Competitive analysis helps businesses discover the strengths and weaknesses of other companies in their industry. Create your own competitive analysis using our free template.

Competitive analysis helps business owners understand what their competitors are doing and identify opportunities to outperform them.

Conducting a competitive analysis means understanding the strengths and weaknesses of other companies in your industry. By studying your competitors’ products, sales, and marketing strategies, you can determine how to develop your business strategy.

Competitive analysis is useful at any stage of business. So how do you do competitive analysis? This article explains how to conduct competitive analysis to achieve your goals.

We also provide a free competitor analysis template to make this process easier.

What is Competitive Analysis?

Competitive analysis is a type of market research that involves assessing and understanding the strengths and weaknesses of your competitors in a market. It involves collecting and analyzing data on your competitors’ products, pricing, marketing strategies, distribution channels, and customer base.

Competitive analysis can help you identify potential advantages and obstacles within your target market or product. It allows brands to monitor how their direct or indirect competitors are marketing, pricing, and distributing.

Competitive Analysis Example: What Does It Look Like?

There are many different ways to conduct a competitive analysis, and the form it takes will depend on what you want to know about your competitors.

For example, you might conduct an analysis of a specific part of your competitor’s operation—such as their website—or you might conduct a comprehensive analysis of your entire marketing and sales team. The goal is to understand your competitor’s behavior and how your business should respond.

There are many different ways to structure a competitive analysis, including:

For a comprehensive competitive analysis, you can look at:

• Target Customer
• Providing Unique Value
• Sales Strategy
• Product Price Range
• Shipping Policy
• Funding

This advanced information can help you understand the fundamental differences between your competitors. For a more detailed analysis, you can look at:

• Website features (design, content)
• Customer experience (payment process, customer support)
• Marketing content (product descriptions, blog posts)
• Social media (posting frequency, engagement rate)
• Promotion (Discount)
• Communication (cart abandonment emails, newsletters)
• Reviews (customer feedback, complaints)

What you include in your competitive analysis will vary depending on your needs. Make sure your research answers specific questions about what actions your business should take to grow in the future.

Need an example? Here’s an example of a simple competitive analysis:

Why is competitor analysis important in e-commerce?

Understanding your competitors makes it easier to compete. Knowing what your competitors are doing helps you plan your response. For example, you can adjust your pricing strategy, tailor your target audience, or emulate good practices.

A broad view of the e-commerce space also helps you understand what sets your business apart.

When starting an ecommerce business, competitive analysis can help you:

• Make informed marketing decisions
• Understand industry trends
• Benchmarking with competitors
• Discover your unique value proposition
• Pricing Determination
• Finding new ways to connect with your customers
• Discover gaps in your marketing or product line

Competitive analysis is a document that needs to be continually updated as your business grows.

When developing a new product, updating your marketing strategy, or expanding into a new area, an up-to-date competitor analysis document can be a powerful resource.

This will help you discover opportunities to gain an edge over your competition and highlight areas of high competition that require focused action.

When should you do a competitor analysis?

When building a business, a thorough competitive analysis can go a long way in helping you gain a deeper understanding of market factors.

As your business grows, repeat your competitor analysis to stay up to date with the latest products, features, and marketing strategies in your industry. Running regular reports will also help you compare how your business is responding to broader trends.

Refresh your competitor analysis whenever there is a major change in your business or industry. Events such as a spike in demand for your product or a Google algorithm update are good reasons to review what your competitors are doing.

When deciding how often to conduct a competitive analysis, consider the pace of change in your industry. Is it possible that your data will become outdated in a month, a quarter, or a year? Remember that when new competitors enter the market, you will likely want to analyze their activities.

How to Conduct Competitive Analysis

To organize your competitive analysis systematically, follow these 7 steps:

1. Select 7 to 10 competitors

If you don’t know your competitors well, try searching for products or services on Google, Amazon, or other marketplaces relevant to your business as a customer. Look for competitors who:

• Competitors selling similar products
• Competitors with similar philosophies or missions
• Competitors marketing to your target audience
• New competitors entering the market
• A well-established competitor in the market

A diverse list of competitors will provide insight into how different companies within the market are responding to challenges.

