In today’s fast-paced and ever-changing business landscape, standing out from the crowd is no small feat. To thrive, businesses must not only focus on their own strategies but also keep a close eye on the competition. This is where competitive analysis comes in—a systematic approach to understanding your competitors, their strengths, and their weaknesses to uncover opportunities for growth.

Competitive analysis isn’t just about knowing who your competitors are; it’s about learning what makes them successful, identifying gaps in the market, and using those insights to shape your own strategies. From analysing marketing campaigns to understanding customer preferences, competitive analysis equips you with the tools to stay ahead of the curve.

In this article, we’ll explore what competitive analysis is, why it’s essential, and how you can effectively leverage it to gain a competitive edge in your industry. Whether you’re a seasoned marketer or a budding entrepreneur, this guide will provide actionable insights to help you navigate the competitive landscape.

What is Competitive Analysis?

Competitive analysis is the process of researching and evaluating your competitors to gain insights into their strategies, strengths, weaknesses, and market positioning and use them to refine your own strategies. Though it’s not really known who invented it, its formalisation and development into structured methods can be attributed to contributions from key figures in business and strategic management.

One notable figure is Michael E. Porter, a renowned economist and professor at Harvard Business School. His groundbreaking book, Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980), is widely regarded as a seminal work in the field of competitive analysis. Porter introduced frameworks like the Five Forces Model, which helps businesses analyse competition and market dynamics comprehensively.

While Porter didn’t invent competitive analysis per se, his work significantly advanced the concept, giving businesses a structured approach to do the following:

• Identify Market Trends: By observing competitors, businesses can uncover emerging trends and shifts in customer preferences so they can stay ahead of the curve.

• Discover Market Gaps: Spotting unmet customer needs or underserved markets can help develop unique offerings that differentiate their brand.

• Benchmark Performance: Comparing their businesses to competitors provides a clear perspective on where they excel and where improvements are needed.

• Improve Customer Experience: Learning from competitors’ successes and failures enables businesses to enhance their products, services, and overall customer satisfaction.

• Anticipate Industry Changes: Keeping an eye on competitors’ innovations and challenges prepares businesses to adapt proactively to industry disruptions.

• Gain a Competitive Edge: By leveraging insights from competitive analysis, businesses can make informed decisions that position them as leaders in the market.

Conducting a Competitive Analysis for Digital Marketing

Almost every marketer conducts some kind of competitive analysis. However, they’re not always particularly effective at doing so. This is typically because they don’t have a systematic way of analysing their competitors. Here are the five core steps for any competitive analysis process:

Identify Your Objectives

Before diving into a competitive analysis, it’s essential to establish clear goals to guide your efforts. Are you looking to increase your market share by identifying opportunities to outpace competitors? Perhaps your aim is to enhance your product features by understanding what your rivals offer and how their solutions appeal to customers. You might also want to refine your marketing strategy by analysing the tactics that resonate with your shared audience.

Defining your objectives upfront not only streamlines your analysis but also ensures that the insights you gather align with your business priorities.

Research and Create a List of Your Top Competitors

It doesn’t matter what industry you operate in. Every organisation has competitors of some kind; there is always someone who wants to reach the same audience as you. Now, since most of the companies can be found online, it’s pretty simple to identify your competitors. Here’s how to do so:

• Conduct a Google search of your products or services or use Semrush to identify the top companies with the same offerings.
• Ask your customers to tell you what other businesses they would consider for the same products or services.
• Attend the latest industry conferences and check a list of the presenters or companies running booths.

Now that you’ve made a comprehensive list of your top competitors, the next step is to rank them into categories depending on the type of competition they pose. In that case, you should end up with three categories: primary competition, secondary competition, and tertiary competition.

• Primary Competition: Those are the businesses targeting the same audience and offering the same kinds of products and services as your own. Pay special attention to their pricing and features.

• Secondary Competition: Those are the competitors offering either a high or low-end version of your products or maybe selling something similar to a diverse audience. They can also be people who solve the same core problems as you do, but with different kinds of products and services.

• Tertiary Competition: Those are businesses related to yours, targeting similar customers to your own, but not offering overlapping products. They will come in handy when you want to expand your product catalogue.

Examine Your Competitors’ Marketing Plans

After identifying and categorising your business competitors, it’s time to check the strategies they use in marketing their products and services. Snooping at their ads on their sites and other promotional platforms will help a great deal. Also, look at your competitions’ sales approaches and their target markets and identify:

• How they allocate their budgets on running adverts and other promotional efforts
• The audience on which your competitors focus their marketing efforts
• The platforms they use to reach their target customers
• Updates/trends on the products and pricing
• New and better product/service distribution channels
• Branding positioning

In addition to this, here are a few other things to keep an eye on when examining your competitors’ marketing plans:

Business Website

Start by checking their website. What’s the first impression you get when you look at the website? What is the design like? How attractive is it? Is the site optimised for mobile?

