Conducting an in-depth competitor analysis is essential for gaining strategic insights and identifying opportunities to improve your business. This ultimate guide will teach you everything you need to know about competitor analysis, from understanding its importance to step-by-step instructions for carrying out research.
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What is Competitor Analysis and Why is it Important?
Competitor analysis, also known as competitive analysis or competitive intelligence, is the process of identifying, analyzing, and comparing businesses that offer similar products and services to your own. The goal is to gain strategic insights that can inform key business decisions and help you outperform the competition.
Here are some of the key benefits of conducting competitor analysis:
Identify Strengths and Weaknesses
A thorough analysis of your competitors will highlight areas where they are excelling as well as any weaknesses or gaps in their offerings. This allows you to play to your own strengths while capitalizing on competitors’ weaknesses.
Understand the Competitive Landscape
Researching competitors provides visibility into the broader competitive landscape. You can identify industry leaders, new market entrants, customer needs, and larger trends.
Set Performance Benchmarks
Studying competitors’ performance in areas like revenue, market share, and growth establishes benchmarks you can use to measure your own success.
Spot New Opportunities
Analyzing competitors can reveal unmet customer needs or untapped areas of opportunity you can pursue. You may also uncover new marketing channels and partnerships worth exploring.
Enhance Messaging and Positioning
Seeing how competitors communicate and position themselves helps differentiate your own messaging and unique value proposition.
Make Informed Strategic Decisions
Competitor insights allow you to make smarter, more informed strategic decisions around things like product development, partnerships, hiring, marketing campaigns, and more.
In summary, competitor analysis gives you an informed perspective of the competitive landscape so you can make strategic business decisions that drive growth and success. It is an ongoing process that should be revisited regularly as market conditions evolve.
The Different Types of Competitors to Analyze
When conducting a competitor analysis, it is important to research a diverse range of competitors, not just businesses that seem like obvious rivals. Broadening the scope of businesses you analyze provides a more complete view of the competitive landscape.
Here are the main types of competitors to research:
Direct Competitors
Direct competitors offer nearly identical products and services and target the same core customer base. For example, Pepsi and Coca-Cola are direct competitors in the soft drink market. Focus the majority of your analysis on these close competitors.
Indirect Competitors
Indirect competitors appeal to a similar target audience but offer distinctly different products or services. For example, a juice brand and a soda brand both appeal to health-conscious consumers but sell completely different beverages.
Secondary Competitors
Secondary competitors operate in the same general industry but focus on different market segments. For example, an indie bookstore and Amazon appeal to different types of book buyers.
Substitute Competitors
Substitute competitors provide alternative solutions that satisfy the same core customer need. For example, Uber and public transportation both fulfill the need for convenient urban travel.
Future Competitors
Keep an eye on companies that could become direct competitors down the line. Startups attracting significant funding or recent industry entrants are worth monitoring closely.
Analyzing this diverse mix of competitors will provide the most complete view of your competitive landscape.
6 Steps for Conducting Competitor Analysis
Follow these six steps to carry out an in-depth competitor analysis:
Step 1: Identify Key Competitors
Start by making a list of your direct and indirect competitors. Here are some tips for identifying relevant businesses to analyze:
- Search online: Look at businesses ranking for keywords relevant to your offerings. Competitors will often show up in the same Google search results.
- Review your website analytics: See what sites your website visitors are coming from. These are likely competitor sites.
- Ask customers: Survey your customers about other businesses they considered before purchasing from you.
- Study advertisements: Pay attention to ads running on search engines and social media for clues on competitors.
- Use tools: SEO and marketing tools like SEMrush, BuzzSumo, and Alexa can identify competitor sites.
- Research unknown competitors: Don’t just look at established, obvious competitors. Search for new and emerging competitors as well.
Aim to identify around 5-10 competitors to focus your analysis on. Mix top industry leaders with smaller niche players for the most comprehensive view.
Step 2: Gather Data on Competitors
The next step is collecting information and data points on your competitors. Tap into the following resources:
- Products/Services: Review competitors’ product offerings, features, and benefits by analyzing their website and marketing materials.
- Social media: Study competitors’ social media channels to analyze follower counts, engagement levels, messaging, partnerships, and growth rates.
- Marketing activities: Research competitors’ content marketing, email marketing, paid advertising efforts, and more.