2. Create a spreadsheet

As you gather competitor data, organize it systematically in a table or spreadsheet, preferably one that can be easily updated over time.

Create a section within your document where you can compare competitors based on your research goals. For example:

• Price range
• Product Offering
• Social media engagement
• Lead Generation Strategy
• First time visitor benefits

3. Select direct and indirect competitors

In your spreadsheet, classify each business as a direct, indirect, or tertiary competitor. This will help you understand what relationships they have.

• Direct competitors are those who sell similar products or services to similar audiences. For example, Nike and Adidas are major competitors.
• Indirect competitors are those that offer higher-priced or lower-priced versions of a product to different audiences. For example, Victoria's Secret and Walmart are secondary competitors.
• Third-tier competitors are brands that market to your audience but do not sell similar products or compete directly with you. They may represent potential partners or future competitors. For example, think of Gatorade and Under Armour.

4. Understanding your competitors' positioning

Positioning is the most persuasive marketing tool for a business. Good positioning connects with the target audience and plays a vital role in delivering the message and establishing value.

Understanding your competitors’ positioning is essential. This will help you learn how other companies are communicating with their customers and find a unique and relevant voice for your brand.

Analyze the following channels to see how your competitors are positioning themselves:

• Social Media : See how your competitors present themselves and interact with their customers on social media.
• Press Releases : See how your competitors are positioning themselves when announcing new products or services.
• Website Copy : Analyze the language and messaging used on your website to determine your brand positioning.
• Events : Analyze how you present yourself at events hosted or attended by your competitors.
• Interviews : Understand positioning through messages from executives or spokespeople in interviews.
• Product Description : Make sure your product description matches your positioning.

When identifying your competitors' positioning, ask yourself these questions:

• What story is being told?
• How is the product described?
• How is the company described?
• What is a Unique Value Proposition (UVP)?

Understand how your competitors interact with their followers, customers, and other stakeholders. If you can pinpoint their communication framework, you will be able to clearly position yourself in the market.

5. Understand your competitive edge and product offerings

The most successful companies sell a unique product or offer a differentiated experience – whether it’s an innovative feature, a secret recipe, or outstanding customer service.

Think of these offerings as your company's competitive advantage or unique selling proposition (USP).

For example, a fashion retailer's competitive advantage might be providing high-quality products with fast delivery. An online educator's USP might be teaching based on 20 years of experience.

Look at your competitors’ products and services and determine where their strengths lie. Your brand is probably closely tied to your unique offering.

Reading customer reviews can help you understand why your target customers do business with your competitors. They may prefer lower prices, premium ingredients, or sustainable practices.

Understanding your competitive edge in a given market will help you understand where to compete and where not to compete.

6. Understand how your competitors market their products

Successful ecommerce stores often outperform their competitors through marketing, not just by competing on product.

But don't assume you have to compete on every marketing channel to get in front of your customers.

Instead, use competitive analysis to learn how your competitors are reaching their customers and where they are focusing their marketing resources.

For example, your competitors may focus on targeting customers through Instagram or driving traffic to informative blog posts.

Use software tools (listed below) to collect marketing data. Then, experience your competitors’ marketing from the perspective of your customers.

You can try the following methods:

• Sign up for our newsletter
• Subscribe to the blog
• Follow your competitors on social media
• Add products to your shopping cart and abandon your purchase
• Buy a product

By studying your competitors' marketing and documenting the results, you can decide whether to compete on popular marketing channels or reach customers through lesser-used avenues.

The insights gained at this stage will be valuable input to your sales and marketing teams.

7. Performing a SWOT Analysis

Consider conducting a SWOT analysis to complement the data you've collected.

SWOT is a competitive analysis framework that lists a company's Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis helps you find areas for improvement by comparing your business to your competitors' strengths.

