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GuidesMarket researchCompetitive analysis: How to do one step-by-step

Competitive analysis: How to do one step-by-step

Last updated

1 April 2024

Reviewed by

Cathy Heath

In business, it’s worthwhile to undertake a competitive analysis to determine where you're doing well, where to improve, and what trends to get ahead of. 

This activity can help you learn why your business is moving forward slower than anticipated or why your competitors secure more business from your ideal customers.

All companies chase the same customers as their competitors, especially those that offer comparable products or services. By looking at your competition's features, you will have a road map to make changes, grow market share, and better understand future market trends.

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Defining a competitive market analysis

Competitive analysis in marketing is an assessment of your competition's products and services and an evaluation of their strengths and weaknesses compared to your own. 

A new business should conduct a full competitive analysis to determine its position in the market and determine its competitors. It should repeat this process at least yearly.

It’s always good business to stay on top of what the competition is doing and where you stand. It’s a solid part of your company's discipline, like keeping good financial records and staying current with marketing trends. 

Competitive analysis in marketing helps you better understand your unique advantages and potential barriers to growth opportunities.

Many businesses operate on preconceived ideas about the market landscape, consumers, and competitors. However, these may not always be accurate.

Competitive marketing analysis challenges your assumptions, as the market is constantly changing due to disruptive influences like new technology. Doing this exercise regularly gives entrepreneurs a more proactive approach to business ideas and processes.

Competitor analysis templates

What to include in a competitive analysis

The primary purpose of performing a competitive analysis is to gain an edge over your competitors in the market while improving your business strategy. It becomes easier to know what your competitors are doing to win customers or clients in your target market.

A complete competitive analysis report should include the following:

  • A description of the company's target market

  • Pricing comparison

  • A detailed report about your products or services versus your competitors’

  • Your current strengths and weaknesses versus the competitors'

  • Current and projected sales, revenues, and market share percentage

  • Distribution channels

  • Customer reviews

  • Marketing differentiators

  • Potential disruption or disruptors

This comprehensive data allows you to compare each detail of your products to the competition and use it to assess your strategy. Comparing these success metrics across different competitors is a proven step toward making data-driven decisions in your company.

How to perform a competitive analysis

Knowing what to focus on when performing a competitive analysis in marketing can be challenging, especially if you don't know what exactly to base your research on. 

Before conducting your competitor analysis, consider what you intend to get out of it. Use this data to add or remove any areas that do or don’t align with your goals.

An effective analysis depends on answering the key questions below, uncovering strengths and weaknesses, and changing things to exploit this knowledge.

1. Determine who your competitors are

The first step to completing a competitive analysis is determining who you’re competing against to compare your data more accurately. 

Choosing start-up and seasoned companies and direct or indirect competitors diversifies your analysis for a more comprehensive list. You can weed out less relevant competitors from the list.

To find your industry's competitors, you can use Google or Amazon to find products or services you are selling. The top search engine results will likely be your most fierce competitors.

If you’re a small, local company, your competitors will likely be nearby, so you probably already know a lot about them or at least that they exist. 

However, for an online service or eCommerce store, you may need to dive deeper into the competition's overall search engine rankings and other metrics, such as the return on investment (ROI) and key performance indicators (KPIs).

2. Research products offered by the competition

At the heart of every business is the product or service it offers customers, making this an ideal place to start. Take note of your competitors' pricing and the potential discounts they may offer customers.

Some questions to guide you through this process include:

  • Is the competition a high-cost or low-cost provider?

  • What is their market share?

  • How do they distribute their products or services?

  • Do they work only on one-off purchases or volume sales?

  • What differentiates the company from its competition?

  • What customer characteristics and needs does the company meet?

  • Do they use different pricing strategies for online purchases?

These highly targeted questions should help you compile a more detailed and targeted competitor list and the products/services they offer.

3. Compare product features

After determining your competitor's products/services, your next step will be to objectively analyze and break them down feature by feature.

While different products have their unique features, most often include the following:

  • Price

  • Ease of use

  • Service offered

  • Style and design

  • Product quality

  • Number of features

  • Customer support offered

  • Age of audience served

  • Type and number of warranties

Ultimately, you will find a few common factors that determine the pricing or superiority of your competitors' products/services and what makes them the go-to seller instead of yours.

4. Compare product marketing

Your competitor's marketing efforts also play a crucial role in determining their sales and success rate. Unlike the product feature matrix, you must dive deeper to unveil your competitor's marketing plan for the most accurate data.

Areas you should analyze when comparing product marketing include the following:

  • Paid ads

  • Website copy

  • Social media

  • Product copy

  • Press releases

Identifying your competitor's target demographic helps you build customer personas. This gives you a clearer perspective of your competition's marketing tactics to customers.

