What Is a Competitor Analysis and How to Do It Step by Step

When starting a new company or launching a new product, one of the most fundamental components of your business strategy will be market research. 

Market research consists of many different aspects, including competitive research or competitive analysis. By understanding what competing brands are offering and how they’re positioning their products or services, you can gain valuable competitive intelligence that will help you make informed decisions. 

In the following sections, we explore what is a competitor analysis and show you how to conduct one for your own business. 

What Is Competitor Analysis?

Competitor analysis is part of a fuller market analysis process. It specifically concentrates on researching, evaluating, and comparing the strategies, strengths, weaknesses, and market presence of other businesses in your industry or niche. 

This report aims to identify competitors, analyze key business metrics and compare them against your own company. 

As part of the competitor analysis, you’ll need to determine who the main market players are in your niche, what and how your competitors sell, what technology stack they rely on, what’s their unique value proposition, and more. 

When explaining what a competitor analysis is, it’s also key to acknowledge that there are two main types of competitors – direct and indirect competitors. 

Direct competitors are those offering similar products or services to the same target audience as you. On the other hand, indirect competitors are businesses solving a similar problem or meeting similar customer needs with different products or services. 

We’ll talk more about these two groups later on when we show you how to conduct a competitor analysis for your own brand. 

Benefits of Competitor Analysis

Performing a competitor analysis offers a range of unique opportunities and advantages for business from any industry and of any size.

The information you uncover through this report can help you gain a granular understanding of the competitive landscape and be aware of shifting market dynamics. This will naturally equip you with all the insights you need to make data-driven decisions. 

By seeing what competitors’ products and services are trending, you can tailor your own offers and strategies to enhance customer acquisition. 

In addition, identifying market trends and understanding the market presence of your rivals can also reveal market gaps that you can fulfil with your own brand. This is a guaranteed way to achieve a competitive advantage over others and grow your company to new heights. 

Overall, the competitor analysis will expose unmissable information on competitor pricing, marketing, product or service offering, and much more, allowing you to shape an effective and reliable long-term business plan. 

How to Conduct a Competitor Analysis: Step-by-Step

So how can you conduct competitor analysis?

If this is your first time researching competitors, don’t worry. Below, we offer a step-by-step guide that will take you through the process. 

Step 1: Identify Your Competitors

All competitor research starts with identifying who your customers are. 

When discussing competitors, it’s fundamental to make a differentiation between indirect and direct competitors, as noted above. However, there’s also a third category of businesses worth exploring – potential competitors. These are the companies that are currency emerging, gradually building the potential to disrupt the market in the future.

Keeping an eye on all three groups is important, enabling you to act strategically in today’s market and make plans for tomorrow. 

If you’re new to the market and aren’t sure who your competitors are, you can use a range of different channels and platforms. 

Some of the most popular ways to find out more about competing businesses in a niche include:

• Search engines – type in industry or niche keywords and keyword phrases into Google search and examine the results. The keywords you use can be directly related to your own products or services or can be such that define pain points, problems, or challenges your target audience may be having. In most cases, the first results in the SERP (Search Engine Results Page) will be your legacy competitors – the ones you’ve been around for years.
• Social media platforms – you can perform a similar exercise on social media platforms like LinkedIn, Instagram, Facebook, TikTok, X, and others. Think about where your target audience spends most of their time and find key competitors that offer similar solutions to yours by browsing tags, joining groups, or exploring accounts. 

Depending on the type of niche you’re in, you can also identify competitors by talking to your customers or to friends and family, watching out for TV or radio ads, and others. You can also analyze competitor mentions in industry reports or press releases. 

Step 2: Gather Competitor Data

Now that you know who you’re competing against, it’s time to collect all of the competitor data you can get your hands on, including insights from primary and secondary research.

The more information you have about your competitors, the more thorough and useful your competitor analysis will be. 

Here are the different types of data you’ll need to gather.

Company Overview

For each competitor, make a note of essentials that will help you gain an overview of the company. This includes things like the company’s market share, target market, size, history, and mission statement. Check competitors’ websites and a specific competitor’s URL as listed on Google or social media channels.

If the business is well-established, you’ll be able to find this information on corporate information sites or official business reports. However, you can also explore social media platforms to gather some components of this data. 

