In this article you will learn what a competitive environment analysis is, why it is essential and how to conduct one. 

Cycling races are one of the most prestigious competitions in the world. Athletes are taking off from the tracks to break records or win high rankings. Racing shoulder to shoulder, they climb hills, then descend mountains in a frenzied fashion.

The field becomes more challenging over time. The longer a race goes on, the thinner the group becomes. It’s true that a cyclist who is the strongest stays in the front, a cyclist who is mediocre battles in the back, and a weak cyclist will give up. 

Why do I tell you this? 

Because competitive economics is quite similar. It can be a ferocious race, so you must push yourself to keep going.

Competitive Environment Analysis

Your company must remain competitive by offering more than your direct competitors, being innovative, and exceeding customer expectations. It’s important to focus on the internal and external environments to take advantage of opportunities and keep yourself alarmed by any threats because the primary purpose of a competitive environment analysis is to discover what your rivals are doing precisely.  

Let’s see how to keep yourself battling to stay at the front in your industry.

What is a Competitive Environment Analysis?

Any competitive environment consists of companies competing to gain more market share. But in these business environments, small businesses or like-minded corporations selling similar products can be challenging. They want to saturate the market, meaning each company will gain slim profit margins.  

That’s why retailers have to get creative with their bragging power, pricing plans, partnerships, and marketing strategies to earn buyers’ attention and, most importantly, to earn their dollar.  

But the market is open for all, and with an extensive digital marketing landscape, new entrants emerge and become other companies’ direct competitors. As a result, it becomes more important for individual businesses than any other to name and target specific market segments. 

And that’s what we introduce today, a competitive environment analysis, which means an analysis of the competition to assess the strengths and weaknesses of current or potential competitors.

This environmental analysis is evaluated from the perspective of the customer.

This analysis should include the following:

  • Systematically evaluating the existing and potential competitive environment.
  • Providing insights into the strengths and weaknesses of your own and your competitors.  
  • Examining the competition landscape through marketing research.
  • Analysing potential threats and future trends to your company.
  • Analysing your strategy against your competitors.  

A competitive analysis is a master key to identifying your competitors, implementing great strategies and understanding your business’s standing, and in due course, overtaking your competitors.  

Because when you know your weaknesses versus the competition, you can handle adjustments accordingly. Conversely, when you know your strengths, you can establish them, build your strategy, emphasise them, and make your offer unrivalled. 

Not just that, competitive analysis is essential for your company to stay strategically positioned in the market.   

Digital Strategy Explained!

When Should You Conduct Competitive Environment Analysis?

It seems you always need to invest in competitive environment analysis. But when should you do it? Annually… Monthly… or something in between. 

Well, the following situations require environmental analysis; let’s see:

  • Product introductions (when you’re ready to launch a new product, you need to answer these questions: Is this new product already on the market? How do consumers receive it?)
  • Starting a new business (You have set up the foundation of your new business. But we need to know how you’d describe the target market structure— if the market is saturated with your offerings and how you introduce it to the audience.)
  • Introducing a new target segment (which consumers will choose you, and which consumers tend to opt for your competitors and why?)
  • Product development (how can your company develop this product to be unique and innovative to offer customers?)
  • Develop your marketing strategy and study the strategy of your competitors (Here, you should observe your competitors closely and explore how they advertise and how they do it)
  • Examine recruiting strategies and your brand image (If you want to haunt a skilful team, you should have a look at your competitor’s hiring strategy and how they can keep their employees satisfied) 

No question that executing a competitive environment analysis requires extensive effort to reveal many secrets behind your competitors’ work. You need to gain as much knowledge as you can.

However, it’s almost impossible to do this or overtake the competition without understanding their strategies.

How can you know that?

Start by gathering the customer’s opinion about your and their products. Then, let the customer decide whether a product is successful or not. 

Then, the buyer would tell you whether to stick with your brand or if they prefer to go with the competition. 

To conduct a brilliant competitive environment analysis, be ready to reach consumers directly. So, surveys serve as a curricula element in this process. 

That’s why choosing your sample is the determining factor here. Selecting the right people will guarantee the success or failure of your analysis. 

Consequently, choose all potential customers that might fit perfectly into your ideal target group— not just those already your customers. You need to put yourself in a consumer’s point of view.

