Competitive Analysis: What It Is and How It's Done (+ Model) (2023)

There is nothing more frustrating in business than seemingly doing everything right, only to see the competition continue to grow while your business stagnates.

Fortunately, a competitor analysis can be incredibly helpful in understanding your strengths and weaknesses and helping you find your edge.

This post describes a method to perform acompetitive analysisany business can use, whether you're a successful store owner reassessing your current market view or just getting ready to launch your business for the first time.

Below, we'll show you the tools you need to perform an effective competitor analysis and help you identify what to consider (eg, social media presence/search, pricing, etc.). We've even included a free competitive analysis template that you can follow and fill out as you conduct your own analysis.

What is a competitive analysis?

Acompetitive analysis, also known as competitive analysis, is a comparison of competitors' strategies used to assess the strengths and weaknesses of different marketing approaches in an industry.

It helps a company identify potential advantages and barriers within a market around a product or service and often helps brands monitor how direct and indirect competitors are using tactics such as marketing, pricing and distribution.

Competitor analysis example: What does someone look like?

Competitive analysis can vary greatly depending on what you want to learn about your competitors. You can perform a competitive analysis on a specific aspect - such as a competitor's website approach - or you can take a general look at the marketing approach as a whole. Ultimately, the goal is to help you understand your strengths and reach new potential customers.

There are many different ways to structure a competitive analysis. Let's see then the different types of information that are common in this type of research.

When conducting a high-level competitive analysis, you should consider some important elements about competitors' market positioning, such as:

• who your target customers are;
• What is your main differentiator/unique added valueit's for your business and products;
• Key features/benefits highlighted in sales materials;
• price pointsfor products in a variety of markets;
• as they approachshipping;
• Whether they received grants or venture capital.

These sections will help you take a look at what sets your competitors apart and how they are working to differentiate themselves from the competition within your niche.

If you want to examine more specific elements of your competitor's approaches, consider adding sections like these to your competitor analysis:

• Site features (search tools, product images, design/layout, etc.)
• Elements of the customer experience (checkout workflows, customer support, mobile UX, etc.)
• Copywriting tactics (product descriptions, calls to action, etc.)
• Social media approach (channels used, posting frequency, engagement, etc.)
• Content marketing tactics (blog topics, content types, etc.)
• Marketing tactics (types of promotions, frequency of discounts, etc.)
• Email marketing approach (newsletters, abandoned carts, promotions, etc.)
• Customer reviews (language around products, recurring complaints, etc.)

In general, competitive analysis can take many forms, depending on what a company wants to assess about its competitors - but this gives a rough idea of ​​whatit couldincluded in the different sections.

Why competitive analysis is important for e-commerce

At this point, you might be thinking, "Okay, but why?competitive analysisimportant to me as a business owner or marketer?”

The main reason this activity is important is that you can't compete effectively without knowing your competitors - and you can't differentiate yourself if you don't know what really makes you different.

If you areStarting an E-Commerce Business, a competitive analysis will help you:

• Make more informed marketing decisions;
• Identify industry trends;
• benchmark against competitors;
• Solidify a unique value proposition;
• Determine prices (high level, low or medium);
• Discover new ways to talk to customers, or even new customers to talk to;
• Find a marketing gap and make sure there is a market in that gap.

This type of analysis is not just for e-commerce newbies. An analysis of the competition it can and should be a living document, constantly evolving as a business grows and matures over time.

Maintaining a resource like this is a powerful way to track how your brand stacks up against the competition, but it can also help give you clear direction on how you will continue to excel in the future.

Need a reference example? Here's one that shows what a competitive analysis can look like:

How to do a competitive analysis

Once you're ready to dive into your own competitive analysis, follow the steps outlined here to properly structure and organize your research.

1. Choose 7 to 10 participants

To identify relevant competitors to include in your analysis, start by searching Google, Amazon and Alexa for your product and business idea. You want a mix of competitors that:

• Sell ​​similar types of products;
• have a similar office;
• similar marketEslightly different target demographics;
• Both new to the market and the most experienced.

To compile a list of different competitors that gives you a good overview of the competitive landscape that isn't too small or too big, it's a good idea to stick to a group of seven to 10 relevant competitors.

2. Create a table

When collecting data on this group of competitors, organize it into a spreadsheet or worksheet that can be easily shared and updated over time. In this document, you will compare and contrast competitors using various criteria, such as:

• price range;
• product offerings;
• social media engagement;
• Content used for lead generation;
• Offers for first-time visitors;
• Other properties worth comparing.