For example, if the competitor has a LinkedIn page, you’ll be able to see how many people work there. Find out whether they have a sales team, a product development team, or any other department that may be relevant for you.

See what you can find across news or other publications to find out more about the business’s developments over time. 

Products and services

Next, collect all data related to the products or services the competitor offers. Analyze their company website or other channels to find out more about their features, pricing strategies, and unique selling points. 

For example, if you’re assessing a direct competitor that’s selling a similar product to yours, make a note of any differentiations. Their product may differ in quality, price, abilities, and more. 

Check their pricing and if possible, gather insights on how your competitor’s price has changed over time. Research any promotions or special offers they have based on seasonality or other occasions. This will give you an idea of what others are doing to encourage repeat purchases and create loyal customers. 

Marketing strategies

When determining the driving force behind a company’s success, in most cases, it turns out that it’s effective marketing. 

When collecting data for your competitor analysis, don’t forget to analyze the marketing strategies your competitors are enforcing to land sales. 

Explore both online and offline marketing strategies.

Online marketing strategies

In today’s highly digital world, most businesses concentrate on creating an online store and embracing digital marketing across different online platforms and channels. So what are your opponents doing online to acquire customers? 

Some of the key areas to focus your research on include:

• Advertising strategy – are your competitors relying on paid ads on Google or other advertising channels to bring in customers or leads? What are they spending, what do their creatives look like, and what are their call-to-action buttons?
• Content strategy – what type of content are your competitors using to attract users or customers? Some of the content types to look for include blog post articles on their websites, email newsletters, social media content (in the form of videos, visual posts, written messages, and more), eBooks, whitepapers, case studies, and more. To access this information, act as a user and engage with the brand as much as possible.
• Social media strategy – which platforms are your competitors using to engage with customers and attract new leads? How often do they post, how do they interact with their community, and do they partner with creators?
• SEO strategy – what type of SEO practices are your competitors implementing to gain more visibility and attract organic traffic? Take a look at their website and analyze it to find out what SEO rankings look like or what organic search they’re not adequately fulfilling. 

Answering these questions will help you gain a better understanding of your competitors’ marketing strategies.

Don’t forget to look out for any information on promotions or special discounts as part of their online marketing. 

You can find some of this information across different resources. For example, you could use competitor analysis tools like SEMrush and Ahrefs or rely on social media channels and publicly available reports and websites. By doing this, you’ll be able to compare your own content strategy against your competitor’s content, as well as weigh your advertising and social media efforts against theirs.

As a result, you’ll be able to improve your own strategy by addressing the inefficiencies of rivals or getting inspiration from their success stories. 

Offline marketing strategies 

While online marketing is considered a dominating approach today, offline advertising campaigns are still effective in helping businesses grow on a local or national level.

Explore how your competitors are using traditional advertising, like print, TV, radio, and billboards. Check if they’re regularly attending any events, trade shows, or have ongoing sponsorships. 

If they have physical locations, find out more about their in-store experience, including store layout and branding, their POS experience, and more. 

All of this information will help you get to know the marketing tactics your competitors use to grow in your industry. These valuable discoveries will empower you to create marketing efforts that are adequate for your niche and appealing to your target audience. 

Step 3: Analyze Competitor Strengths and Weaknesses

The third stage of creating a competitor analysis is dedicated to assessing your rivals’ strengths or weaknesses. This will enable you to compare against your own SWOT analysis and identify opportunities that may otherwise remain hidden beneath the surface. 

To create a SWOT analysis for your competitors, create a report that consists of four different graphs:

• Strengths – all of the things competitors excel at or their most powerful assets or capabilities.
• Weaknesses – areas where competitors lag and components that can be improved on.
• Opportunities – market gaps that your rivals haven’t yet filled, leaving room for new market entrants or more effective solutions.
• Threats – factors that could undermine the success of your competitors in the short- and long-term.

When you analyze competitors as part of a SWOT analysis, it’s key to cover areas like brand positioning, customer experience, sales strategies, pricing strategies, marketing strategies, shipping strategies, promotions, websites, and more. 

Step 5: Evaluate Customer Experience

In the next step of your competitor analysis, you’ll focus on customer experience. 

