As an entrepreneur, you can’t simply say screw the competition because such thinking could harm your company in the long term. You can’t simply say screw the customers because your business existence depends on that customer. You need a high level of competitive analysis to succeed as an entrepreneur, which involves analyzing competitors thoroughly.

To beat the competition, achieve a high level of competitive advantage, and be close to your customers, you need to be smarter than your competitors. You need to have enough knowledge about your competition and your buyers to make the right decisions for your business.

Here, I will try to systematize this process and help you to start conducting your competitive analysis.

What is competitive analysis?

Many entrepreneurs talk about competitive analysis in very different ways. This is because it is a broad term and might end up in many various directions, various knowledge, and multiple processes. However, we must clearly understand that it is only one bit of the bigger picture where your business operates. Conducting a comprehensive competitive analysis is essential for informing your business strategy, helping you make strategic decisions, and planning effectively.

Competitive analysis means that you have recognized your top-rated competitors, your target market, customers with the right purchase intent, and their needs and problems. This knowledge will show you the right direction for your business.

Competitor analysis is essential for accumulating insights into the competitive landscape, including your position regarding your direct competitor’s strengths, weaknesses, opportunities, and threats. This can significantly inform your marketing strategy for your chosen target market.

Remember that competitive analysis can include anything from tracking competitors’ web traffic and social media posts to conducting market research through surveys and focus groups. The critical thing to remember about competitive analysis is that you can only collect information about your competition that you know about.

Once you have an idea of your competition, you can conduct market research to analyze their market position, strengths and weaknesses, opportunities and threats, and their target audience to devise a strategy for how you can be better than them.

As with everything else you do for your business, you must set clear goals before conducting competitive analysis to help you focus your energy on the right things. It is crucial because you can quickly jump into research and become bombarded by a large amount of data from everywhere, making the process very hard for the correct conclusions.

Why Will You Need to Conduct Competitive Analysis?

A competitive analysis is essential for any business that wants to succeed in a crowded and competitive market. By analyzing your competitors, you can identify areas where you must improve, develop effective marketing strategies, stay ahead of the competition, and make informed decisions.

Such a competitive analysis helps you understand the market landscape, identify your target audience, and create an advantage for your small business. It also enables you to assess your business strategy and marketing efforts and adjust as needed to stay competitive.

Let’s start with the benefits that you and your business will gain from such research:

• You will have a better understanding of your target market.
• You will understand what your competition is doing in that market.
• Also, you will have information for better forecasting the market’s potential.
• You can make better customer targeting.
• You will better understand your current and potential customers.
• Also, you will know and understand the offers of your competitors.
• You can make a better strategy to acquire new customers.
• You will learn about the different pricing strategies that your competitors use.
• And you will make better business decisions.

1. Identify Your Biggest Current and Potential Competitors

Identifying your competitors is the first step in conducting a competitive analysis. You need to identify both direct and indirect competitors and potential competitors who may enter the market in the future.

Direct Competitors

Direct competitors are businesses that offer the same or similar products or services to the same target audience. Thus, we can say that we have direct competition when two or more companies, including ours, offer the same products and services for the same target market.

What is important for these competitors is that they operate within the same market landscape, targeting the same customers, and often compete on factors such as pricing strategy, product features, and marketing tactics.

The presence of these competitors can significantly impact your business performance by influencing your pricing strategies, marketing efforts, and product development.

For example, if two companies sell similar smartphones, they compete directly. Their competition may drive them to innovate, improve product features, and offer competitive pricing to gain market share. This rivalry can lead to a competitive advantage for businesses that successfully differentiate themselves through superior value propositions or unique marketing strategies.

Examples of direct competitors include Coca-Cola and Pepsi in the beverage industry and Nike and Adidas in the sports apparel market. These companies continuously analyze competitors to refine and improve their business strategy and maintain their market presence.

Indirect Competitors

Indirect competitors offer different products or services that fulfill similar needs or solve similar problems for the same target audience.

Unlike direct competitors, indirect do not offer the same products or services but still compete for the same customer base. So, their impact on your business can be more subtle than that of direct competitors, as they may influence your target audience’s purchasing decisions through alternative solutions.

