The Ultimate Guide To Competitive Analysis (Examples, Tools, Templates)
Owning an online business can sometimes seem a little daunting. There are so many competitors that it may feel overwhelming to try and figure out the best way to leave an impression and succeed.
Enter competitive analysis. This is the process of identifying your competitors, evaluating their strategies, and uncovering their strengths and weaknesses in relation to your own product/service.
The process forms part of a vital foundation for any organization, online or not, and gives you valuable insight into your competitors.
Performing a solid competitive analysis allows you to evaluate your own business and what makes it unique, allowing you to play on your strengths and stay ahead of your competition.
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Why Do Competitive Analysis?🤷♀️
As mentioned above, performing an analysis allows you to keep your finger on the pulse of your competitors and increase market share by effectively identifying your unique selling point (USP) and uncovering market segments where your competitors may be falling short.
You'll have two main types of competitors, direct and indirect. A direct competitor offers essentially the same product/service as you. Indirect competition is those offering different/related products that reach the same target market as yours.
Understanding your strengths and weaknesses, analyzing the market, and visualizing its developments are significant for staying up to date with the new challenges.
If you conduct your research properly, you’ll end up with plenty of quantitative and qualitative data to get a sense of the competitive landscape. Incorporating these insights into your business and marketing strategies will help you get the best results.
Your company's actions need to be data-driven and based on experience.
Luckily, the advent of the internet and social media has made competitor analysis more straightforward and comprehensive. Business owners can now conveniently identify their competitors and learn more about their engagement, strategies, and tactics with the click of a button.
While the core of this analysis remains the same, the methodology might vary slightly across different industries.
Competitive Analysis For Small Business🕵️♀️
You've got more to contend with as a small business than just meeting sales goals. For your business to survive, you also need to understand your position compared to your competitors.
You need to identify areas where your own business might need some improvement, encounter new strategies you haven't tried yet, and learn how to pull them off effectively by observing your competitors' actions.
Having data, which shows you what other brands are up to and what strategies they are using, will help you gain insight into what works and what doesn't.
When performing analysis for small businesses, you're going to want to look at your closest competitors: businesses that are of a similar size to yours.
For example, if you're a solo entrepreneur selling handmade leather bags, big chain stores usually aren't your direct competitors, even if they might carry leather bags in their inventory. Instead, look for other small to medium-scale producers of leather bags and similar leather products.
Delve into identifying the types of customers that your competitors are attracting and the methods they are employing to attract these consumers. A few questions you may want to ask are:
- Are their customers high- or low-end?
- What does their pricing structure look like?
- Do they offer free or competitive shipping costs?
- Have they partnered with other businesses/individuals to cross-promote?
- What is the look and feel of their website?
- What online channels are they advertising on and do they also employ print advertising?
- What is their call to action?
You can answer these questions by going through their marketing materials, social media pages, website, blog, advertising channels, etc. Exploring this will help you figure out who they are trying to reach.
As most small businesses won't have the resources for an expansive marketing strategy, you're going to be going head-to-head in providing the highest quality product, or offering a better service, while making yourself seen so that customers develop an affinity for and trust in your business.
As you continue to evaluate your competitors and business, ask yourself:
- Can you do better than them or would it serve you better to outdo them elsewhere?
- How will it affect your business if a competitor turns their weaknesses into strengths?
- Will you be changing your pricing model to reflect what your competitors do, or will you aim for a different market altogether?
- Will you focus on the marketing channels that they’ve ignored?
Use this knowledge of your competition to make any necessary changes to your business plan. With these adjustments, you'll be able to protect your business against tough competition.
Competitive Analysis For eCommerce🛒
Research for eCommerce businesses is not fundamentally different, but it does require a slightly different approach to the collection and evaluation of data.
If you owned a brick-and-mortar store, you'd perform consumer surveys and physically visit other stores. In eCommerce, market research is as easy as walking through your competitor's online metrics.
In both online and brick-and-mortar stores, pricing will be the single most significant contributor to your conversion rate.
When shopping online, customers tend to be more price-sensitive. E-tailers tend to amplify this by favoring competitively priced products in their search results.
When evaluating eCommerce competitors, look for the average online-price-to MSRP (Manufacturers Suggested Retail Price) delta and the frequency of discounts.
Most major e-tailers will apply dynamic pricing to remain both appealing and competitive while capturing as much profit as possible.
Dynamic pricing makes price monitoring crucial, and a little tricky, as prices can change daily, or sometimes hourly.
Another point you'll want to keep in mind is product availability. This has a direct impact on search rankings as the algorithms of some retailers avoid displaying products with low inventories/favor results with no risk of shortages.
Monitoring the share of problematic stock statuses (out of stock, limited stock, shipping at a later date, etc.) for each brand is a good performance indicator to include. Having no (or low) stock is sure to be a sale lost to a competitor.
Some good questions to ask yourself are:
- Which market segments are your competitors targeting?
- What pricing strategy are they using and how volatile are their prices?
- Which brand owns the entry-level segment?