3. Identify the types of competitors

Starting with your list of competitors, start your spreadsheet by categorizing each as a major or minor competitor. This will help you better determine how they relate to your business.

1. direct competitors,or big competitors of your company who are selling a similar product to a similar audience. Example: Nike and Adidas are the main competitors.
2. indirect competitorsare secondary competitions that offer a fancy or simple version of your product to a different audience. Example: Victoria's Secret and Walmart are minor competitors.
3. tertiary competitorsare related brands that may market to the same audience, but do not sell the same products as you or directly compete with you in any way. They could be potential partners or future competitors if they decide to expand their business. Example: Gatorade and Under Armour.

4. Identify the positioning of your competitors

positioningit is the most attractive marketing tool for a company. Good placement helps you connect with an audience and keep them for longer. It also guides your message, your values ​​and your overall business strategy.

This is exactly why understanding your competitors' positioning is so important. You can learn to stand out and build a good reputation in the eyes of your customers. Differentiation also helps build brand awareness and justify your pricing, impacting your bottom line.

Review these key channels to determine placement and messaging:

• social media;
• press releases;
• Copy of website;
• events;
• job interview;
• product copy.

When determining where your competitors rank, ask yourself the following questions:

• What story are they conveying to customers?
• How do they position their products?
• What is your company description?
• How do you describe your uniqueness?value offer?

Understand how competitors interact with their followers, customers, employees, partners and shareholders. If you can accurately determine your communication structure, you can position yourself differently and stand out from the competition.

5. Determine competitive advantages and offers

Once you understand your competitors' messages, look at their competitive advantage and product or service offering. The vast majority of successful companies have a clear “secret recipe” when compared to the competition.

For example, a fashion retailer's competitive advantage may lie in cheap, high-quality products and fast shipping services. An online teacher can have over 20 years of experience teaching and working in their specific industry. Unique selling propositions like these are not easy to replicate and can increase a company's awareness value.

Take the time to look at your competitors' products and services and compare them to yours. Read online reviews from your target audience to learn why customers choose your business. It could be that they offer similar products at a lower price or have a focus on sustainability. Either way, you want to know their advantage and see how you can offer them something better.

6. Understand how your competitors market their products

Marketing is the secret to the most successful e-commerce stores. A good deal is the ticket price, but the marketing puts you on top. Unfortunately, most companies don't examine their competitors' marketing. They assume everyone is on Instagram, running Facebook ads and optimizing their site for search.

And many of them are. but understandAsYour competitors market their products from a different perspective. They want to know what offers they promote, how they build and manage their contact lists, and how they distribute content online.

In addition to the research you do with software and tools, it's a good idea to do your competitive research as well. Put yourself in a potential customer's shoes and see what your competitors are doing in terms of marketing.

You can do this by:

• subscribing to your newsletter;
• subscribing to their blogs;
• Follow them on social media;
• abandon a product in the shopping cart;
• purchase of a product.

As you carry out these activities, be sure to document your results with notes on each tactic you see. By examining their approach to cart abandonment and how they provide support on social media (and beyond), you can spot interesting approaches your competitors are using to get more customers and increase sales. The insights you gather at this stage can be incredibly useful specifically for your sales team.

7. Perform a SWOT analysis

considerDoing a SWOT Analysisto keep track of the data collected from you. It is a competitive analysis framework that lists your company's strengths, weaknesses, opportunities and threats and is also useful for shaping your overall marketing strategy. SWOT takes your competitors' strengths and compares them to your company to define areas for improvement.

Strengths and weaknesses focus on the present. These are elements that you control and may change over time, including:

• Ruf;
• product offer;
• partnerships;
• Intellectual property;
• number of employees;
• Market share;
• Financial assets.

Opportunities and risks are beyond your control. You can plan changes, but you cannot influence these elements. They include:

• competing products;
• The economy;
• consumer trends;
• Regulation;
• market size;
• market demand.

The aim is to conduct a SWOT analysis every year. It helps inform your break-even analysis and keep an eye on the competitive landscape. You can anticipate problems and continually improve your business. You shouldseek funding, you must include an up-to-date SWOT analysis in your proposalBusiness plan.

🎯PRINCIPAL:If you're interested in writing a business plan but are put off by the bulky paperwork, we've developed a template.business plan templatethat you will actually use. Thousands of people have made a copy to reuse in their own plan and it's completely free to use.

Gather data with these competitive analysis tools

Once you know which direct competitors you'll be investigating, it's time to start researching and collecting data for your competitive analysis. The good news is that there are many different tools and software available today that can make gathering data for your competitive analysis easier, more efficient and more accurate.