For example, a movie theater and a streaming service like Netflix are indirect competitors. While the theater offers an in-person cinematic experience, Netflix provides on-demand home entertainment. Both compete for customers’ leisure time and entertainment budgets.

Another example is a coffee shop and an energy drink brand. While the coffee shop serves freshly brewed coffee, the energy drink offers a quick and portable caffeine boost. Both target consumers looking for an energy boost.

Understanding indirect competitors is crucial. They can affect market trends and customer preferences, potentially leading to shifts in demand for a product or service. By analyzing indirect competitors, businesses can identify opportunities to differentiate themselves and capture a larger share of the market.

To identify your competitors, you can use online tools such as Google, social media, and industry reports. You can also conduct market research to gather information about your competitors.

You can follow these guide to help you conduct comprehensive market research and use the following market research information sources to collect about and then analyze competitors.

Related: Market Research Methods: An Extensive Guide

2. Collect Information for Identified Competitors for Your Competitive Analysis

First, you will need to analyze your competitive landscape to identify and collect information about your competitors’ products, sales, and marketing strategies.

This step is one of the most important and, at the same time, most time-consuming steps for competitor analysis because you will base your decisions on the analysis of collected information. Outdated or unreliable information sources can negatively affect your future because you will base your business strategy on outdated information and data.

For example, if you have outdated information about competitors’ pricing strategies, you risk changing your current pricing, which can impact your business’s bottom line.

Let’s examine several important steps to take when collecting information to conduct a competitor analysis report.

What types of information will you collect for competitor analysis?

Here are some questions that you can consider when defining the information that you will need for your competitive analysis:

• What products or services do you and your competitors offer on the market?
• What are the comparative benefits of your and your competitor’s products and services?
• Also, what problems or needs will your customers want to solve or satisfy?
• How do they inform themselves to find products and services that will solve their problems or needs?
• What habits do your customers have when they want to solve such problems or needs?
• What options (competitors) do they have to solve such problems or needs?
• Is there a possibility for other companies to launch products or services similar to yours?
• Where do you and your competitors sell products, and to which target customers?
• How do your sales perform for different customer segments in your target market?
• What products do your competitors have in their sales funnel, and how do they acquire, maintain, and grow their customers?
• What type of channels are they using and why?
• Who are your direct and indirect competitors, and what are their strengths and weaknesses?

Create an Excel File Where You Will Fill Data

You will need to create a framework for your competitive analysis. The best way is to create an Excel file where you will put the following columns:

• Competitor;
• Location;
• Web URL;
• Products/Services;
• Comparative Benefits of their/your products and or services;
• Brand differentiators;
• Offers;
• Types of promotion;
• Pricing strategies;
• Key customers;

Organize and document this information in a comprehensive competitive analysis report. This report should outline competitors’ strengths and weaknesses, provide insights into the market landscape, and help you make strategic decisions.

Don’t limit yourself only to these elements as a part of competitive analysis. You can add more elements that you think are important for your business.

However, as you start to collect information about different competitors, the more important thing is that you will find something more you can simply add to your Excel file.

Where will you find such information?

In general, there are three of the most important sources of information that you can use for conducting competitor analysis and competitive analysis.

Competitors.

What do competitors say about themselves? For information about your competitors, look at their websites, social media accounts, promotional materials, etc.

1. Read the About page and Products and Services page on their website. Read carefully through the product’s features and try to see what benefits they are delivering to their customers. If there is a pricing page, write the strategies they are using in your Excel file.
2. Analyze their marketing strategies, including channels, messaging, and target demographics. Use tools to explore their ad campaigns and keywords and compare their marketing efforts, such as social media, website copy, paid ads, press releases, and product copy.
3. Check if they have a blog and what type of content they publish. This information will help you develop your own unique content marketing strategy.
4. Check their social media account and check their content. If there are some threads, read them carefully and write down everything important you can find.

Related: How to Develop a Content Marketing Strategy in 9 Steps: From Start-to-Finish Guide + Template

Customers.