- Price points: Document pricing structures and compare to your own. Take note of discounts, sales, and special offers.
- Public information: Use information from press releases, news articles, and leadership interviews to learn more about competitors’ backgrounds, company values, and business developments.
- Job postings: Open positions can provide clues about areas competitors are trying to grow in.
- App and site stores: Check competitor ratings, reviews, and downloads/users in iOS App Store, Google Play Store, Chrome Web Store, etc.
- Analytics tools: Use website analytics tools to estimate competitors’ traffic volumes, top landing pages, and audience demographics.
- Financial statements: For public companies, analyze earning reports, profit and loss statements, cash flow, and other financial data.
Compile all of this data in a centralized spreadsheet or database to compare side-by-side.
Step 3: Analyze Products and Offerings
Now it’s time to closely analyze competitors’ product and service offerings using the information you’ve gathered. Compare factors like:
- Core features: What are the main functions and capabilities of competitors’ products/services? How do they compare to your own?
- Complementary features: What secondary features and functionality do competitors offer? Do they have any features you lack?
- Quality and reliability: What do reviews and your own analysis say about competitors’ product quality and dependability?
- Design and user experience: How intuitive, attractive, and satisfying are competitors’ products to use?
- Customization: Do competitors offer ways to tailor products for different users and needs?
- Value proposition: What core needs do competitors’ products fulfill? How do they position their offerings as superior?
Analyze competitors’ products from the customer’s perspective. Identify potential weaknesses you can improve upon as well as strengths to emulate.
Step 4: Evaluate Marketing Tactics and Performance
Your competitor analysis should also closely examine competitors’ go-to-market strategies and marketing performance. Assess factors like:
- Messaging: What messaging and positioning do competitors use in their advertising and content? What makes their branding unique?
- Content marketing: What types of content do competitors create? How does performance compare to your efforts?
- Social media: Which social platforms do competitors focus on? How engaged are their communities?
- Advertising: What kinds of paid ads are competitors running? On which platforms? How prominently are ads shown?
- SEO: What keywords do competitors rank highly for? How much search traffic do they attract?
- Conversions: What success do competitors have turning website visitors into leads and customers?
- Partnerships: What kind of strategic partnerships and influencer relationships have competitors secured?
- Referrals: What incentives do competitors offer for customer referrals? What’s their referral conversion rate?
Evaluating these performance factors will reveal competitors’ most and least effective marketing strategies. You can learn what’s working well in your industry while also identifying potential gaps.
Step 5: Determine Competitive Advantages and Disadvantages
With all this data gathered, you can start determining where competitors have a leg up on you and areas where you have the edge. Ask:
- What do competitors do better than you? What unique value do they provide?
- What weaknesses or gaps exist in competitors’ offerings?
- What strategic assets or capabilities make competitors difficult to replicate?
- What disadvantages or vulnerabilities can you capitalize on?
- What emerging innovations or capabilities put competitors ahead?
Be honest about competitors’ advantages over your business. Then look for weaknesses and deficiencies you can improve upon.
Step 6: Map Competitors on a Strategy Canvas
A strategy canvas visually plots you and your competitors based on factors like product price, features, quality, and service. To create one:
- List your key product or service attributes along one axis. For example, price, quality, range of features, brand reputation, etc.
- Plot each competitor’s performance across those strategic factors on a scale of 1-5.
- Draw lines to visualize the strategic positioning of each competitor.
- Evaluate areas where you lag competitors and where you excel.
Below is an example strategy canvas:
The visual mapping allows you to easily compare your strategic positioning and opportunities to differentiate.
Advanced Competitor Analysis Tools and Tactics
In addition to traditional research methods, make use of the following tools and tactics for even deeper competitor insights:
Social Listening
Social listening tools monitor online conversations about competitors. This reveals customer sentiment, key topics of discussion, demographic data, and more. Popular tools include Awario, Talkwalker, and Brandwatch.
Paid Keyword Research
See what keywords competitors are buying on Google and Bing using tools like SEMrush, SpyFu, and iSpionage. You can also analyze their ad copy, spend levels, and performance.
Email Tracking
Sign up for competitors’ email lists to analyze their strategies. Or use tools like Mailtrack and Mixmax to track opens, clicks, and reply rates for their campaigns.
Site Grader Tools
Site grader tools like SEMrush and Moz analyze competitors’ websites for things like SEO, security, speed, and best practices.