 How can you reach out to these potential consumers?

Digital marketing research. It’s the ideal tool for competitive environment analysis. It will allow your company to get thousands of opinions in a very short time, giving you insights into your competitors.

Why You Should Consider Building Competitive Environment Analysis 

You’ve likely heard the Chinese saying: “Keep your friends close, but keep your enemies even closer.”

Conducting a competitive analysis is not the whole story. Understanding your competitor will not prevent you from getting abandoned or ambushed because sometimes you might not even know who your enemies are and how to deal with them.

Because in this world built upon insane exposure, your enemy, after all, could be acquired by a giant company you can not compete with, such as Amazon, which has the ability to put you out of business overnight!

Or you might offer a service, discover that Google has built a competing tool in your market, and you have to provide something much better than Google! (Seriously!) 

Here’s why we should conduct competitive environment analysis or, in other words, “study your enemies”. Studying the enemy can help you explore the battlefield before you start fighting. You’d understand where you should centre. 

Also, it can help identify where your enemies are and how they’re approaching their business objectives. Then, over time, you can discover strategic areas where you can cement yourself for a win.  

However, you need to know that a competitive environment analysis will not help you with critical and pressing business decisions, such as a product feature you need to build next. 

But it will help you uncover your competitors’ unique product features and get inspired to set your own.

But here is a very important tip when establishing your strategy based on a competitive analysis; never ever copy your competitors’ work for the sake of it! They could be 100% winning it every time because they have already mastered it. 

But what if you’re the industry leader, is competitive environment analysis still worth it?

Definitely yes! The value of analysing competitors is checking who could steal your attention. However, you don’t need to conduct it frequently, just like other companies, because you’re the one and only leading the pack through the uncharted region.    

Or listen to David Cancel, an American entrepreneur:

“when your competitors copy & paste your language, films, videos about you, and write help guide about you… Focus on the customer, not your competition is my best advice.”

Yes, you will already guide them to each territory, so your customers should be your driving power. 

So let’s get it right!

Understand Your Market Conditions

Many competitors are out there, and you will never compete against just one. In fact, in many cases, the biggest competition comes from indirect competitors. 

Some competitors hold a commanding position in the market, allowing them to conquer the industry’s core and expand into different industries and verticals. 

Just have a look around, and you will get surprised! Who would have thought Google and Uber would become die-hard rivals in the autonomous car market?- or the Giant Amazon, which becomes a competitor to every retailer that doesn’t offer their products on the eCommerce website. 

Sales witnesses enablement and acceleration, and it’s almost impossible to separate direct and indirect competitors. Sometimes, in many cases, such as the technical industry, you will never be able to distinguish between them because everyone competes with each other.

Competitive environment analysis will give you insights into all of that, turning assumptions into facts.

Identify Strengths and Weaknesses

You will have a solid foundation of the strengths and weaknesses of your company concerning the alternatives. Also, you will discover new things about your ideal customer, as you need a keen understanding of your target markets before launching a product.

A good analysis will help you position yourself correctly in the ecosystem of all offerings in relation to your competitors.

Since competition can emerge from anywhere, you should be ready with a catalogue of your strengths and weaknesses compared to indirect and direct market leaders (those adjacent to your core business).  

How to conduct strategic plan to improve your sales

Create or Adjust Go-to-Market (GTM) Strategy

Additionally, competitive environment analysis is necessary to develop a high-compact marketing and go-to-market (GTM) strategy, and much more. 


Simply, an effective GTM strategy requires a pure understanding of your ideal customer, competition, market, pricing, and product offering. Also, you will discover the channels necessary to reach out to your customers. 

Designing a competitive analysis helps you uncover market dynamics, so you will identify the optimal way to reach your target audience. 

Eventually, analysing the competitive environment helps determine how your company and products fit the current market and trends.  

Before you go: the idea of a competitive analysis is not about overly focusing on the competition but about understanding where your company positions in the marketplace. You will discover your stance and identify opportunities to distinguish further. Eventually, focusing on the customer will help you differentiate your offerings and serve your company far more. 

What You Need to Know Before Establishing Your Analysis 

Along with all benefits you can get from setting up your competitive environment analysis, you need to know a bunch of things first.

