Competitive Analysis: What Is and How Do You Conduct One?
Apr
In today’s fast-moving business world, it’s not enough to just focus on your own brand — you also need to keep an eye on the competition. Whether you’re launching a startup, growing a product line, or simply trying to stay ahead in your industry, understanding what your competitors are doing can give you a powerful strategic edge.
That’s where competitive analysis comes in. It helps you uncover who your competitors are, how they operate, what makes them successful (or not), and where your own business can outperform them. By identifying their strengths and weaknesses, you can position yourself more effectively and make better decisions around marketing, product development, and customer engagement.
In this guide, you’ll learn exactly what a competitive analysis is, why it matters, and how to conduct one — step by step. Whether you’re a solo entrepreneur or part of a growing company, this process will help you gain clarity, uncover opportunities, and stay ahead of the curve.
Contents
What Is a Competitive Analysis?
A competitive analysis is the process of identifying your competitors and evaluating their strategies to determine their strengths, weaknesses, and overall positioning in the market. It goes beyond simply knowing who else is out there — it’s about understanding how they attract customers, what makes them successful, and where they fall short.
This kind of analysis helps you answer key questions like:
- What are your competitors doing better than you?
- Where are they vulnerable?
- How can you differentiate your business?
Whether you’re developing a new product, crafting a marketing strategy, or planning a business expansion, a competitive analysis gives you the insight needed to make smarter, more informed decisions. It’s a foundational part of any solid business strategy — used by marketers, consultants, startup founders, and corporate leaders alike.
Why Is Competitive Analysis Important?
Understanding your competition isn’t just helpful — it’s essential. A competitive analysis allows you to make informed decisions by giving you a clear view of the playing field. Here are some of the key reasons why it matters:
- Spot Market Opportunities: By studying your competitors, you can identify unmet needs in the market — gaps they’re overlooking that you can capitalize on.
- Refine Your Unique Value Proposition (UVP): When you understand how others position themselves, it becomes easier to clarify what makes you different — and better — in the eyes of your customers.
- Benchmark Your Performance: Comparing your performance to competitors helps you set realistic goals and track how you stack up in areas like pricing, customer service, and marketing reach.
- Improve Product Development: Analyzing competitor features, customer feedback, and innovation strategies can reveal ideas for improving your own offerings.
- Strengthen Marketing Strategies: Learn from what works (or fails) in your competitors’ campaigns to sharpen your messaging, ad targeting, and content strategy.
- Reduce Strategic Risk: By understanding your competitors’ moves and anticipating trends, you can avoid blind spots and make more calculated decisions.
In short, competitive analysis helps you move from guesswork to strategy — making your business more resilient, innovative, and customer-focused.
Types of Competitors You Should Analyze
Not all competitors are created equal. To get a full picture of your competitive landscape, you need to look beyond just the obvious names in your industry. There are three main types of competitors to consider in your analysis:
1. Direct Competitors
These are businesses that offer a similar product or service to the same target audience. They compete with you head-to-head for the same customers.
Example: Coca-Cola and Pepsi are direct competitors — both sell soft drinks to a global market and often compete on shelf space and brand loyalty.
2. Indirect Competitors
Indirect competitors offer a different type of product or service that satisfies the same need or solves the same problem.
Example: A gym and a fitness app like Peloton may not offer the exact same service, but they both help customers stay fit. They compete for the same health-conscious audience.
3. Alternative/Substitute Competitors
These aren’t in your industry at all — but their products could serve as a replacement for yours in the eyes of the customer.
Example: A ride-hailing app like Uber competes with not only taxis (direct competitors) but also public transportation and even electric scooters (substitutes), depending on the customer’s situation.
By analyzing all three types, you gain a deeper understanding of the full range of choices your customers have — and how to better position yourself to win their attention.
What to Include in a Competitive Analysis
A thorough competitive analysis goes beyond simply listing who your competitors are. It digs into the details of how they operate and how they connect with their customers. Below are the key elements you should include in your analysis:
- Company Overview: Basic information about the competitor — such as their founding year, size, location, and mission. This sets the context for the rest of your analysis.
