Competitive Analysis

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You know the basics while playing a game – the goal and the rules. But what if you could see how the other teams are playing? What if you knew their strengths and weaknesses?

That’s what competitive analysis is like for businesses! It’s all about figuring out who your competition is and how they operate. By understanding them, you can improve your own game and become a stronger player in the market.

In this guide, we will cover all about;

What is competitive analysis
It’s benefits
It’s components
Step-by-step process to do a competitive analysis
Frequency and examples of competitive analysis

So, let’s get started.

What is competitive analysis?

Competitive analysis is essentially a business research project focused on your competitors. It’s all about gathering information on their products, services, marketing strategies, and overall performance in the market. This intel is then used to assess your own company’s strengths and weaknesses relative to the competition.

Benefits of competitive analysis

Competitive analysis offers quite a range of benefits for businesses, helping them to make informed decisions and gain a significant edge in the market.

Better market understanding

A competitive analysis paints a clear picture of the industry landscape. You’ll gain insights into the key players, their market share, and overall market trends. This knowledge empowers you to make informed decisions about your own business strategy.

Improved targeting

By analyzing your competitors’ target audience, you can refine your own targeting strategy. You’ll learn about their ideal customer profiles and identify any gaps they might be missing. This allows you to tailor your offerings and messaging to resonate more effectively with your target market.

Identifying opportunities

Competitive analysis can reveal unmet needs or gaps in the market that your competitors might be overlooking. This presents valuable opportunities for you to develop unique products or services that cater to those needs and gain a competitive edge.

Product and service enhancement

Analyzing your competitors’ products or services allows you to benchmark your own offerings. You can identify areas where you excel and areas needing improvement. This knowledge can guide product development and improvement efforts to stay ahead of the competition.

Strategic marketing

By understanding your competitors’ marketing strategies, pricing models, and brand messaging, you can make more informed decisions about your own marketing approach. This allows you to develop targeted campaigns that effectively differentiate your brand and reach your target audience.

Risk mitigation

Competitive analysis helps you identify potential threats posed by your competitors. This allows you to develop proactive strategies to mitigate those threats and protect your market share.

Staying ahead of the curve

The business world is constantly evolving. A competitive analysis helps you stay informed about the latest trends and innovations employed by your rivals. This allows you to adapt your strategies and stay ahead of the competition.

Competitive advantage

With a strong understanding of the competitive landscape, you can effectively position your own brand and offerings. This might involve highlighting your unique selling points (USPs) or capitalizing on your competitors’ weaknesses.

What to include in competitive analysis?

A competitive analysis equips you with valuable intel about your competitors, allowing you to craft a winning strategy. Here’s a breakdown of the key factors to consider and what to include in your analysis:

Competitor identification

Direct vs. Indirect Competitors: Identify both direct competitors offering similar products or services to the same target audience, and indirect competitors that fulfill a similar need but with a different approach.

Competitor research

Company Background: Research the history, mission, and vision statements of your competitors. This helps understand their overall goals and motivations.

Products & Services: Analyze the features, benefits, pricing, and customer reviews of your competitors’ offerings.

Marketing Strategies: Identify the marketing channels your competitors use, their messaging, and their brand positioning.

Sales Strategies: Understand how your competitors generate leads and close deals.

Customer Service: Evaluate the quality and approach to customer service offered by your competitors.

Financial Performance (if publicly available): This can provide insights into the overall health and growth trajectory of your competitors.

SWOT analysis

Strengths: Identify what your competitors are doing well. This could be their product quality, brand reputation, marketing reach, or customer service.

Weaknesses: Analyze areas where your competitors might be lacking. This could be limited product features, a weak online presence, or high customer churn.

Opportunities: Based on the competitive landscape, identify any unmet needs or gaps in the market that you can capitalize on.

Threats: Consider potential threats posed by your competitors, such as new product launches, aggressive marketing campaigns, or price wars.

Market trends

Analyze broader market trends that might be impacting your industry and how your competitors are adapting to them.

Customer insights

While competitor analysis focuses on their strategies, consider incorporating customer insights. Understanding your target audience’s needs and preferences in relation to competitor offerings allows you to refine your approach.

How to do competitive analysis (step-by-step process)

A competitive analysis is a crucial tool for businesses of all sizes. It equips you with valuable insights into your competitors’ strategies, strengths, and weaknesses, allowing you to refine your own approach and gain a competitive edge.

