Competitive analysis can help you identify your competitors, find out what and how they’re selling to their customer base, and learn what you can do to outperform them. You can gain a tremendous amount of insight from a thorough competitive analysis. This article will help you get started.
Competitive Analysis Step 1: Identify your competitors
Look for businesses that do exactly what you do, do parts of what you do, and do things that are different than what you do but could satisfy the same customer need.
Your primary competitors are those who meet the first criterion. They do exactly what you do, offering the same or very similar products or services to the same or a similar customer base at a similar price point. This group deserves most of your focus. They’re cornering the same segment of your market, which is made up of people with a limited set of resources they’re willing to allocate toward the goods or services your industry offers. You’ll want to compile competitive information for each player in this category.
Other competitors (often called “indirect competitors”) should stay on your radar, too. These businesses might offer different solutions, serve different markets, or sell at different price points than your business. However, they can be sources of inspiration for new ways to deliver your product, new product lines, new market segments to target, or new marketing ideas you could adapt for your business.
Keep disruptors on your radar, too. Many technology and other companies are emerging with plans to change buyer attitudes and experiences by offering a solution that’s entirely new to the market. It can be difficult for disruptive solutions to gain traction. But some do, and they can decimate a long-standing solution’s popularity, viability, and appeal.
So how do you find these three kinds of competitors? Try the following strategies:
- Run search engine queries for the products you sell using specific brand names or generic market terms (e.g., clothing for women 30 and up).
- Research your industry’s market share using competitive analysis software. Klue is a popular resource.
- Talk to your suppliers and wholesalers about others who are using or selling their products.
- Join social media conversations with your target customer base and find out which brands they’re following and talking about.
Competitive Analysis Step 2: Study your competitors’ websites and social media pages
Once you’ve identified your direct, indirect, and disruptive competitors, spend time looking at their website and social media pages to learn who they are, what they offer, and how they’re positioning themselves. You can learn a great deal about a business by studying the design of their site and social media posts and seeing how their audiences engage with them. For instance, you may find that some of your competitors excel at calling their audience to action, maybe by sharing certain pages or posts. Others might overlook this important opportunity.
You may also notice that some competitors lean on certain social media platforms and ignore others. In some instances, this can be a smart, deliberate move to concentrate their efforts on the platforms that appeal most to their target audience, one you might be inspired to copy. In other cases, you could find areas of opportunity on other platforms where you can stand alone and connect with your market.
When you browse competitor sites and social media pages, try paying attention to the following points:
- How many followers your competitors have on various social media platforms
- How frequently and consistently your competitors post on those platforms and their website
- Whether their posts are designed to inform, entertain, engage, or drive action
- Whether the brand’s followers are liking, interacting, or engaging with the posts or pages
- If followers are sharing, pinning, or retweeting the brand’s original content
- Whether the brand is responsive to their customers’ queries on their posts and pages
- Whether the brand is partnering with influencers to extend its reach
|You may want to invest in a tool like Social Searcher to understand social media sentiments around brands and tune into what your market is talking about.|
Finally, be sure to study the user experience of your competitors’ websites. Pay attention to ease of navigation, the functionality of their pages, ease of learning about products and making purchases, and other factors that are essential to the brand experience you know your customers value.
Competitive Analysis Step 3: Look into the products, services, and solutions your competitors offer
Take a closer look at the products, services, and solutions your competitors offer. Pay attention to the quality, features, and differentiators they play up and how each competitor tries to position their offerings in terms of affordability and ability to meet a specific consumer need.
It can help to explore the following questions with each competitor you study:
- What solutions does this competitor offer, and how many are like mine?
- What solutions does this competitor offer that I don’t, and how many of those would appeal to my target customers?
- Do they sell their products through brick-and-mortar stores, distributors, or online channels?
- What is this competitor doing to differentiate its products from others in its market?
- How are customers responding to these products through reviews on their social media pages, website, or other sales channels?
- If the company’s products could be defined by a single word, what would it be (e.g., high-quality, expensive, craftmanship, durable)?
Competitive Analysis Step 4: Read your competitors’ reviews
We alluded to this in the previous step. Reviews can offer insight on what your target customers think of other solutions in your market space. You’ll likely find reviews on your competitors’ websites and social media pages, on the selling platforms they use, and through third-party articles that review their products. Each of these sources can be invaluable in understanding what others think of the usability, functionality, value, durability, and price of a given product.
Competitive Analysis Step 5: Determine how your competitors are positioned in their market
What’s interesting is that your competitors may use radically different approaches to deliver a similar set of products or services to a single pool of customers. When you understand their approaches, you can usually spot their position (how each one tries to appeal to your target customers) and whether there are gaps you could exploit to connect with your market.
Position is usually the function of a product’s price and its quality. Try mapping the positions of your competitors’ primary products or services along these two factors:
- Which of your competitors offer solutions that are high-quality and high in price?
- Which offer solutions that are high-quality and low in price?
- Who offers solutions that are low-quality and high in price?
- Who offers solutions that are low-quality and low in price?