- Products and Services: What exactly are they offering? Look at product features, variations, pricing tiers, bundles, and service add-ons. Pay attention to what seems to attract customers and what’s missing.
- Market Positioning: How do they present themselves in the market? Are they positioned as a luxury brand, a budget-friendly option, or something in between? What’s their unique value proposition?
- Pricing Strategy: How do they price their products or services? Are they using cost-plus, freemium, subscription-based models, or something else? Compare their pricing against the value they deliver.
- Marketing and Advertising: Analyze their messaging, tone of voice, and the channels they use. Look at their website, ad campaigns, email marketing, and even offline promotions. What themes do they emphasize?
- Website and SEO Performance: Use tools like Ahrefs or SimilarWeb to look at traffic volume, keyword rankings, domain authority, and backlink profiles. Are they getting a lot of organic traffic? Which keywords are driving it?
- Social Media Presence: Which platforms are they active on? How frequently do they post? What kind of engagement do they get? Are they using influencers, short-form video, or paid ads?
- Customer Reviews and Feedback: Scan platforms like G2, Trustpilot, Yelp, or app store reviews. What do users love or complain about? Are there patterns you can learn from — or gaps you can fill?
- Sales and Distribution Channels: Where and how do they sell? Online, in physical stores, through distributors, or marketplaces? Do they offer direct-to-consumer options?
- SWOT Snapshot (Optional): To summarize your findings, you can build a quick SWOT Analysis for each competitor. It helps highlight where you can outperform them.
How to Conduct a Competitive Analysis (Step-by-Step)
Step 1: Identify Your Competitors
Before you can analyze your competition, you need to know exactly who they are. And that means looking beyond just the brands you already recognize. To do this effectively, you should identify competitors across three levels: direct, indirect, and substitute (as discussed earlier). Here’s how to get started:
Use Search Engines
Type in your main product or service keywords on Google. Check the first page of results to see which companies appear consistently — these are likely your direct competitors. For example, if you sell email marketing software, searching “best email marketing tools” or “email marketing for small business” can quickly reveal who your main rivals are.
Use Competitive Research Tools
Platforms like Ahrefs, SEMrush, and SimilarWeb can show you who shares keyword rankings with you, what sites drive traffic to their pages, and even which companies your users are also visiting. These tools often reveal competitors you didn’t even know existed.
Check Online Marketplaces or App Stores
If you’re in e-commerce or SaaS, browse marketplaces like Amazon, Etsy, Google Play, or the Apple App Store. See what other products or apps rank under your category or are recommended as “alternatives.”
Listen to Your Customers
Ask new customers what other products or services they considered before choosing yours. Their answers can reveal competitors you may have overlooked — especially those who don’t rank well online but still hold mindshare.
Create a Competitor List
Once you’ve done your research, create a structured list with three sections:
- Direct competitors (same audience, same solution)
- Indirect competitors (same problem, different solution)
- Substitute competitors (other ways to fulfill the same need)
This list becomes the foundation for the rest of your analysis.
Step 2: Gather Key Data Points
Once you’ve identified your competitors, it’s time to collect the right information about them. The goal here isn’t just to observe what they do — it’s to understand how and why they do it, and what you can learn from it.
You’ll want to be methodical, focusing on specific areas that impact competitive performance. Here’s how to approach this step:
Organize Your Research Categories
Use a spreadsheet or template to track your findings across categories like:
- Product offerings
- Pricing
- Target audience
- Marketing channels
- SEO performance
- Website experience
- Customer feedback
- Brand positioning
Each category should have space for both quantitative data (like price points or number of social media followers) and qualitative insights (like tone of voice or customer sentiment).
Use Tools to Speed Up the Process
Here are a few tools that can help you pull accurate, up-to-date data:
- Ahrefs / SEMrush / SimilarWeb – for SEO, traffic, and keyword data
- BuiltWith / Wappalyzer – for identifying tech stacks
- Social Blade / HypeAuditor – for analyzing social media presence
- G2 / Capterra / Trustpilot – for user reviews and sentiment
- Wayback Machine – to track how a competitor’s website or messaging has evolved over time
These tools can help you see not just what’s happening now, but how things have changed — which is crucial for spotting growth strategies or missed opportunities.