Also, check how your competitors post and do their content marketing. Don’t forget to look at the customers’ reviews on the website, testimonials and other interactive tools they use to enhance their customers’ experience.

Social Media

Social media presence is increasingly becoming an integral tool for companies to interact with their users and fans.

Look at your competitors’ social media channels such as Facebook, X/Twitter, and Instagram. Pull a few of their posts and photos and take a look at the comments to know who follows them. How do they engage their followers? Determine how your rivals are using social media and the way they integrate it into their product/service marketing strategies.

This is especially important if they already have a larger audience than yours. This means you can analyse the kinds of posts which get the most engagement, and carry these lessons into your own social media strategy.

SEO Structure and Strategies

A quick analysis of your competitors’ content can reveal that they’re offering the same type of content as your business, they frequently update it just as you do and it’s high quality. But then, what is it that they do differently to attract all those customers? The chances are high your larger competitors’ search engine optimisation structure is pretty on point.

Now check how your business rivals are incorporating keywords into the content. What keywords do they use? Successful businesses know how to integrate keywords into the content, title, internal links, image alt tags, etc. Besides, don’t limit yourself to high-search volumes. Also target the long-tail keywords that have a low search volume, low competition, but very powerful.

Even if you don’t mimic your competitors’ SEO strategies, competitive analysis is the easiest way to figure out which search terms you should be targeting.

Profile Your Competitors

If you want to learn what exactly makes your competitors stand out, then you’ve got to dig a little deeper, a process we’ll call competitor profiling.

That implies you should create a profile of your rivals’ business, detailing information regarding the background, competitive advantages, employees, pricing strategies, their financial abilities and, of course, their strengths and weaknesses.

Product Pricing

Pricing is a crucial determinant of the business success irrespective of the industry and you need to monitor the pricing strategies of your competitors to determine the position of your pricing and whether or not you need to make some improvements.

If you set the price of your products or services too high, you’ll drive away your current and potential customers to the competition. In the same vein, your business would lose the necessary revenue if you fix the price too low. The secret to mastering the pricing game is learning to achieve a price balance for the sake of both the business and the market.

In addition, make sure the value of the products or services you offer justify your pricing.

Competitive Advantage

Establish what makes your competitor stand out in the crowd. What are the key aspects that drive their success and set them apart from the rest of the market?

Ask yourself: Could there be offerings they provide that you don’t? Do they excel in areas like customer loyalty programmes, faster delivery times, or eco-friendly practices? Dive into customer preferences to understand why they choose your competitor over others—whether it’s for the perceived value, convenience, or emotional connection their brand evokes.

High-quality products and better services are often at the forefront of effective competition, but don’t overlook other factors like marketing strategies, user experience, and responsiveness to feedback. By identifying these strengths, you can pinpoint areas where you may need to improve or innovate to keep up—or even surpass—your competitors.

Outline the Strengths and Weaknesses of Each Competitor

By now, you’ve conducted ample research on your competition so the strengths and weaknesses will act as a summary of your work. Create a worksheet and feature the strengths and the weaknesses of your each of your competitors’ businesses and categorise them under the five following core areas:

• Product
• Promotion
• Pricing
• Distribution
• Advertising

Look at the strengths and determine your ability to meet or exceed them. Similarly, your competitor’s weaknesses should present an opportunity not only to learn but also exploit them, and gain a competitive edge.

Watch Out for New Competitors and the Market Outlook

The final step in your competitive analysis is evaluating the current and future market landscape for your product. If the market is on an upward trajectory, there’s likely potential to reach more customers. Conversely, if the market is plateauing or declining, prepare for heightened competition as businesses vie for a shrinking customer base. If the market is fragmenting into niches, it may be time to reassess your product offering and consider tailoring it to a more specific audience.

While analysing your existing competition, remain vigilant about potential new entrants, especially if your industry has low barriers to entry. Address any vulnerabilities in your strategy that competitors could exploit to gain an edge.

Additionally, consider how disruptive innovations or emerging technologies could reshape your industry. For instance, the rise of Tesla transformed the automotive sector and challenged legacy brands that underestimated the shift. Similarly, new market segments could emerge, creating opportunities for early adopters and innovators. By anticipating these shifts, you can position your business to stay ahead and avoid losing ground to new players.

