What Is Competitor Analysis?
Learn the essentials of competitor analysis, its benefits for your business, and a step-by-step guide to conducting an effective analysis.
What Is Competitor Analysis?
Competitor analysis, also known as competitive analysis or competition analysis, involves studying businesses in your industry to understand their products, branding, sales tactics, and marketing strategies. It is a critical part of business analysis for entrepreneurs, marketers, start-up founders, and product developers, helping them stay competitive in their field.
Benefits of Conducting Competitor Analysis
Conducting a competitor analysis provides numerous advantages for businesses, including:
Gaining insight into industry standards to ensure your business meets and exceeds them.
Identifying untapped niche markets with growth potential.
Enhancing product differentiation to offer unique value.
Addressing customer needs and challenges more effectively than competitors.
Building a strong and recognizable brand identity.
Creating marketing strategies that help your business stand out.
Tracking progress and evaluating performance to measure business growth.
How to Conduct a Competitor Analysis
Use the following competitor analysis framework to evaluate your industry’s competitive landscape. Regularly revisit this process to refine your strategies and grow your business.
1. Identify Your Competitors
Begin by assessing your own business, including your values, goals, branding, products, and services. This clarity will help you recognize brands that appeal to your target audience as potential alternatives.
Next, utilize online tools to pinpoint competitors:
Search for your product name or category on Google. For example, if you sell “hydrating lipstick,” see which brands appear in the search results.
Explore social media platforms by searching relevant hashtags or keywords.
Compile a list of up to 10 brands whose offerings closely align with yours and cater to a similar audience. Differentiate between:
Direct competitors: Businesses offering the same products or services to the same audience.
Indirect competitors: Companies offering different products or services but targeting the same audience.
2. Analyze Your Competitors and Their Business Structures
By studying how competitors organize their businesses, you can assess their capacity for growth, market share acquisition, and customer loyalty in your target market. Review each competitor’s website and social media presence to gather key insights, such as:
The size of the company, including the number of leaders and employees.
The length of time the company has been in operation.
The job openings listed on platforms like Glassdoor, Indeed, or LinkedIn, and their areas of expansion.
3. Evaluate Your Competitors and Their Value Propositions
A value proposition is a concise statement that highlights the benefits of a product and explains why customers should choose it over alternatives. It often follows this structure: "We help [target customer] achieve [outcome, benefit, or experience] by offering [product or service]."
To ensure your product or service stands out in the market, it’s important to understand your competitors' value propositions. Review major competitors’ website content, especially the "About" or "What We Do" pages, as well as any blogs or customer stories. Consider the following questions for each competitor:
What problems or pain points do their products address?
What customer desires do their products fulfill?
What benefits or outcomes do their products deliver?
What data or evidence do they provide to back up their product claims?
What pricing structure do they use?
4. Evaluate Your Competitors’ Marketing Efforts
Evaluating how competitors position themselves in the market allows you to develop a marketing strategy that effectively reaches your target audience.
For each competitor, consider the following questions:
Which social media influencers do they partner with to build credibility, create authentic content, and connect with their target audience?
Do they have affiliate marketing or brand ambassador programs that help promote their products through recommendations from satisfied customers?
What types of paid advertising (digital or traditional) does the company use?
On which marketing channels (websites, landing pages, social media platforms, email) do they publish organic content?
What type of content do they create, such as articles, videos, ebooks, reports, commercials, or digital ads?
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5. Audit Your Competitors’ Brand Identities
To understand why customers may feel connected and loyal to a competitor, it's essential to audit their brand identity.
For each competitor, answer these questions:
If this company were a person, how would you describe its personality?
What words, phrases, tone, and style does the company use in its messaging?
What values does the company communicate through its messaging?
How would you describe the visual elements of the company’s branding, and how do these elements align with the brand’s values, voice, and personality?
What emotions do the brand elements evoke in customers?
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6. Follow Each Competitor’s Customer Journey
Study the customer journeys created by your competitors to understand how they nurture and convert customers. The goal is to evaluate how seamless, integrated, and logical the process is, from the first touchpoint to making a purchase and beyond.
Start by following your competitors on social media, subscribing to their emails, and purchasing their products or services to experience their customer journey firsthand.
As you go through the customer journey for each competitor, gather insights on the following:
What are the different touchpoints along the customer journey?
What elements make it easy to progress through the journey?
What calls to action and instructions guide you on how to proceed?
What kinds of content educate or entertain you at each step?
What elements cause friction or make it hard to move to the next stage?
What happens after subscribing or making a purchase? Is there customer support, upselling, or access to a community?
7. Examine Audience Engagement
In this step, review competitors’ customer reviews, reactions, and comments across various platforms such as social media, product reviews, media appearances, and employee reviews on job sites. This will help you understand how competitors are perceived in the marketplace. With these insights, you can develop strategies to build a positive reputation for your brand, learn from competitors’ mistakes, and avoid similar pitfalls.
For each competitor, explore the following:
How do followers and subscribers interact with the company’s public content?
What is the overall public sentiment about the company, based on mentions, product reviews, and social media likes and comments? Consider both praise and complaints.
What are employees’ experiences, based on reviews on job sites like Glassdoor and Indeed?
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8. Conduct a SWOT Analysis of Your Competition
A SWOT analysis is a valuable tool for identifying the Strengths, Weaknesses, Opportunities, and Threats within the competitive landscape. By conducting a SWOT analysis of your competitors, you can consolidate everything you've learned into a clear picture of where your business stands in relation to them.
Consider the following questions when conducting your analysis:
What strengths do you observe in competitors' branding, marketing, customer journeys, and products?
What weaknesses are evident in their branding, marketing, customer journeys, and products?
What opportunities can your business take advantage of to stand out or gain a competitive edge?
What actions is your competition taking that might pose a threat to your business?
How to Use Competitor Analysis
After conducting a competitor analysis, the next step is to apply the insights you've gathered to strengthen your business. Here are several strategies to help you differentiate your brand, products, and services from competitors, ultimately gaining more market share:
What product features can you add to make your product stand out from competitors?
What pricing strategy can you adopt to attract new customers to your offerings?
What design features can you integrate into your brand to make it visually distinctive?
How can you craft a value proposition that sets you apart? For example: "We help [target customer] achieve [outcome, benefit, experience] by offering [product or service]."
How can you create a more seamless and frictionless customer journey that leads to purchases and encourages customers to become loyal brand ambassadors?
How can you create content that surpasses your competitors' offerings, such as covering new topics, addressing overlooked pain points, recommending fresh solutions, or providing more engaging experiences?
How can you enhance your social media strategy to attract new customers?
What strategies can you implement on marketing channels where your competitors are present, to differentiate your messaging and highlight your offerings as the best choice?
Are there any marketing channels your competitors aren’t yet using? What steps can you take to establish and grow a presence on those platforms?
Competitor Analysis Key Takeaways
Conducting a competitor analysis is an essential step in growing your business. It allows you to differentiate your brand and position your products and services as the best choice in the market. Be sure to revisit your competitor analysis regularly—whether quarterly, semi-annually, or annually—to stay updated on changes in competitors’ strategies and the emergence of new competitors. Continuously seek opportunities to give your brand and products a competitive edge.
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