Here’s a breakdown of the process explained in detail, highlighting the significance of each step:

Step 1: Define Your Goals

A competitive analysis is like a treasure hunt. Having clear goals at the outset is like drawing a treasure map. It helps you identify what kind of information is most valuable and ensures you’re gathering the right intel.

How to Do It:

Start by brainstorming what you hope to achieve with the analysis. Do you want to:

Increase brand awareness and attract new customers?
Improve your marketing strategy to generate more leads or sales?
Refine your product development roadmap to stay ahead of the curve?
Develop a more competitive pricing strategy.

Prioritize: Once you have a list of goals, prioritize them based on what’s most critical for your business at this time.

Sharpen Your Focus: With your priorities clear, refine your goals into specific questions that will guide your research. For example, if your goal is to improve your marketing strategy for online furniture sales, your question might be “How are leading online furniture retailers attracting customers through social media?”

Step 2: Identify your competitors

Identifying your competitors allows you to understand the competitive landscape and benchmark your offerings against the key players.

How to Do It:

Direct Competitors: These are interchanges offering products or services very similar to yours, targeting the same audience. Look for companies that appear in search results when you search for your own keywords or products.

Indirect Competitors: These companies fulfill a similar need but with a different approach. For example, a high-end furniture store might be a direct competitor, while a company selling DIY furniture kits could be an indirect competitor. Consider companies that might show up in “related searches” or “customers who bought this also bought” sections on online retailers.

Tools and Resources: Here are some resources to help you identify your competitors:

Industry publications and reports
Online business directories
Trade shows and conferences
Customer reviews and testimonials (mentioning competitor brands)
Social media listening tools (to track mentions of relevant keywords)

Step 3: Gather information

The information you collect will be the foundation for your analysis and strategic decision-making.

How to Do It:

Company Websites: Get deep into competitor websites to understand their:

Product offerings and features
Pricing models and promotions
Target audience and messaging
Customer service approach (live chat options, return policies, etc.)

Social Media Presence: Analyze their social media channels to see how they:

Interact with customers (respond to comments and messages)
Use different social media platforms (content focus on each platform)
Generate engagement (likes, shares, comments)

Customer Reviews: Read online reviews and testimonials on various platforms to understand:

Customer perception of competitor products or services
What customers like and dislike about the competitor’s offerings
Areas where competitors might be falling short (e.g., slow delivery times)

Industry News and Reports: Stay updated on industry trends and competitor news through resources like:

Industry publications and websites
Market research reports
News articles about your competitor companies

Step 4: Analyze the competition

Now that you have a treasure trove of information, it’s time to analyze it and turn it into actionable insights. Here are some frameworks to help you make sense of the data:

SWOT Analysis: Conduct a SWOT analysis for each competitor to identify their:

Strengths: What are they doing well? (e.g., strong brand reputation, innovative product features)
Weaknesses: What areas could they improve on? (e.g., limited product selection, poor customer service)
Opportunities: What external factors could benefit them? (e.g., growing market demand, new technologies)
Threats: What external factors could hinder them? (e.g., rising material costs, new regulations)

Value Proposition Analysis: Identify each competitor’s value proposition – the unique benefits they offer to customers. How does their value proposition compare to yours? This will help you understand how they position themselves in the market and how you can differentiate your offerings.

Marketing Strategies: Analyze the marketing channels your competitors use (social media, content marketing, email marketing, etc.) and their overall marketing strategy. Here are some aspects to consider:

Content strategy: What type of content do they create? (Blog posts, infographics, videos, etc.) What topics do they focus on?
Paid advertising: Do they use paid advertising on social media or search engines? What keywords or demographics are they targeting?
Public relations: Do they have a strong public relations presence? Are they featured in industry publications or attend industry events?

Customer Journey Mapping: (Optional but highly valuable) By understanding the customer journey your competitors are creating, you can identify potential gaps or areas for improvement in your own customer experience.

Step 5: Take advantage of competitive insights

This is where the rubber meets the road. Use the insights gained from your analysis to improve your business strategies. Here’s how:

Identify Opportunities: Based on the competitive landscape, look for unmet customer needs or gaps in the market that you can address with your products or services. Perhaps there’s a specific customer segment that your competitors are overlooking, or a particular feature that customers are clamoring for.

