitors.
Step 4: Map out the competitive landscape. Use the data you’ve gathered to identify gaps in the market or areas where your competitors are outperforming you.
By following this approach, you’ll not only identify your key competitors but also discover actionable insights that can help you refine your own strategy. For more competitive examples, follow our blog competitive analysis examples.
Drawbacks of Competitive Analysis
While competitive analysis is a critical tool for strategic decision-making, it comes with its own set of challenges and drawbacks:
Time-Consuming Process: Conducting a thorough competitive analysis requires significant time and resources. Gathering data, analyzing trends, and continuously updating insights can strain smaller teams or businesses with limited bandwidth.
Over-Focus on Competitors: Excessive attention to competitors may lead to neglecting internal innovation and customer-centric strategies. Businesses might end up imitating rivals instead of creating unique value propositions.
Inaccurate or Outdated Data: Information collected during competitive analysis may not always be current or accurate, especially when relying on public sources. This can lead to flawed strategies or missed opportunities.
Confirmation Bias: Analysts may unintentionally seek out data that confirms pre-existing assumptions about competitors, leading to skewed conclusions and ineffective strategies.
Static Insights: The competitive landscape evolves rapidly, and an analysis that is not updated regularly may become irrelevant, leaving businesses ill-prepared for new market shifts.
Understanding these limitations is essential to conducting a balanced competitive analysis. Businesses should integrate ongoing market monitoring and maintain a focus on innovation to avoid these pitfalls.
1. What is the meaning of competitor analysis?
Competitor analysis is the process of identifying and evaluating the strengths, weaknesses, strategies, and market positions of businesses operating in the same industry or targeting the same audience. This analysis helps organizations understand their market dynamics, anticipate competitors’ moves, and refine their own strategies to gain a competitive advantage. It typically involves assessing key areas like pricing, product features, marketing tactics, and customer perceptions to make data-driven business decisions.
2. Why perform a competitive analysis?
Competitive analysis allows you to understand your market better, identify gaps in your strategy, and discover opportunities to outperform your competition.
3. How do you do competition analysis?
To perform a competition analysis, follow these steps:
- Identify Your Competitors: Categorize them as direct, indirect, or replacement competitors. Use industry reports, customer feedback, and tools like Google Alerts or Competitors App for insights.
- Gather Key Data: Collect information on competitors' products, pricing, marketing strategies, customer reviews, and market positioning.
- Analyze Their Strategies: Evaluate their strengths, weaknesses, opportunities, and threats (SWOT). Pay close attention to their content, advertising, and customer engagement efforts.
- Benchmark Your Business: Compare your performance against your competitors to identify gaps and opportunities for improvement.
- Document and Act: Save insights and develop actionable strategies based on the analysis to enhance your competitive positioning.
4. When is it time to do a competitive analysis?
There's no hard and fast rule, but it's generally good to conduct a competitive analysis at least once a year, or when you're considering a major business pivot.
5. Is competitive analysis the same as SWOT analysis?
No, SWOT analysis is a component of competitive analysis that focuses on your own company's Strengths, Weaknesses, Opportunities, and Threats. Competitive analysis is broader and includes evaluating your competitors as well.
6. How is competitive analysis performed?
Competitive analysis is performed by collecting data on your competitors and evaluating their strategies, strengths, and weaknesses. Tools like Competitors App can streamline this process.
7. What are the types of competitive analysis?
There are various types, including digital competitive analysis, product competitive analysis, and customer experience analysis, among others.
8. What are the objectives of competitive analysis?
The main objectives are to understand your competitors' strategies, identify market gaps, and find opportunities to gain a competitive edge.