Additional Tips

Conducting a thorough and well-rounded competitive analysis requires input from various departments within your organisation. Each team offers a unique perspective that can enhance the depth and accuracy of your insights. The marketing team, for instance, can provide valuable information about competitor campaigns, target audiences, and engagement strategies. Sales teams can share first-hand observations from customer interactions, shedding light on competitor pricing, customer pain points, and purchasing behaviour.

Secondly, consider leveraging a shared platform for data collection and communication. Tools like Slack, Asana, or Trello can facilitate seamless information sharing, enabling team members to upload findings, discuss observations, and track progress in real time. Centralised platforms also make it easier to identify patterns, correlate data from different departments, and ensure alignment across teams.

Keeping up with industry trends is another critical component of competitive analysis. Attending conferences, webinars, and networking events allows you to hear directly from industry leaders and gain insights into emerging technologies or shifts in consumer behaviour. Reading industry publications, blogs, and reports keeps you updated on the latest developments and benchmarks. Additionally, following key influencers and thought leaders on social media can provide real-time updates and opinions that shape the direction of your market.

Potential Pitfalls When Conducting Competitive Analysis

Of course, there is a number of things which can go wrong during competitive analysis. Specifically, if you conduct your research incorrectly, you might come up with the wrong steps forward.

Here are some of the pitfalls to watch out for during competitive analysis:

• Overlooking the Influence of External Factors: Competitive analysis should consider external factors like economic conditions, legal changes, and technological advancements, as ignoring them can lead to an incomplete view of competitors’ strategies and market positions.
  
• Focusing Too Much on Competitors’ Strengths: This can miss opportunities for differentiation. Pay attention to their weaknesses and areas where you can offer better value for a competitive edge.
  
• Overlooking Smaller or Emerging Competitors: Focusing on the biggest players can make you overlook smaller, emerging competitors who may disrupt the market with innovative products, lower prices, or new business models, leaving you unprepared for changes.
  
• Relying on Outdated Information: Competitive analysis should be ongoing, as relying on outdated data can lead to inaccurate conclusions. Regularly update your analysis to account for changing market dynamics, consumer preferences, and competitor strategies.
  
• Misinterpreting Competitors’ Strategies: Accurately interpreting competitors’ actions is crucial. Relying on limited or unclear data can lead to ineffective strategies. Always validate assumptions with further research or insights.
  
• Ignoring Customer Sentiment and Feedback: Competitor analysis should also consider how customers perceive them. Focusing only on competitor tactics without factoring in customer satisfaction can lead to strategies that miss market demands or overlook gaps.
  
• Neglecting to Align Findings with Your Business Strategy: Competitive analysis is most valuable when aligned with your business goals. Failing to translate insights into actionable strategies can lead to missed opportunities or misdirected efforts.
  
• Getting Distracted by Non-Relevant Competitors: Avoid spending too much time analysing competitors that aren’t directly relevant to your business or industry. Focus on those with a meaningful impact on your target market or competitive landscape.

Competitive Analysis Template and Framework

This template provides a practical framework for conducting your own competitive analysis. Customise it based on your specific goals and industry.

Competitor Identification

• Direct Competitors: List 3-5 key competitors offering similar products/services.
• Indirect Competitors: List 2-3 companies addressing the same needs with different solutions.

Data Gathering

Category	Data Points	Sources
Products/Services	Features, functionality, pricing, specifications, packaging	Competitor websites, brochures, reviews
Marketing	Channels used (social media, SEO, PPC), messaging, content types, advertising campaigns	Competitor websites, social media profiles, analytics tools
Sales and Distribution	Channels used (direct sales, resellers, online channels), pricing models, terms and conditions	Competitor websites, industry reports, customer reviews
Customer Service	Support channels offered, response times, customer satisfaction ratings	Competitor websites, social media interactions, customer reviews
Brand and Reputation	Brand messaging, positioning, online sentiment, awards and recognition	Competitor websites, social media engagement, news articles, industry rankings

Analysis and Benchmarking

SWOT Analysis

• Strengths: List each competitor’s key advantages and differentiators.
• Weaknesses: Identify their vulnerabilities and shortcomings in product, marketing, etc.
• Opportunities: Explore potential market gaps they’re not addressing.
• Threats: Consider possible future challenges they might pose.

Benchmarking: Compare your data (e.g., market share, website traffic, customer satisfaction) to competitors’ benchmarks to identify areas for improvement.