What do customers say about themselves? You already know which customers are your ideal customers. Now, you will need to gather information about them that is connected to the problem that your business solves.

You can start finding them on social media and follow their behavior. You can start building a relationship with them on social media. Also, you can do surveys and send them to collect data you will use for competitive analysis.

You can refine your strategies when you understand who your competitors are targeting as their target audience.

• Search for customer reviews on your competitors’ websites and check what they say about the competitor’s products and services. Be careful, as sometimes your competitors only post good reviews.
• Search reviews on other websites like Amazon. If your competitors sell their products through Amazon, you will find better results related to customer reviews. Focus on one to three-star reviews because you want to find unsatisfied customers who will explain their problems with the product. You will achieve a competitive advantage if you find a better way to solve those problems.

• Search their blog, and if there are comments, locate some customers and read what they say and how they are satisfied with your competitors.
• Use social media to learn how your competitors communicate with their customers. You can also search the branding names of their products or services to see what other people say about them.
• Search for forums and other blogs that cover topics from your industry. You can search for specific questions like: “how do I,” “why is it,” “when can I,” “what are the,” “what is the,” “how come I,” “need help,” “please help,” “I need,” “help with.” In such a way, you can find real problems your potential customers will have.

Go outside of your office and conduct market research yourself.

And yes, you can’t conduct competitive analysis without leaving your building. You need to try a competitor’s products and understand both direct and indirect competitors who market the same product to a different audience. You need to talk in person with your customers.

Start Collecting Information and Fill in the Excel File

Once you know where and how to find the information, you can start executing your plan for conducting competitive analysis.

Simply fill in the Excel file you prepared in the second step. This file will serve as your competitor analysis report, documenting the collected information in a structured format. Again, I want to remind you that you can change your Excel file.

When you find critical data, you can see that it is not optimized for reality.

3. Conducting Competitor Analysis

As we already discussed above, analyzing your competitors involves gathering data about their products, sales, and marketing strategies.

You need to examine their strengths and weaknesses, as well as their opportunities and threats. This information will help you understand their advantages and identify areas where you can improve your own business.

This process involves several key steps:

Step 1: Categorize the Data

Start by categorizing the data you’ve collected into a structured format. Use the Excel file you created to group information about each competitor under headings like products, pricing strategy, target audience, marketing, and SWOT analysis (strengths, weaknesses, opportunities, threats).

Step 2: Conduct a SWOT Analysis

Do a SWOT analysis for each competitor. Identify their strengths (strong brand, innovative products) and weaknesses (limited distribution channels, higher prices). Look for opportunities they could exploit (market trends, emerging customer needs) and threats they face (new competitors, changing regulations).

Related: How to Do SWOT Analysis in 4 Steps With Examples

Step 3: Compare Products

Create a feature comparison matrix to see how your competitors’ products compare to yours. This will help you see where you have an advantage and where you need to improve.

Step 4: Look at Marketing

Look at your competitors’ marketing strategies – social media, content marketing, offline ads, and promotional tactics. How well are they reaching their audience and driving engagement?

Step 5: Compare Price Strategy

Review and compare your competitors’ pricing. Consider price points, discounts, and special offers. This will help you see if your strategy is competitive and in line with market expectations.

Step 6: Market Positioning

Look at each competitor’s brand messaging, customer reviews, and overall market presence. This will help you understand how the target audience perceives them and where they stand in the market.

Step 7: Gaps and Opportunities

Now, identify the gaps in the market that your competitors are not covering. Look for ways to differentiate your products or services and capture more of the market.

Related: Uncovering Hidden Opportunities: A Guide on How to Find a Gap in the Market

Step 8: Actionable Outcomes

Summarize your analysis into actionable outcomes that will inform your business strategy. Use these to refine your strategies, product features, and overall advantage over competitors.

Following these steps will help you do a competitor analysis, get valuable insights into your competitive landscape, and make better strategic decisions.

4. Create a Competitor Profile

Creating a competitor profile is an essential part of conducting a competitive analysis.

A competitor profile provides a comprehensive overview of a competitor’s business, offering insights into their products, pricing strategy, target audience, marketing strategies, strengths, and weaknesses.