Analyze With a Customer’s Eye
Don’t just analyze like a competitor — analyze like a potential customer. Visit their website, go through their onboarding or checkout process, sign up for newsletters, and see how they communicate post-purchase. This can uncover strengths and weaknesses in user experience, clarity, and trust.
Take Notes, Screenshots, and Save URLs
Keep detailed notes on your discoveries. Screenshots of landing pages, ads, pricing pages, and reviews can be powerful reference points later. They also allow you to visually compare competitor strategies side by side.
Step 3: Analyze Strengths and Weaknesses
Now that you’ve gathered all the relevant data, the next step is to make sense of it. This means identifying where each competitor is strong, where they’re falling short, and how those strengths and weaknesses compare to your own business.
Look at Each Core Area Critically
Go back to the key categories you researched (product, marketing, SEO, UX, etc.) and ask yourself:
- What are they doing well? (e.g. strong branding, fast website, high engagement)
- Where are they underperforming? (e.g. limited product variety, outdated UI, poor review scores)
- Are there inconsistencies between what they promise and what users actually say?
Use this comparison to understand where they dominate and where you have room to win.
Pay Special Attention to Customer Feedback
Online reviews, social media comments, and forums are goldmines for identifying:
- Recurring complaints (e.g. “hard to cancel,” “too expensive,” “bad support”)
- Common praises (e.g. “easy to use,” “great community,” “affordable”)
These insights help you discover what truly matters to their (and potentially your) customers — which isn’t always obvious from their website or marketing materials.
Compare Against Your Own Business
This step is only valuable if you view it through your own lens. Ask:
- Are their strengths your weaknesses? If so, how can you catch up?
- Are their weaknesses your strengths? If yes, how can you leverage that in your positioning?
Consider Visualizing Your Findings
Use a simple table or side-by-side comparison chart to summarize each competitor’s performance across key dimensions. For example:
his makes it easier to spot patterns and prioritize where to act next.
Step 4: Use a Framework (Like SWOT or a Competitive Matrix)
Now that you’ve evaluated individual strengths and weaknesses, it’s time to organize your insights into a structured framework. This helps you clearly see the big picture, prioritize opportunities, and make confident strategic decisions.
Here are two of the most effective frameworks to use:
SWOT Analysis
A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis allows you to map out your competitor’s internal capabilities and external environment.
You can also create a SWOT for your own business and compare them side-by-side to identify where you can gain an advantage or defend against threats.
Competitive Matrix
This tool helps you visually compare multiple competitors across key criteria that matter to your audience — like pricing, product quality, features, customer service, etc.
Example matrix:
This format helps you quickly spot:
- Areas where you’re ahead
- Where you’re behind
- Where the market is underserved
Using frameworks makes your analysis more actionable and easier to share with your team, investors, or stakeholders. It transforms raw data into strategy-ready insights.
Step 5: Draw Actionable Insights
With your data collected, analyzed, and organized, it’s time to ask the most important question: “So what?”
The real value of a competitive analysis comes from turning information into strategic direction. This step is all about translating what you’ve learned into smart, specific actions that move your business forward.
Focus on Key Questions
Use your findings to answer:
- Where can we clearly outperform our competitors?
- What weaknesses do we need to fix to stay competitive?
- Which areas are underserved in the market that we can own?
- Are there trends in competitor behavior we can capitalize on or avoid?
Identify Opportunities to Differentiate
Ask yourself:
- Can we position our product differently (e.g. more affordable, more premium, more niche)?
- Are there customer pain points our competitors are missing?
- Is there a unique feature or benefit we can highlight that no one else is emphasizing?
This is where you shape or refine your unique value proposition — not based on assumptions, but on market reality.