Predictive Lead Scoring
Lead scoring tools like 6sense apply AI to identify and profile competitors’ ideal customers most likely to convert. You can tailor targeting and personalization.
Win/Loss Reports
Survey prospects that chose a competitor over you to learn why. Use their feedback to improve.
Competitive Tests
Have team members anonymously contact competitors’ sales and support teams. Grade their responses to identify shortcomings.
Wardley Mapping
Map your industry landscape visually based on components’ level of evolvability and certainty. Identify opportunities to disrupt competitors.
Continually experiment with new tactics and tools to uncover novel competitor insights and competitive advantages.
Turning Competitor Analysis Into Actionable Strategy
The end goal of competitor analysis isn’t just to understand the competition—it’s to gain strategic insights that inform business strategy and improvements.
Here are some ways to turn your findings into impactful actions:
- Use competitors’ key messaging in your own content and campaigns to resonate with customers. But differentiate by playing up your unique strengths and value proposition.
- Improve upon weaknesses and gaps in competitors’ offerings by adding features, enhancing quality, or providing superior service.
- Introduce new innovations and capabilities before competitors to gain a first-mover advantage.
- Pursue opportunities in emerging niches and segments that lack mature competitors.
- Partner with influencers and strategically align with businesses competitors aren’t collaborating with.
- Optimize marketing initiatives by focusing on high-ROI activities competitors excel at.
- Make strategic changes to pricing and promotions based on competitive pricing analysis.
- Use social listening insights to create content that addresses customer pain points and desires competitors fail to satisfy.
- Improve your website’s SEO by targeting keywords competitors rank highly for. Produce superior content that outranks them.
- Keep excelling at what you do better than competitors, whether it’s product quality, customer service, or brand reputation. Lean into existing differentiators.
Regularly conducting competitor analysis and applying insights immediately into strategy is crucial for sustaining an competitive advantage. Competitor intelligence informs major decisions around product launches, marketing campaigns, business expansions, and more.
Stay on the cutting edge in your industry by making competitor analysis a core piece of your business strategy and processes.
FAQs About Competitor Analysis
How often should you perform competitor analysis?
Aim to conduct competitor analysis at least quarterly. For rapidly evolving industries, monthly analysis may be more appropriate. Schedule it regularly like any other core business process.
What tools do you use to analyze competitors?
Helpful tools include SEMrush, SpyFu, BuzzSumo, Brandwatch, Mixpanel, SimilarWeb, Alexa, Owler, and more. Use a mix of tools to gather well-rounded data on competitors.
What is the difference between competitor analysis and SWOT analysis?
A SWOT analysis examines internal strengths/weaknesses and external opportunities/threats. Competitor analysis looks specifically at competing businesses in your market to inform strategy. SWOT analysis is a framework component of a broader competitor analysis.
How do you analyze competitors on social media?
Track followers, engagement rates, influencer partnerships, posting frequency, use of hashtags/mentions, types of content, and audience demographics. Social listening tools like Awario and Brandwatch provide data.
What should you look for in competitor websites?
Review competitors’ website content, design, calls-to-action, lead capture, navigation, and SEO elements. Use site grader tools to assess technical implementation and best practices.
How do you do competitor analysis for products?
Compare product specs, features, designs, pricing, quality, customization options, warranties, and packaging. Review customer feedback and test products yourself. Assess strengths, weaknesses, and value proposition.
The Importance of Ongoing Competitor Research
Competitor analysis should not be a one-time effort. To gain a sustained competitive advantage, you need to continuously research competitors and regularly integrate those insights into your evolving business strategy.
By making competitor analysis a consistent, ingrained process, you’ll be able to:
- Quickly adapt to competitors’ product enhancements and new feature releases
- Adjust marketing campaigns based on shifts in competitors’ messaging and positioning
- Capitalize on new openings in the market as competitors stumble or reduce investments
- Shift budget and priorities across marketing channels as competitors ramp up or retrench efforts
- Update your unique value proposition as the competitive landscape transforms
- Maintain a strategic advantage as new innovations emerge
- Better anticipate and prepare for competitors’ upcoming moves
The most successful brands stay ahead of the competition through disciplined, ongoing competitor research and analysis. Make it a core piece of your daily and weekly routines and processes. Competitor intelligence will fuel strategic thinking, empower impactful business decisions, and help drive growth.