- Which retailers are driving the market up or down?
- Which brands offer delivery and what are their shipping/delivery costs?
- What is the average MSRP delta of each brand? (1 – (offered price)/(MSRP))
- Are there any new product launches scheduled, and when?
- How user-friendly is the website?
Another important aspect is search engine optimization and customer reviews. Research your competitors' keyword search performance and any online product ratings.
This will assist you in uncovering where your competitors are falling short and also to know what keywords you'll want to target in your marketing strategies.
Competitive Analysis For SaaS👨💻
There are over 15 000 software-as-a-service companies just within the US and with SaaS companies increasing on a global scale, the execution of competitive strategies is crucial to your success.
A big chunk of your research as a SaaS company is looking at the technical aspects of the products/services and website. You can explore your competitor's websites, go through online reviews/customer feedback, and check the customer lifetime.
When gathering your data, a few good questions to ask include:
- Is the website user-friendly/does it have an aesthetically pleasing interface?
- Does the company have any downtime - how often and for how long?
- Are there security issues such as data breaches/malware?
- What is the structure of their packages and pricing?
- What kind of customer support do they offer (chatbots, email, phone)?
Start by analyzing those companies within your niche and then look at secondary competitors.
Listicles are a great source of base information. Alternatively, you could use paid SEO tools or software review websites.
Your competitor analysis should include general research and more in-depth knowledge of SaaS email marketing, social media marketing, SEO and website quality, and ranking.
One more thing to consider is the distribution model. Most companies will sell directly from their website, but there is the option of employing a reseller strategy. Some companies even employ both models.
Once you have this information, it would be good to look at your competitive edge. What your SaaS company has or does that will make it stand out.
This could be the technology you use, the pricing and perks, untapped sales channels, additional or more specialized features, or unrivaled customer support and resources.
How To Do Competitive Analysis In 5 Easy Steps📝
Detailed research and data will help you understand your future and current competitors, your audience demographics/target customers, market leaders within your industry, and ultimately your business strengths and weaknesses.
There is a basic systematic approach that can be used to make this process less overwhelming and to yield the right data for you to make informed decisions. You'll want to include statistics from search engine results, web analytics tools, client feedback/customer reviews, social network posts, and analysis of the types of content your competitors are producing.
- Define Your Business Goals
- Identify Your Competitors
- Plan Your Analysis Strategy
- Analyze Your Competitors
- Identify Your Competitive Advantage
1. Define Your Business Goals
Before you can assess your competitors, you need to have a good understanding of your product or business and what your goals are. Ask yourself the following questions:
- Are you a marketing leader, follower, challenger, or ‘nicher’?
- Have you already built an established brand, or are you a startup?
- What are your mission and vision?
- Who is your target audience?
You can collect plenty of data about your competition, but if you don't understand your own product/service offering, audience demographic, or mission statement, you'll never be able to identify your business edge.
Once you understand your own business, you can then start to build a comprehensive list of your potential competitors.
2. Identify Your Competitors
Now that you know your own business, you can start to identify your current and possible future competitors. You can break this list into primary competitors and secondary competitors.
To identify your competition and their current market share, you can do the following:
- Keyword research using a search engine. Type in the keywords and terms that your potential customers would use to search for your product/service and review the highest-ranking pages.
- Review social media communities or community forums and find out which companies people are recommending within your niche.
- Ask your current or potential customers which other companies they have considered or would consider and why.
- Browse your local business directories and online maps to search for similar businesses within your area.
Once you have a list of competitors, split them into direct/primary competitors, indirect/secondary competitors, and future/potential competitors.
Identifying Your Small Business Competitors
As a small business, you'll be targeting a very specific, often local, market and need to analyze competitors of the same size. Look for both physical and digital competitors selling the same product or an alternative.
Evaluating online forums, social media networks, targeted keywords, and customer feedback on related services/products, will help you uncover your audience's interests and your top competitors. Trade fairs, flyers, local business directories, and exhibitions are also great places to look for insight.
It's valuable to remember that you need to constantly keep your eye out for possible new competition, so don't just research what's already out there, look for what might be in development.
Identifying Your eCommerce Competitors
Ecommerce businesses, much like traditional commercial traders, will need to identify those who sell the same or similar products and what pricing model is being used. The difference with online selling is that pricing is highly competitive and can often change weekly, or even hourly.
When searching for your competitors, don't only look for the popular, successful brands but also the brands which are not as successful. You will gain valuable insight by looking at competitors on both sides of this spectrum.
Keep in mind that you'll want to monitor offline competitors who may go digital in the future and those businesses which appeal to the less tech-savvy customers.
Your best starting point is to use a search engine to search for your products and review the websites which appear on the first page of results. You will also uncover competitors at conferences, trade shows, and industry-related events.
Identifying Your SaaS Competitors
When identifying your SaaS competitors, you'll want to focus less on the company size and more on the solutions which they are selling. Look for businesses offering the same key features and solutions and who are targeting the same audience.