You may want to repeat this exercise for other products or services your competitors offer. This will help you build your knowledge of the business and learn their go-to practices for winning over their customers.
Competitive Analysis Step 6: Study how your competitors market and sell their products or services
Next, examine your competitors’ sales processes to learn how they’re reaching their markets, converting prospects to customers, and retaining their customers’ business.
It can be tough to learn other companies’ processes without making purchases yourself, but there are some ways to go about it. First, look for information on the company’s website that will help you understand the fundamentals. Second, reach out to your customers, especially those who have mentioned that they were considering a competitor’s solution before choosing yours. This group could offer insights into what working with a given competitor was like, especially in terms of sales pressures, transparency, accommodation, and inquiry into the buyers’ needs.
Web research and interviews with suppliers, customers, and others in your industry can help you find answers to other important questions. These could include:
- How is a competitor reaching, educating, and engaging their customer base?
- Are they leaning on blog posts, videos, webinars, podcasts, ebooks, infographics, or other tools to market their business and product lines?
- Are they providing easy-to-access guides to help their customers make buying decisions or use the product effectively post-sale?
- Do they use case studies, testimonials, or reviews to sway their prospective customers?
- Do they partner with distributors or resellers to reach more customers?
- What are their sales volumes?
Competitive Analysis Step 7: Review your competitors’ pricing models
Building on the previous step, dive into your competitors’ approaches to pricing. The goal here is to understand whether they’re using that factor to appeal to their customers.
Some of your competitors may try positioning themselves as the low-cost solution. Others might offer free trials or upfront discounts to position themselves as the risk-free choice for buyers. Both trials and discounts can win over customers. It’s important to know who is using these tools and whether it’s a common practice in your market.
You’ll likely find the bulk of your competitors using similar pricing strategies. You may want to follow suit. Of course, another option is to stand out and charge higher prices. You might do this to emphasize the quality, durability, or superior features of your solutions or how you deliver your solution to your customer more quickly than your competitors. Or, if the bulk of your competitors are offering high-priced solutions, you might consider cost-cutting strategies and appeal to customers looking for a lower-priced option.
Competitive Analysis Step 8: Investigate the technologies your competitors are using
Technology can be an important differentiator between competitors. Good technology can create a better brand experience, smoother transactions, better functionalities, and a host of other important outcomes. Spend time on your competitors’ websites, job postings, and talking with people in your industry to learn about your competitors’ uses of technologies, which may include the following:
- The e-commerce solution they use to complete transactions
- Their payment processing tools
- The out-of-the-box site features or custom plug-ins they use to capture better data or improve their customers’ experience
- Their artificial intelligence functionalities
- How they use chatbots
- Their use of augmented reality or virtual reality technologies to improve their buyers’ shopping experiences
|You might also consider analyzing your competitors’ sites with BuiltWith, a tool that reveals the technologies various sites use for hosting, shopping, and supporting their customers.|
Competitive Analysis Step 9: Look into their delivery options
Delivery options are tremendously important for customers. For online shoppers, they’re one of the leading reasons for cart abandonment. Check out how your competitors are taking on delivery matters and see how your business is measuring up.
If your competitors sell online, dive deeper. Find out which logistics providers they work with, which shipping options they use, and what they charge for those options. Some of your competitors might have arranged a discount with a logistics provider (an advantage you could certainly copy). Or, they might be marking up their products to absorb some of the cost.
If your competitors sell through brick-and-mortar locations, look into whether they offer buy-online-pickup-in-store options or curbside pickup. These two options appeal to many buyers and can be relatively easy to implement with most modern fulfillment systems.
Competitive Analysis Step 10: Understand your competitors’ strengths, weaknesses, opportunities, and threats
Take stock of your competitors’ strengths and weaknesses. You might find these in their leadership, business model, products, sales, and marketing.
Then, note the opportunities and threats they’re facing. Your research can help you understand where your competitors have an advantage over your business. You might also see where they’re struggling, lacking, or failing to prepare for changes that could help or hurt their business.
Be sure to think about your business’s strengths, weaknesses, opportunities, and threats, too. Then, try to draw some comparisons. You might spot opportunities to develop or reposition your business to strengthen your market position. You could find ways to emulate what others are doing right. And, you can ensure that your business is doing all it can to stay relevant and appeal to your customers.
Strategies for long-term analysis
Competitive analysis can’t be conducted once and ignored. Instead, you’ll need to investigate, track, and continue learning about your competitors. This will help you learn how they’re trying to grow, improve, and capture more market share.
Here are some simple strategies for making competitive analysis an ongoing part of your business:
- Set up Google Alerts for each of your competitors to obtain email alerts of where and how they are being mentioned across the web.
- Look into tools such as Semrush and Ahrefs to understand which keywords your competitors are using and track their ranking progress.
- Get in the habit of checking your competitors’ competitive positioning on (at least) a quarterly basis. Scan for new competitors with web and social media searches (check out Pages to Watch on Facebook).
- Use a competitive analysis tool to manage your findings and track your competitors’ progress, growth, and shifts over time. You can find free (or free-with-trial) tools through the following sites:
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