Let's look at a few different resources that can help you gain important insights into various aspects of your competitor's marketing approach, from product or service positioning to content marketing and social media efforts.

SEO Analysis

• Ahrefs: Checks any URL's top performing organic keywords and gets estimated traffic reports for those keywords.
• Alexa: Helps you define audience demographics and search rankings for your site and your competitors' sites.
• SE Classification: Shows competitors' paid and organic search performance, strategy, and keywords.

PPC/Keyword Performance

• SimilarWeb: Provides information about estimated monthly visits and top traffic sources for a website. Useful for getting a rough idea of ​​your competitor's market share.
• SpyFu: Helps you research and download the most profitable keywords your competition is using in their PPC campaigns.
• espionage: Shows you how many keywords your competitors are using in Google Ads, which ones they're targeting, and your estimated monthly budget.
• SEMrush: Helps you identify your competitor's keywords, performs a website audit and analyzes backlinks.
• What'sOnWhere: Provides data on the advertising approaches of competitors on the Internet.

social media performance

• RivalIQ: Shows how often competitors post on social channels, their average engagement rates, and their most successful content.
• Followerwonk: Provides insights from Twitter about follower demographics, top influencers, and performance metrics.
• Scion Social: Benchmarking around competitors' social performance on social channels, influencer identification and reporting.

Marketing de email

• owl letter: Analyzes changes in sending frequency and detects trends in competing emails.
• MailCharts: Aggregates emails and provides insight into email sending frequency, subject line tactics, and more.

Content marketing performance

• BuzzSumo: Helps you see top-performing content for specific topics and competitors, as well as total social shares.
• Monitorar backlinks: Helps track backlinks every time someone links to your and your competitor's content.
• Feedly: Aggregates content as it is published, allowing you to study topics covered by competitors in one place.

Start collecting data using these resources and add it to your competitive analysis spreadsheet so your results are all stored in one organized place.

A competitive analysis model

If you're still not sure how to start designing your model for your analysis, here's an example and template to work with to get you started.

Suppose you sell makeup brushes. You'll see how to compare competitors' approaches (and find out what you can do to differentiate yourself):

You can add as many sections as you like to your template, but remember to limit your set of major and minor competitors to seven to ten so your frame of reference is highly relevant.

Want a simple competitive analysis template to speed up the process?

Six Pitfalls of Competitive Analysis in Marketing

Now that you know how to create a competitive assessment, let's go through some of the major pitfalls just to be aware that doing so can undermine the insights you've gathered.

1. Competitive analysis is not a one-time exercise

Never revisiting your original insights (or updating them) can lead to erroneous data and bad decisions. Businesses are always evolving, so it's important to remember that watching your competitors is an ongoing process – not something you do once and never again. Ultimately, you must be consistently on top if you want to grow your market share.

2. Confirmation bias is real

As humans, we tend to jump to conclusions based on our assumptions. this is calledconfirmation bias. As you work through your analysis, it's important to be aware of your initial assumptions and test them thoroughly, rather than relying on what you believe to be true about your competitors. Let the data guide your decisions instead of letting assumptions guide you.

3. Data without action is useless

If you put the work into competitor analysis, make sure you act on the results rather than letting them virtually gather dust on your computer, buried in some obscure file folder. Create a strategic plan around your discoveries, and execute on the unique angles and tactics you discovered along the way.

4. Work harder instead of smarter

With so many great resources available today, simplifying the data collection process around competitive analysis, it's easier than ever to put together a world-class, highly accurate comparison. Don't reinvent the wheel and do things the hard way: invest in tools that speed up the process and provide the critical insights you need to make informed, data-driven decisions about your business.

5. Start without direction

If you don't have direction for compiling your competitive analysis and you don't have a clear end goal, the job becomes much, much harder. Before diving into research, define your objective and what you hope to learn about your competition. What do you want to achieve? what do you want to build? After all, it's your own business!

6. No consideration of market timing

When analyzing competitive data, be sure to look at how companies have grown and progressed over time, rather than looking at their approaches to a single fixed point.

Sometimes knowing how your competitors developed their tactics can be even more useful than knowing what they were doing in the beginning (or what they're doing now). Understanding past, current and future industry trends will help you make better decisions.

Competitive analysis: your business advantage

Competitive intelligence is the key toopen a business. By constantly performing market competition analysis, you can always be one step ahead of your competition. You'll be able to break into new markets, launch new products and keep an eye on your competitors' customers - offering an innovative approach to small business that keeps your company or startup agile.