5. Understanding what technology stack competitors use

Learning what types of technology your competitors use will be critical in helping you minimize friction and increase momentum within the organization.

Some organizations may use powerful customer service software you may not know about yet. This information should equip you with the tools to outperform your competitors.

Websites like Built With can help you identify which software your competitors are using.

Consider looking into the competitor's job listings, especially those involving engineer or web developer roles. Most job listings for these roles mention which tools a competitor uses.

Competitor analysis templates

6. Analyze the engagement level of the competition's content

You will want to know what content resonates better with the competition, what needs improving, and what to scrap from your marketing strategy. You can check how the competition's target audience responds to the organization’s posts.

Monitor their number of comments, likes, and shares to find out the following:

  • Are people tweeting about specific topics more than others?

  • Which comments come out as positive, negative, or a mix?

  • Do readers respond better to Facebook updates compared to other types of content?

  • Do competitors categorize their marketing content using tags? Do they follow social media and share buttons for their content?

7. Observe how the competition promotes their marketing content

From the competition's engagement, you will move right along to their content promotion strategy. These may include features like:

  • Image alt text tags

  • Keyword density in the copy

  • Use of internal links

You will want to know: 

  • Who is sharing your competitor's publications

  • Which keywords they focus on that you haven't tapped into yet

  • Who is referring traffic to the competitor's website

  • The social media platforms the target audience is using and the keywords to focus on

8. Consider their social media presence and strategies

Monitoring your competition's social media marketing presence and engagement rates is another critical competitive analysis process to pay special attention to.

You want to know exactly how your competition drives engagement with their brand through their social media presence and engagement.

Do they use links to their social media platforms in the header or footer of their publications? Are these links clearly visible? Do they have calls to action in their engagement buttons?

These are all critical questions to find answers to help you determine what you may be doing or not doing with your social media marketing.

It is worth having more information about social media platforms your competitors may be on, but you still need to explore. Check the competition's engagement rates on the new social media platforms to see if they are worth venturing into.

Make sure you visit the following social media sites to check if your competitors have accounts on them:

  • Facebook

  • Instagram

  • Twitter

  • LinkedIn

  • Pinterest

  • YouTube

  • Snapchat

  • TikTok

While monitoring your competitor's engagement in these social media platforms, take note of the following quantitative items:

  • Number of followers

  • How many shares, likes, retweets, and repins do their posts get?

  • Are customers leaving comments and leaving posts?

  • Users’ posting frequency and consistency

You want to learn about the content your competitors are posting and check if they are more focused on driving more prospective clients to their landing pages for new leads. They may also be using more visual content to promote user engagement and brand awareness.

9. Perform a SWOT analysis

Competitive intelligence plays a significant role in your competitor's analysis framework. A SWOT analysis gives you the necessary data to identify your business's strengths and weaknesses. Once you have all the information you need, you can use it to propel your company toward success.

When done right, a SWOT analysis can turn your company's weaknesses into opportunities while assessing threats you may face from your competition's marketing efforts. Using this method, you can monitor your competition's strengths, weaknesses, opportunities, and threats each time you assess their overall grade.

The data from the previous steps in the competitive analysis should help you better understand what to improve on, what to leave as is, and what to get rid of. This allows you to position your business better as you uncover areas of improvement within the brand.

How often should you perform a competitive analysis?

Regular competitive analysis is vital to keeping your business competitive and thriving. Unfortunately, many businesses only perform a competitor analysis in start-up mode and neglect the process once established.

However, industries are constantly changing, and previous successful factors may be less effective in the coming years. Moreover, new companies are continually performing a competitive analysis of your company. 

Disruptors can enter and change a market overnight, such as new technology that meets customers’ needs better. 

Analyzing your company regularly against the competition will: 

  • Reveal novel opportunities to improve your products or service

  • Increase levels of profitability

  • Help you better serve your target customers

Understanding your competitors allows you to: 

  • Distinguish yourself from the competition

  • Determine the best services to offer

  • Focus on underserved market opportunities

  • Identify the best business practices to use

Using competitive analysis to gain a market advantage

For your company to thrive in a highly competitive market, you must know what competition you’re up against. This will help you find the right tools to beat them. 

Learning and understanding your competitors' strengths and weaknesses is critical to becoming a better marketer and company.

Using competitive analysis in your marketing strategy can boost your company's sales and ROI and help you capture your target audience faster.

A comprehensive competitive analysis should lead to action: Follow up on your findings with a strong business plan and goals. 

The insights captured in this post will help you analyze different metrics within your company where you can surpass your competitors.

Competitor analysis templates

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