Refine Your Strategy

Marketing: Use your competitor analysis to inform your marketing strategy. Can you develop content that resonates better with your target audience? Are there new marketing channels you should explore?

Product Development: Based on your analysis, are there opportunities to improve your existing products or services? Perhaps there are new features you can develop to address customer needs or stay ahead of the competition.

Pricing: Analyze competitor pricing models to identify potential opportunities to adjust your own pricing strategy.

Develop a Competitive Advantage: By understanding your competitors’ strengths and weaknesses, you can position your brand more effectively and highlight your unique selling points (USPs).

Step 6: Continuously monitor

The business world is dynamic, and your competitors won’t be standing still. Regularly monitoring their activities ensures you stay informed about any changes in their strategies or the market landscape.

How to Do It:

Set up alerts for competitor news and mentions.

Periodically revisit competitor websites and social media channels.
Conduct competitor analysis regularly (e.g., quarterly or annually) to stay updated.

By following these steps and continuously monitoring the competitive landscape, you can gain valuable insights to refine your strategies, develop a competitive advantage, and ensure your business stays ahead of the curve.

Competitive analysis frequency

The ideal frequency for competitive analysis depends on several factors, but it generally falls somewhere between quarterly and annually, with some businesses needing more frequent updates. Here’s a breakdown of the key considerations:

Industry dynamics

Fast-paced industries: In industries with rapid innovation or frequent changes in customer preferences (e.g., technology, fashion), more frequent analysis (quarterly or even bi-quarterly) is recommended. This ensures you stay up-to-date on the latest competitor strategies and market trends.

Slower-paced industries: For industries with slower change cycles (e.g., legal services, insurance), annual analysis might suffice. However, even in these industries, it’s still important to stay informed about major competitor developments or emerging market trends.

Competitive landscape

Highly competitive markets: If you operate in a market with a large number of active competitors or aggressive rivals, more frequent analysis (every quarter or even every six months) is advisable. This allows you to stay agile and adapt your strategies quickly to counter any new competitive threats.

Less competitive markets: In markets with fewer competitors or a more stable competitive landscape, annual analysis might be sufficient. However, be mindful of any disruptive forces that could emerge and necessitate a more frequent review.

Business goals

Proactive strategy: If your business goals are focused on proactive innovation or staying ahead of the curve, you might benefit from more frequent analysis (every quarter). This allows you to identify new opportunities and capitalize on them before your competitors do.

Reactive strategy: If your business goals are more reactive, focusing on responding to competitor actions, annual analysis might be adequate. However, be prepared to conduct additional, targeted analyses if a competitor makes a significant move.

Industry Dynamics	Competitive Landscape	Ideal Frequency
Fast-paced	Highly Competitive	Quarterly
Fast-paced	Less Competitive	Bi-annually (every 6 months)
Slower-paced	Highly Competitive	Semi-annually (every 6 months)
Slower-paced	Less Competitive	Annually

Competitive analysis examples

Here are a few examples of how companies from different industries might conduct a competitive analysis:

Example 1: Athletic Apparel Company

Industry: Apparel (Fast-paced, Highly Competitive)
Goals: Increase brand awareness among Gen Z consumers, develop a new line of eco-friendly activewear.

Analysis Steps:

Identify Competitors: Identify direct competitors like Nike and Adidas, and indirect competitors like Lululemon that cater to a similar health-conscious demographic.
Gather Information: Analyze competitor websites and social media presence to understand their marketing strategies towards Gen Z (e.g., influencer partnerships, social media challenges). Research sustainable materials used by eco-conscious clothing brands.
Analyze the Competition: Conduct a SWOT analysis for key competitors to identify their strengths (brand recognition, product technology) and weaknesses (limited eco-friendly options).
Insights: Develop marketing campaigns targeted towards Gen Z using relevant social media platforms and potential influencer partnerships. Design a new activewear line using sustainable materials to differentiate themselves in the market.

Example 2: Cloud Storage Service Provider

Industry: Technology (Fast-paced, Highly Competitive)
Goals: Increase market share and attract new business customers.