By developing detailed competitor profiles, you can gain a deeper understanding of your competitors and identify areas for improvement. These profiles are crucial for informing your business strategy and ensuring you maintain a competitive edge in your market landscape.

A competitor profile should include the following data points:

Company Overview:

Basic information about the competitor, including their business model, positioning, and core values. Simply explain each competitor in one to two paragraphs that were part of your competitor analysis.

Products and Services:

In the end, products and services are the focus from a customer perspective. Customers don’t care how you make them or what your or your competitors’ operations are. They will measure value through the products and services you and your competitors offer.

Therefore, provide a detailed list of the competitor’s offerings, including product features, benefits, and unique selling points.

Pricing Strategy:

An analysis of their pricing models, discounts, and any special offers they provide to their target audience.

I want to mention one important thing here. A competitor’s pricing analysis will tell you much more than just their price rates. If they have lower rates and your products and services are similar in quality, you probably need to improve your operations. In this case, you will reduce costs, increase productivity, and offer the same rate.

Target Audience:

This part of your competitor profile must include insights into the demographics and psychographics of their customer base, including any specific customer segments they focus on.

Related: How To Reach Your Target Audience and Sell Your Product

Marketing Strategies:

An overview of their marketing efforts, including content marketing, social media strategy, offline advertising campaigns, and promotional tactics.

The main question you must respond to is how your main competitors acquire, maintain, and grow their customer base. This information will help you test different tactics.

SWOT Analysis:

As we discussed above, a SWOT analysis is an inevitable part of a competitor analysis. Your competitor profile must cover their strengths, weaknesses, opportunities, and threats in the competitive landscape.

Market Positioning:

Information about their brand messaging, customer perception, and overall market presence.

Here is an example from one competitive analysis report I have conducted with one of my clients:

• strong brand messaging as a luxury, eco-friendly footwear brand, positioning them as a leading choice for environmentally conscious consumers
• positive customer perception with high satisfaction ratings for quality and sustainability.
• market presence is significant, with a strong social media following and
• partnerships with major retailers.

Customer Feedback:

Insights from customer reviews and testimonials provide a sense of their reputation and customer satisfaction levels.

5. Create a Competitive Analysis Report

A competitor analysis report is the output of the competitor analysis process. This document provides detailed insights into your competitors and is an essential tool for entrepreneurs and managers to understand the competitive landscape, identify market trends, and develop strategies to achieve an advantage.

Why will you need such a document? One of the most important benefits that this document will bring you is related to the definition of the next steps you must take to stay ahead of the competition. So, having defined your next moves will mean that you will have an improved strategic planning process in your company.

Also, by monitoring competitors’ activities closely, you can anticipate market changes and adapt your strategies accordingly to mitigate possible risks.

Remember that competitor analysis can inspire innovation, help you improve your products or services, and help you achieve sustainable growth.

Essential Content of a Competitor Analysis Report

Competitive analysis reports, like any other research report, can have different content structures based on the market landscape and the industry in which your business operates.

Generally, the following elements can be part of your competitor analysis report:

By incorporating these elements, a competitor analysis report becomes a powerful tool for entrepreneurs and managers. It enables them to navigate the competitive landscape effectively and achieve business success.

6. Implement a Monitoring System for Continuous Competitor Analysis

Conducting a competitive analysis and then saying that you have finished your job is not enough. As an entrepreneur, you will need a continuous research process.

Here are some of the things that you will need to track:

1. Track any changes that they made to their visual identity.
2. Track their new products or services.
3. Also, follow their pricing strategies.
4. Track every promotion that they make.
5. Track their new customers or big deals.
6. Evaluate their social media strategy, including the types of content posted, engagement rates, interaction with followers, and overall quality.

At the end of this guide, I want to share some of the tools you can use to conduct your competitive analysis.

• Ask Google;
• Google Keyword Tool;
• Google Alerts;
• Monitor Twitter (Competitors’ name, competitors’ products/services);
• Each social media where they are present;
• Use RSS Reader;
• Online or Offline surveys;
• SWOT Analysis;
• Five Forces Analysis.