Insights and Actionable Steps

• Identify Competitive Gaps: Are there unmet needs your competitors aren’t addressing?
• Define Your Competitive Advantage: What sets you apart from the competition?
• Develop Actionable Strategies:
  • Product: Enhance features, improve usability, offer unique value propositions.
  • Pricing: Adjust price points, develop flexible pricing models, offer discounts.
  • Marketing: Optimise existing channels, explore new avenues, refine messaging.
  • Sales and Distribution: Expand distribution channels, improve sales processes.
  • Customer Service: Enhance support channels, offer personalised service, improve response times.
  • Brand and Reputation: Strengthen brand messaging, build positive online presence, engage with customers.
• Prioritise Actions: Create a timeline and assign responsible individuals for implementing your strategy.

Monitor and Update

• Regularly revisit and update your analysis to stay ahead of evolving competition.
• Track the impact of your implemented strategies and adjust as needed.

Additional Resources

• Free Competitive Analysis Tools: Semrush, Similarweb, SpyFu
• Competitive Analysis Templates: HubSpot, Asana, Smartsheet
• Industry Reports and Market Research: Statista, eMarketer, Gartner

Real-World Competitive Analysis Insights

Real-world competitive analysis can provide invaluable insights that help businesses refine their strategies and maintain a competitive edge. Here are some examples of how companies have applied competitive analysis to their advantage:

Case 1: Patagonia—Identifying an Untapped Customer Segment

• Analysis: Patagonia, known for its high-end outdoor gear, analysed competitors like North Face and Columbia. They noticed a gap in the market for more affordable, sustainable outdoor apparel aimed at younger generations.
• Insight: A growing segment of eco-conscious, budget-minded adventurers existed.
• Strategic Decision: Patagonia launched a sub-brand, “Black Diamond Equipment,” offering lower-priced outdoor gear with the same sustainability commitment. This captured a new customer segment and boosted overall sales.

Case 2: Dollar Shave Club—Counteracting a Marketing Blitz

• Analysis: Dollar Shave Club, the subscription razor provider, faced heavy marketing from Gillette’s “Fusion ProGlide” launch.
• Insight: Consumers valued convenience and transparency over fancy technology.
• Strategic Decision: Dollar Shave Club doubled down on their direct-to-consumer model, highlighting cost-effectiveness and humour in their marketing. This resonated with their existing customer base and attracted new budget-conscious buyers, maintaining their market share despite Gillette’s aggressive campaign.

Case 3: Airbnb—Embracing Local Experiences

• Analysis: Airbnb compared competitor booking platforms focusing solely on accommodation.
• Insight: Travellers increasingly desire authentic, local experiences beyond just a place to stay.
• Strategic Decision: Airbnb launched “Airbnb Experiences,” connecting travellers with unique local activities like cooking classes, guided tours, and cultural workshops. This differentiation attracted experience-seeking customers and established Airbnb as a one-stop travel platform.

Case 4: Netflix—Expanding Content Strategy

• Analysis: Netflix analysed streaming competitors like Amazon Prime and Hulu, noticing their diverse content libraries.
• Insight: Viewers wanted variety and niche entertainment options beyond mainstream TV shows.
• Strategic Decision: Netflix invested heavily in original content creation, producing diverse shows and movies across genres and languages. This broadened their appeal, attracting new subscribers and maintaining their dominance in the streaming market.

Case 5: Tesla—Disrupting the Automotive Industry

• Analysis: Tesla studied traditional car manufacturers like Toyota and Ford, focusing on their slow adoption of electric vehicles (EVs).
• Insight: Early adopters and environmentally conscious consumers craved innovative, high-performance EVs.
• Strategic Decision: Tesla focused on developing cutting-edge EV technology, prioritising performance, range, and sleek design. This captured the attention of tech-savvy customers and disrupted the traditional car market, opening the door for widespread EV adoption.

These examples showcase how competitive analysis can yield valuable insights, leading to strategic decisions that drive brand success. By actively studying the competition, businesses can identify gaps, cater to unmet needs, and differentiate themselves in the market, ultimately achieving sustainable growth and market leadership.

Conclusion

Competitive analysis is a powerful tool that allows businesses to gain crucial insights into their competitors’ strategies, strengths, and weaknesses. By understanding the competitive landscape, companies can identify opportunities for innovation, improve their offerings, and fine-tune their marketing strategies to better meet customer needs.

However, it’s important to remember that competitive analysis is not a one-time exercise but an ongoing process. Regularly updating your insights and staying informed about industry trends will help you stay ahead of emerging threats and capitalise on market shifts.

Ultimately, when done correctly, competitive analysis can provide a significant advantage, helping your business make informed decisions that lead to sustained growth and success.

FAQ