Utilize search engines to perform a search targeting your SaaS use cases, features, and problems that your software solves, and review the first page to get a better idea of your SEO competitors.
Review the websites of these companies to see which are your direct/indirect competitors, and keep your eye on the news to identify any new competitors or new releases from your existing competitors.
Another great resource is your customers. Chances are, if someone has signed up for your service, they have demoed or tried other options as well before deciding on yours. You can send out a short survey or ask them during the onboarding process.
Remember that your fiercest competitors are those with the same buyer persona, software features, and pricing model, or those closest to what you offer.
3. Plan Your Analysis Strategy
With all the information available you will need to ensure you organize it effectively to understand the data gathered. It is always best to set up your strategy before diving in so that you know exactly what information you will be looking for and can accurately record it.
It may be best to start with a spreadsheet or utilize an online competitive analysis template for your initial data gathering but once you have the data, you'll want to organize it in a manner that allows you to gain insights at a glance. You can do this by creating a competition matrix.
Competition Matrix
Creating a competition matrix involves collecting competitor data and translating it into insights that answer your market research questions. In essence, it is a visual representation of those rows upon rows of data in your report, most often zoning in on a specific dataset.
There are many competitive matrices to choose from and the type you choose will depend on the scope of your comparison and the questions you seek to answer. Some examples of the data you can pull in include social media statistics, web traffic statistics, sales data, product comparisons, marketing and content comparisons, audience demographics, and customer reviews.
Matrices make it easy to recognize your competitive advantages and discover market opportunities. Below are just a few examples.
- SWOT Analysis - a framework used to evaluate strengths, weaknesses, opportunities, and threats for your own company and competitors.
- Competitive Positioning Matrix - to determine your market position in a specific area such as price-quality relation.(Image: a matrix of quadrants where you place low price/low quality on the lower left/high price and high quality on the upper right. Your other two quadrants would be low price/high quality and high price/low quality. Position competitor examples across the quadrants based on price/quality relation)
- Porter’s Five Forces - focuses on five forces (new entrants, existing rivals, substitutes, suppliers, buyers) that impact the level of competition in an industry.
- Competitor Analysis Axis - another matrix used to determine your market position but as a plotted graph with an X- and Y-axis.
- The Competitor Comparison Chart - A simple table layout where you can view competitors side by side and compare statistics for the same headings such as features/benefits or types of search statistics (paid, organic, local), etc.
4. Analyze Your Competitors
Now that you've identified your business goals and your top competitors, it's time to dig a little deeper. At this stage you will be reviewing and analyzing your competitors with a specific focus on the following:
- Direct and indirect competitors - identify and create a separate list for each.
- Competitor websites - ease of use, appeal, pages, content.
- Customers - target audience, solutions offered, customer experience, reviews.
- Strengths and weaknesses - gaps in their offerings/content marketing strategies/pricing. Top solutions/products, most successful content/promotions/services.
- Content Strategy - content promotion strategies, SEO strategy, platforms utilized, blog topics covered.
- Pricing - pricing plans, payment methods, promotions, freemium versions.
- Customer Service - chatbot/email/phone support, response time, quality of solutions/products/services, sales team efficacy.
To find out more about the products on offer, you could also adopt a "secret shopper" approach and sign up for free trials, look at their onboarding process, wizards, sign up for their newsletter, etc.
5. Identify Your Competitive Advantage
Now that you have gathered the data, organized it, and plotted it in a competition matrix or two, you can easily identify your competitive advantages. These will make you stand out from your competitors and could be pricing plans, product quality, downtime, the technology used, content strategy, etc.
You are now armed with the resource to answer the question: "What potential opportunities do they make available for you?"
Keep in mind how your competitors will respond to your actions - if they respond at all. After all, chances are that rival businesses have analyzed your business too.
You need to continually review your analysis to stay ahead of the competition.
Competitive Analysis Tools🎯
Competitive analysis may seem overwhelming or time-consuming but with the right tools, the process can be quick and easy.
To make the process simpler, you can utilize the following types of tools:
- Search engines such as Google, Bing, Yahoo, AOL
- Social media analysis/trackers such as Sprout Social
- SEO software/analytics tools such as SEMrush, Frase, and MarketMuse
- Website traffic/visitor activity analysis tools such as Leadfeeder and Active Campaign
- SERP scraping and data aggregation tools such as Hubspot website grader and ZoomInfo
- Content analysis tools such as Buzzsumo
- Digital marketing suites such as SocialBee and Promo Republic
- Newsletter/email marketing software such as Active Campaign and Omnisend
- Technology profilers
- Software review websites
Which tools you decide to use will significantly depend on what data you are looking for. Each business is unique and you will use different tools for eCommerce, SaaS, small business, and so on.
Conclusion🙌
To sum it all up, the aim in any healthy competition is to get ahead of your competitors, but not just for the sake of getting ahead. With all the insight gained and data gathered, your focus should remain on delivering the best value and experience to your customers.
Offering a top-notch product or service will naturally go a long way, but the analysis is to find out what you need to give your customers exactly what they’re looking for.