Prioritize Strategic Changes
Not all insights require action. Focus on areas that will:
- Create the biggest advantage
- Deliver the most impact with the least effort (low-hanging fruit)
- Protect your position against major threats
Use your insights to inform:
- Marketing campaigns
- Product roadmap
- UX improvements
- Pricing strategy
- Customer service upgrades
Document Your Conclusions
Summarize your key findings and action points in a concise document or presentation. This makes it easier to revisit and update later — and to align your team around your strategy.
Step 6: Update Your Competitive Analysis Regularly
Markets evolve. Competitors pivot. New players emerge. That’s why a competitive analysis should never be treated as a one-and-done project. To stay ahead, you need to keep your insights fresh and your strategy adaptable.
Why Regular Updates Matter
- Your competitors may launch new features, change pricing, or rebrand.
- Customer expectations shift over time.
- Your own business evolves — and so should how you measure yourself against others.
- New competitors might enter the market (and old ones might disappear).
If your analysis is more than 6–12 months old, there’s a good chance you’re making decisions based on outdated assumptions.
Set a Recurring Review Schedule
Create a habit of reviewing your competitive landscape. Depending on your industry, this might be:
- Quarterly for fast-moving industries (e.g. tech, e-commerce)
- Bi-annually or annually for more stable sectors (e.g. manufacturing, consulting)
You don’t need to start from scratch each time — just revisit your original document and update:
- Metrics (traffic, reviews, pricing, social engagement)
- New product or service launches
- Shifts in positioning or messaging
- Any noticeable changes in customer sentiment
Create a System for Ongoing Monitoring
To make updates easier:
- Set up Google Alerts for your competitors’ brand names.
- Use SEO tools (like Ahrefs Alerts) to track changes in rankings or backlinks.
- Follow their social media and subscribe to newsletters to stay in the loop.
By keeping your finger on the pulse, you’ll be better equipped to respond to changes, identify opportunities early, and stay one step ahead — always.
Common Mistakes to Avoid
Even with the best intentions, it’s easy to fall into traps that can make your competitive analysis misleading or ineffective. Avoiding these common mistakes will ensure your research leads to better decisions — not just more data.
1. Focusing Only on Direct Competitors
Many businesses make the mistake of only analyzing companies that look exactly like theirs. But real competition often comes from indirect or substitute products that solve the same problem differently. Broaden your scope to see the full picture.
2. Relying on Outdated or Surface-Level Data
Markets shift quickly. Using old data — or data pulled from a competitor’s homepage alone — leads to poor insights. Make sure your research includes updated SEO stats, current customer reviews, and real-world user experiences.
3. Copying Instead of Differentiating
The goal isn’t to mimic what your competitors do — it’s to do something better or different. Copying their features, messaging, or pricing can backfire if it doesn’t align with your unique audience or value proposition.
4. Ignoring Customer Sentiment
Many analyses overlook what customers are actually saying. Online reviews, social media comments, and support forums reveal what people love, hate, and wish for. These are clues to what you can double down on — or avoid.
5. Not Updating the Analysis
A competitive analysis loses value fast if it’s not maintained. A company you ignored six months ago might have launched a game-changing product last week. Build regular updates into your workflow to stay informed.
6. Turning Insights Into a Checklist, Not a Strategy
Don’t just list facts — connect them to business goals. For example, if a competitor is weak in UX and you’re strong there, that’s a signal to emphasize usability in your marketing. Make your analysis drive action, not just reporting.
Final Thoughts
A competitive analysis isn’t just a research exercise — it’s a strategic advantage. By taking the time to understand who your competitors are, how they operate, and where they fall short, you put your business in a stronger position to differentiate, grow, and win customer loyalty.
The most successful companies don’t just react to the market — they anticipate it. And that kind of foresight comes from staying informed, asking the right questions, and turning insights into action.
Whether you’re launching a new product, refining your marketing strategy, or planning your next move, a well-executed competitive analysis gives you the clarity and confidence to make smarter decisions.
Make it part of your business toolkit — and revisit it regularly. Your competition won’t stand still, and neither should you.