Analysis Steps:

Identify Competitors: Identify direct competitors like Dropbox and Google Drive, and indirect competitors like hard drive manufacturers offering physical storage solutions.
Gather Information: Analyze competitor pricing models, free storage tiers, and available features (security protocols, file sharing options) to understand their value proposition for business customers.
Analyze the Competition: Conduct a SWOT analysis for key competitors to identify their strengths (established user base, ease of use) and weaknesses (limited storage capacity for free plans).
Insights: Develop competitive pricing plans specifically for businesses, highlighting features like increased storage capacity and robust security measures. Target marketing campaigns towards businesses emphasizing the benefits of cloud storage compared to traditional physical storage solutions.

Example 3: Coffee Shop Chain

Industry: Food Service (Slower-paced, Less Competitive)
Goals: Improve customer loyalty and drive repeat business.

Analysis Steps:

Identify Competitors: Identify other coffee shop chains in the area, as well as independent coffee shops offering similar specialty coffee drinks and cafe experiences.
Gather Information: Analyze competitor loyalty programs, mobile app features (ordering, rewards), and in-store atmosphere (seating arrangements, Wi-Fi availability) to understand how they appeal to customers.
Analyze the Competition: Conduct a SWOT analysis for key competitors to identify their strengths (convenient locations, comfortable ambiance) and weaknesses (limited menu options, lack of mobile ordering).
Insights: Enhance the existing loyalty program with more attractive rewards. Develop a user-friendly mobile app for ordering and in-store pickup. Utilize Xano agency no-code development to streamline the integration of new features seamlessly Refine the in-store experience by offering comfortable seating arrangements and ensuring reliable Wi-Fi connectivity to encourage customers to linger and work or socialize.

Example 4: Marketing Automation Platform

Industry: Marketing Technology (Fast-paced, Highly Competitive)
Goals: Expand into new market segments and attract larger enterprise clients.

Analysis Steps:

Identify Competitors: Identify direct competitors like Hubspot and Pardot, and indirect competitors like email marketing platforms (Mailchimp) or social media management tools (Hootsuite) that offer overlapping functionalities.
Gather Information: Analyze competitor pricing structures for different plan tiers, feature sets offered at each tier (landing page builder, lead scoring, marketing attribution), and customer success resources (dedicated account managers, training materials) offered to enterprise clients.
Analyze the Competition: Conduct a SWOT analysis for key competitors to identify their strengths (user-friendly interface, robust reporting features) and weaknesses (limited scalability for large organizations, lack of industry-specific features).
Leverage Insights: Develop enterprise-level plans with features catering to the needs of large organizations (advanced segmentation capabilities, custom integrations). Provide dedicated account management and industry-specific training resources to demonstrate expertise and value proposition for larger clients.

Example 5: Project Management Software Company

Industry: Productivity Software (Slower-paced, Moderately Competitive)
Goals: Increase brand awareness and user adoption within specific target industries (e.g., construction, engineering).

Analysis Steps:

Identify Competitors: Identify direct competitors like Asana and Trello, and indirect competitors like collaboration tools (Slack) or communication platforms (Microsoft Teams) that offer basic project management functionalities.
Gather Information: Analyze competitor marketing materials to understand their target audience messaging. Research industry-specific features offered by competitors (software for mechanical contractors or project cost tracking for construction, Gantt charts for engineering) and integrations with popular industry software tools.
Analyze the Competition: Conduct a SWOT analysis for key competitors to identify their strengths (freemium model for basic features, large user base) and weaknesses (limited industry-specific features, complex for non-technical users).
Leverage Insights: Develop targeted marketing campaigns highlighting the benefits of your project management software for specific industries (construction project budgeting tools, engineering team collaboration features). Focus on integrations with popular industry software to streamline workflows for target audiences. Ensure the user interface is intuitive and user-friendly even for non-technical users.

Takeaway on Competitive Analysis

Competitive analysis is a powerful tool that equips businesses with valuable insights into their competitors’ strategies, strengths, and weaknesses. By following a structured approach and gathering relevant information, you can gain a clear understanding of the competitive landscape and make informed decisions to:

Improve your market understanding and target audience focus
Identify unmet customer needs and develop unique selling propositions
Enhance your products or services to stay ahead of the curve
Craft effective marketing strategies and optimize pricing models
Mitigate risks posed by competitors and develop a sustainable competitive advantage

Regularly monitoring the competitive landscape and conducting periodic analyses ensure you stay informed about industry trends and competitor activities. By leveraging these insights, you can adapt your strategies and keep your business on the path to success.