Strengths and weaknesses are business elements that you can control and change over time. These include:

• Product Offering
• Partnership
• Intellectual Property Rights
• Number of employees
• Market share
• asset

Opportunities and threats are factors outside your control. You can plan for changes to these factors, but you cannot directly influence them. These include:

• Competitor's products
• economic situation
• Consumer Trends
• regulation
• Market size
• Market demand

Aim to perform a SWOT analysis annually. This will help you with your break-even analysis and will help you monitor your competitive environment on an ongoing basis. If you are seeking funding, it is a good idea to include an up-to-date SWOT analysis in your business plan.

Collecting Data with Competitive Analysis Tools

After you have identified your competitors, it is time to start researching and gathering data for your competitive analysis. The good news is that there are a variety of tools and software that can help you easily collect data.

Here are some resources that can help you analyze your competitors' keywords, content marketing, social media strategies, and more.

SEO Analysis

• Ahrefs : Check out your competitors' top keywords and expected traffic.
• SE Ranking : Learn about your competitors' paid and organic search performance.

PPC/Keyword

• SimilarWeb : Understand your competitors' market share with monthly visit estimates and traffic.
• SpyFu : Download the most profitable keywords from your competitors' PPC campaigns.
• iSpionage : See what keywords your competitors are targeting on Google Ads and their estimated monthly budgets.
• SEMrush : Run audit reports on your competitor sites and analyze their backlinks.

Social Media

• RivalIQ : See how often your competitors post on social media, their average engagement rates, and their most successful content.
• Followerwonk : Analyze Twitter(X) follower demographics, key influencers, and performance metrics.
• Sprout Social : Measure your competitors' performance across social channels.

Email Marketing

• Owletter : Analyze changes in your competitors' email strategies and discover trends.
• MailCharts : We aggregate emails to determine email frequency, subject line tactics, etc.

Content Marketing

• BuzzSumo : Check out top content on general topics and specific competitors.
• Monitor Backlinks : Monitor backlinks and get notified whenever your competitor's content is mentioned.

Once you've collected your data using these resources, add it to your competitive analysis spreadsheet to store all your research in one organized space.

Competitive Analysis Template

If you’re not sure where to start with your competitor analysis, here’s a sample template to help you compare your competitors’ approaches and find areas where you can differentiate yourself.

For example, let's say you sell makeup brushes, you might create a table like this:

You can add more sections to the template, but keep the number of major and minor competitors to no more than 10 to keep your analysis efficient and relevant.

6 Marketing Competitive Analysis Precautions

Now that you know how to create a competitive analysis, let's look at some considerations that can impact the insights you gather.

1. Competitive analysis is not a one-time task.

If you update your data once and call it a day, you’ll end up with a false picture that can lead to poor decision-making. Because business is constantly changing, it’s important to consider competitive analysis as an ongoing process.

2. Confirmation bias is real.

Everyone tends to favor their initial assumptions. This is called confirmation bias . Let your data paint an objective picture of your competitive environment.

3. Unused data is useless.

If you've put a lot of effort into your competitor analysis, don't let it sit idle. Create a strategic plan to respond to your competitors' actions and update it based on that.

4. Instead of working harder, work smarter.

Instead of trying to invent something new, use modern data collection tools to get the right information without unnecessary effort. Today’s tools greatly accelerate competitive research and provide tailored insights and data points.

5. Don't start without direction.

When conducting a competitive analysis, if you don’t have a direction, you may have difficulty drawing any real conclusions. Before you begin your research, define your goals and what you want to know about your competitors.

6. Consider market timing.

When looking at competitor data, rather than just analyzing a fixed point in time, study how the company has grown and developed over time. Sometimes, understanding how your competitors have developed can be more valuable than knowing what they are doing now. Understanding how similar companies have successfully navigated their way through the industry can help you make better decisions.

Competitive Analysis: Business Advantage

Competitive intelligence is crucial when starting a business. By conducting market competition analysis on an ongoing basis, you can stay ahead of your competitors. This allows you to enter new markets, launch new products, and keep an eye on your competitors’ customer trends. In this way, competitive analysis provides innovative approaches that allow businesses or startups to stay agile and gain a competitive advantage.

Competitive Analysis FAQs