Let’s explain.

It’s Hard to Understand Your Competitor’s Strategy Fully 

You’ll never be able to duplicate or break down your competitor’s strategy. You can analyse their output, but it doesn’t reflect all these inputs or resources. 

Also, competitive analysis is just one element in your growth strategy, and sometimes you could be limited in reaching all competitors’ channels.

Yes, it’s important to analyse their marketing tactics, but you don’t want to copy that. They might be spending thousands on Google ads, but that doesn’t mean it’s working. Instead, you need to focus on what fits and prepare to improve what they’re doing.

You’re Not Obligated to Launch a New Feature just to beat Your Competitor 

Well, you found your competitor released a new striking feature.

Okay, let’s do it as well!

No, it doesn’t work like that. You don’t need to spend expenses on something just to keep up with a competitor. The only reason to introduce a new feature is to have a data-driven strategy based on your target market and what they expect from you.

Never make product decisions backed by petty internal politics.

Don’t Use Competitive Environment Analysis to Decide on What to Build

It’s not wise to get your next idea from your competitors. Instead, you should build what is next based on customer feedback, employee and marketing team output, and talking to prospects. 

That’s how you can create something relevant to your industry, customers, and potential customers. But, of course, you also need to share any ideas internally across your company first before going to the marketplace because your competitors hit the market with something you don’t offer.

You Don’t Need Analysts… You Need Data-Driven Marketing Experts 

Some entrepreneurs suggest avoiding industry research when holding your competitive environment analysis. But we will never say that. Instead, prevent industry analysts who are not good at forecasting disruptive companies.

They will only inform you of cutting-edge trends if such changes happen at the bottom of the market. It’s not something you can observe from the radar. You will need a marketing team already in the industry with insights from the kitchen.

Even giant research firms always release industry consensus reports after massive shifts have already taken place. Plus, their data are much more focused on analysing large organisations, so you don’t explore your indirect competitors or startups.

Eventually, what you’re looking for is not there. 

Don’t Spend So Much Time on Competitive Analysis 

You need to treat your competitive environment analysis as an ancillary activity. That means it’s just part of your business plan and your strategy. Therefore, it should consume less time, money, and resources.

Instead, you can hire a marketing agency with so much data about your industry and potential competitors and let them make this work for you.

On the other hand, you need to focus more on what makes your customers satisfied and what they’re telling you. Follow up on their feedback, conduct interviews, and understand their behaviours. They are and always will be the best resource for information and understanding.

How Can Profiletree Help You?  

Part of running a successful business strategy is having a competitive game intact. That means being enlightened about your competitors’ moves, what makes them competitive and unique, and any respective growth patterns.

Indeed, what we have gone through in this article offers a deeper understanding of the competition for greater insights into how you can make your business stand out.  

However, you still need access to your competitors’ resources to conduct your analysis accurately. Competition is a multifaceted phenomenon, and to excel at tackling it, you must understand its complexities. 

Our expert team offers a unique range of digital analysing approaches for conducting product strategy, competitive analysis, design service and SWOT analysis that will make products stand out in your target market.

Competitive Advantage: What is a SWOT Analysis?

How does it work?

  • Create a step-by-step guide to outline how we can help you attain your ultimate goal by implementing an effective competitive analysis.
  • Select your competitors for analysis, including both direct and indirect competition landscape based on our marketing research supported by +15 years of experience in the UK market.  
  • Take notes and insights after gaining an overview of competitors.
  • Figure out how each competitor performs in the market and acquires customers
  • Analyse all product offerings inducing price, features, strengths, weaknesses, whether it’s offered and your competitor’s overall business style
  • Break down your competitors’ selling points, such as a freemium or free trial, or coupons 
  • Implement a marketing strategy based on our findings to help you beat your competitors
  • Identify the channels competitors use to advertise or promote or deliver their products. 
  • Analyse the satisfaction level of your competitors’ customers, whether they are meeting customers needs or exceeding their expectations.
  •  Use all this information to populate a framework of your competitive analysis and competitor battle cards. 

Done well, a competitive environment analysis can help you find ways to outplay your competitors by better serving customers— yours and theirs.

Let’s work together and give your business a chance to shine.    

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