Find out what others have to say about others in your niche. Explore customer feedback by reading online reviews, testimonials, and even social media interactions. 

In addition, think about the customer journey and explore how easy it is to navigate your competitors’ websites. Act as a consumer and go through their shopping process to become familiar with the steps.

Don’t forget to inspect their support services and assess their responsiveness and quality. 

Step 6: Create a Competitive Analysis Framework

As you can imagine, gathering these insights together will leave you with a large pile of data. In an unstructured and unorganized form, it’s likely to create more problems than opportunities.

To avoid this, use a competitor analysis framework to organize your findings and be able to make sense of all of this information. The SWOT analysis we mentioned above is an example framework, but you can rely on others as well.

Some of the popular ones businesses choose from their competitor analysis include:

• Strategic group analysis – a structure that relies entirely on the differences and similarities between your marketing strategy and that of your competitors.
• Porter’s five forces – addresses five key elements, including the threat of new entrants, the buyer’s bargaining power, the supplier’s bargaining power, the chance of substitutes, and the intensity of competitive rivalry.
• Perceptual mapping – demonstrates how products or services are received by consumers.
• BCG Matrix – helps determine which products are worth investing in based on competitors in the industry.
• Use social listening – includes monitoring competitors on social media by tracking brand-name mentions, product names, and other terms. 

While all frameworks are equally effective, some are more appropriate for some businesses than others. 

To choose the right one for you, we recommend digging deeper into what each has to offer and thinking about the type of information you have available. 

Using Competitor Analysis to Improve Your Business

Needless to say, a competitor analysis can empower any business to make improvements and gain a competitive edge. 

You can do so in the following ways.

Refine Your Strategy

For starters, you can leverage the insights from your competitive analysis report to develop your own unique value proposition and differentiate yourself from the rest. 

You can think about strategic ways to make pricing changes, adjust product features, or introduce new customer service techniques to stand out from others in your space. 

Optimize Marketing Tactics

Another way to boost your performance through a competitor analysis is incorporating successful rival strategies and avoiding their mistakes at the same time. 

Thanks to the data from your reports, you can discover new and creative ways to engage audiences and attract attention via online and offline marketing tactics. 

Identify Market Opportunities

Last but not least, a competitor analysis can open the doors to identifying new market opportunities. 

Look for untapped segments or unmet customer needs and think about the ways in which you can position yourself in a way that will help fill these gaps. 

Common Challenges and Solutions

As useful as a competitor analysis may be, there are also a few challenges worth addressing.

Data Overload

Analyzing your competitors inevitably means collecting and processing large volumes of information, oftentimes creating risks for data overload.

To stay focused and avoid chaos, concentrate on key metrics that directly impact your business. The competitive analysis frameworks that we outlined above can help you get through the process with minimal risks of overload. 

Biased or Inaccurate Data

Another possible challenge is working with biased or inaccurate data.

To avoid this, make sure you always cross-check multiple resources to ensure your information is reliable and up to date. Validate your findings with primary research, like customer reviews. 

Adapting to Market Changes

Finally, making use of your competitor analysis to adapt to market changes can sometimes be more difficult than it sounds.

Make sure that you regularly revisit and update your competitor analysis reports and stay on track of new and emerging trends, new market entrants, and other changes in your industry. 

Conclusion

Competitor analysis is a critical part of business strategy, offering valuable insights to refine your approach and gain an edge.

By going through this process, you can unlock new opportunities, achieve business growth, and stand out in a saturated market. 

Frequently Asked Questions

When should you conduct a competitor analysis?

Competitor analysis is especially useful when you’re starting a brand new business or launching a new product or service, when you find yourself in a stagnating market landscape, or when you notice a sudden drop in organic traffic.

Why is competition analysis important for my business?

Understanding your competitors allows you to make informed business decisions. It helps you discover what attracts customers to competing brands, how they market their products, and what gaps exist in the industry. By analyzing their approach, you can develop stronger messaging, improve your offerings, and position your brand more effectively in the market.

How often should I analyze my competitors?

Competitor analysis should be an ongoing process rather than a one-time task. Market trends, customer preferences, and marketing strategies change over time, so regularly reviewing your competitors’ activities ensures you stay ahead. Monitoring them quarterly or at least twice a year helps you stay adaptable and responsive to industry shifts.