Getting started with competitive analysis: Examples and best practices

We’ve all checked out our competition to see why they are doing better than us. Maybe you’ve ogled your neighbor's greener grass and checked out the fertilizer bags in his garage. Perhaps you’ve investigated a highly successful competing product and perused the competition's website. These are forms of competitive analysis.

Market analysis template

Save time, highlight crucial insights, and drive strategic decision-making

Use template

Simply, a competitive analysis is analyzing your competitor. This is where you delve into the competition's marketing and pricing tactics and compare them with yours to evaluate the strengths and weaknesses of those approaches.

This analysis may uncover opportunities to outperform the competition and grab the market share you deserve.

Evaluating multiple competitors can keep you on top of industry changes and trends, ready to outpace the competition. It can assist you in making better, more informed decisions in marketing and distribution.

When developing a competitive analysis, you can also use the information in pricing changes, market definition, and messaging.

Competitor analysis templates

You can do competitor analysis in many ways. Perhaps the most effective way to analyze your competition is to narrow your scope and focus on a segment of your competitor's business.

That doesn't mean you shouldn't do more than one area of research, but it’s smart to home in on one area that makes the most sense to you. Some areas to consider for competitor analysis are:

Brand awareness

Brand awareness is essential to your success. If you’re wondering how your competitors have reached the pinnacle of brand awareness, you’ll want to look into their tactics.

So, what’s the point of all this? Well, it can help you understand what your customers want, where your brand fits in, and why your competition is so successful.

To get started, the first and most vital step is determining who your competition is. You probably already know, but you can research your industry or product to ensure you include all crucial players. Go ahead and do an internet search and see what comes up.

Some things are obvious: Coke and Pepsi or Ford and Chevy.

What about asking some of your contacts? Your suppliers are selling the same things to your competitors, so they’re likely to be treasure troves of information.

Once you develop a short list of competitors, it’s time to analyze their strategy.

Ask questions about:

• Who they are

• What they offer

• How much they charge

• How they differ

This is a challenging task. Understanding the components of a competitor’s brand strategy takes research and time. Check advertising, social media, special offers, and other things they may use for brand awareness.

Study their brand: What is their logo?  

Check out their website: Are they paying for digital ads?  

What are they doing differently to reach the target market that you are not doing? If you are already doing it, determine how they’re doing it better.

Costs

Your company factors many things into the cost of selling your product or service:

• Labor

• Materials

• Advertising

• Transportation

• Facilities

After undertaking research, you can reduce many of these expenses, making your product or service more cost-effective and attractive.

Perhaps your competitor is manufacturing a competitive product in a state with cheaper labor and real estate costs. Other questions to ask include:

• If you relocated, could you reduce costs, or would shipping costs offset the savings?  

• Can your competition purchase raw materials/packaging at a reduced rate because of volume or contractual reductions?  

• Does your competitor optimize costs by using digital media instead of other advertising? 

• Does your competition partner with other companies for reductions in warehouse costs?

Capabilities

When analyzing a competitor's capabilities, you can use its strengths and weaknesses in different functional areas. You can perform a SWOT analysis to compare your capabilities with your competitors. 

Researchers typically do a capability analysis on a competitor's product quality, service, flexibility, and deliveries and compare it to their company’s capabilities. 

Financials

When determining competitive analysis for financials, don’t just look at a healthy bottom line. Also, check out their ability to procure investors, access capital, and the level of financial growth compared to yours. In comparing financials, another factor to consider is the debt-to-income ratio and the company's total debt. 

Intellectual property

Intellectual property refers to inventions, designs, and creations that set products or designs apart from the competition. 

• Does your competitor have patents or copyrights?  

• Do they own industrial designs or a trademark that gives them an edge over you and other competitors?

Know-how

Another competitive factor is commonly known as know-how. This is the knowledge and experience that combine to give a competitive edge to a company or product.  

Inventors, long-time industry leaders, and even those who have worked in the same industry for years offer competition that can be near impossible to overcome.

Relationships

Industry leaders typically have developed relationships with others that make them competitive, including:

• Suppliers

• Lenders

• Wholesalers

• Retailers

• Advertisers

These relationships stem from past experience and trust. These elements can open doors for the competition that you may not be able to.

Marketing

Marketing strategies vary by company and product. What works for a soft drink likely won’t be successful for car sales, and marketing for the same competing products can also be very different.

You can use competitive analysis to determine how your competition successfully markets its product.

Risks

Analyzing the competition’s tactics and strategy may allow you to see that some of the most successful competitors are risk-takers. But not all risk-takers are successful.

You may be able to be more competitive when taking risks in your own business by analyzing the risks and research these competing companies have undertaken.

Most major companies use competitive analysis to improve their market position, brand recognition, and ultimate success. Researchers delve into the competition and compare strategies to ensure their brand stands alone.  

Major companies have a strong presence on all major social media outlets, so you can do a competitive analysis on each to compare your presence with theirs.

Facebook competitive analysis

Facebook competitive analysis is the process you use to monitor your competitor's activity on the social media site. The analysis involves reporting on brand growth and engagement metrics for your brand and your competition.  

You can use this data to set a baseline for customer growth and engagement projections.  Compare your Facebook content to your competitor’s and determine if your presence needs refining.

Twitter competitive analysis

Start by tracking the basics, like simple performance metrics. This lets you know how you compare to your competition on Twitter. Just track the number of tweets per day or the number of followers.

Study their content and compare it to yours:

• Do they have a different format or content?

• Do they tweet more frequently?

• Are they relying on video versus text posts?

Read the comments and see what engages the audience most frequently. Adjust your tweets while always staying true to your brand and creating original content.

Instagram competitive analysis

When performing an Instagram competitive analysis, consider four things:

• Followers

• Engagement

• Content

• Hashtags

Don't just look at the follower count; check the growth rate. The best way to analyze content is to look at the number of posts plus the amount of engagement the posts earn from the followers:

• What kind of posts gets the most attention and engagement?

• Do they post more image or text-based posts?

• How often does your competition post?

• What are the most popular hashtags?

Undertaking a competitive analysis ensures your company can stand up against leading competitors. It also helps you understand their methods for gaining more reach and customers and can even lead to streamlined business processes.

Competitor analysis templates