Maybe the term “competitive analysis” sounds a bit daunting. “Competitive” brings to mind effort, and “analysis” suggests a time commitment. But here’s the good news: competitive analyses don’t have to be difficult! And that’s crucial because staying ahead in your market requires doing them regularly. This post will guide you through a quick and simple five-step competitive analysis process that you can implement in your business. But first, let’s ensure we’re on the same page about what a competitive analysis is and why it matters.
Contents
- What is a competitive analysis?
- How to do a competitive analysis in 5 steps
- Final tips on doing a competitive analysis
What is a competitive analysis?
A competitive analysis involves comparing your business to competitors to standing out from them. There’s no single approach to competitive analysis: You can analyze your entire business, specific products and services, particular marketing avenues, and more. Moreover, you can leverage a competitive analysis to enhance your marketing, introduce innovative products, venture into new markets, and beyond.
Think of a competitive analysis as the key to pinpoint your position in the market.
Speaking of competitors… want to see how your Google Ads measure up? Download our Google Ads Benchmarks to find out!
How to do a competitive analysis in 5 steps
These five steps provide a solid structure for any type of competitive analysis you’re aiming for. Once you grasp the key steps, use our competitive analysis templates to put them into practice!
1. Determine your competitors
The first crucial step is to identify who you’re up against. It’s vital to recognize the different competitor categories:
- Direct competitors: They provide the same product/service, fulfilling the same customer need.
- Indirect competitors: They offer a different product/service but still address the same customer need.
- Perceived/replacement competitors: Their product/service doesn’t directly fulfill the same need but is similar enough to be seen as a substitute for yours. Your target audience perceives them as fulfilling the same need.
Source
Here’s how to identify your competitors:
- Conduct a Google search using the products and services you offer and observe the results, both local and general. Also, search for your business name to see if any businesses are bidding on it in Google Ads.
- Utilize a competitive analysis tool like SimilarWeb, Semrush, or Ahrefs. These platforms frequently offer freemium versions or free trials, sufficient for this initial step. Tools designed for uncovering competitor keywords can also be beneficial here.
- Explore review sites relevant to your industry. For instance, service businesses might consult Google Maps and Angi, while SaaS providers could explore Trustpilot and G2.
- Engage with your customers. Inquire about other providers they considered before choosing you. Compile a comprehensive list of competitors and categorize them based on the groups mentioned earlier.
2. Analyze your competitors’ products
Simply knowing they offer something comparable isn’t enough. Delve into their website and pinpoint their exact offerings. Most businesses, including yours, may have various compelling offerings. However, there’s often a core offering that forms their foundation. Identify this along with their secondary offerings. For retailers with diverse products, get a feel for their top sellers. Here’s how to identify your competitors’ products/services:
- Step into your customer’s shoes. Explore their product, solutions, and pricing pages, engage in live chat, and consider even making a call to ask questions.
- Read customer reviews. Take note of products or services mentioned frequently and those that aren’t.
- Decode their packages and pricing tiers. Compare your offerings with theirs at similar price points. For instance, a competitor might offer comparable features but at a significantly higher price tier.
- Examine the keywords they are bidding on. Leverage the previously mentioned tools designed for uncovering competitor keywords.
A quick look at your competitors’ PPC keywords can reveal a lot about their primary offerings.
Need assistance in finding competitor keywords? Give our Free Keyword Tool a try!
3. Understand your competitors’ target audience
While your competitors share your target audience by default, each audience has its nuances, so delve deeper. Go beyond demographics and identify the specific personas your competitors are focusing on. Here’s how to uncover your competitors’ target audience and personas:
- Examine testimonials and case studies featured on their website. This offers insights into who uses their product/service. Pay close attention to their occupations.
- Explore review platforms. This helps understand customer pain points, expectations, and uncover details about their lifestyles (B2C) or work styles (B2B).
- Analyze their social media activity. Observe who their posts and ads target. Copy and imagery reveal a lot about their intended audience. Pay attention to which followers engage with their posts.
A quick glance at Wild One’s Instagram profile reveals their focus on young, urban pet owners.
If you’re running paid ads, these strategies for targeting competitor audiences can also prove useful.
4. Decode their positioning and messaging
Despite numerous businesses offering similar products or services, each has its own positioning (the context in which they present their product) and messaging (the unique value proposition). Understanding these is key to developing your own. Here’s how to decipher your competitors’ positioning and messaging:
- Analyze their business descriptions. A good business description encapsulates the business and its key messages. Look for these in business listings, social media profiles, and on review sites.
- Examine their “soft skill” content. This includes content like their core values and about us pages. An explicit mission statement is even more helpful.
- Read their press releases. Press releases are excellent resources to uncover a company’s position and messaging. Look at local media and online press release websites.
- Subscribe to their newsletter or blog. You don’t have to read every word, but regularly scanning their content and noting recurring themes can help you identify key messages. This information, combined with the website analysis from the previous steps, should give you a solid understanding of their key features, benefits, and unique selling proposition.
Some companies even dedicate a “why us” page, like this one.
5. Consolidate your findings with a SWOT analysis
A SWOT analysis is an effective way to generate insights and visualize the information gathered in the previous steps. SWOT stands for:
- Strengths: Areas where the business excels.
- Weaknesses: Areas needing improvement.
- Opportunities: External factors that could offer a competitive advantage.
- Threats: External factors that could create a disadvantage. Conduct a SWOT analysis for your own company as well as your competitors. Our SWOT analysis guide and template, along with these SWOT examples, can provide inspiration.
Final tips for conducting a competitive analysis
These five steps provide a comprehensive framework for conducting a competitive analysis. Here are some final tips and best practices:
- Don’t base your product or service offerings solely on a marketing competitive analysis. Instead, use it to refine the positioning of your offerings and define your unique value proposition within the market.
- Maintain your uniqueness. While adapting ideas from competitors is acceptable, avoid directly copying them. Learn from their strengths, address their weaknesses, and stay true to your brand story and what sets you apart.
- Prioritize your customers. While monitoring competitors is necessary, don’t lose sight of your customers. Ensure your business prioritizes their needs. Remember, they can be your most valuable source of information!
Begin your competitive analysis today
With these steps and tips, you’re well-equipped to conduct a competitive analysis for your business. Use it to refine your positioning, messaging, and unique value proposition. You’ll quickly realize its impact on your brand consistency and marketing effectiveness! Here’s a recap of the five steps to conduct a competitive analysis:
- Determine your competitors
- Analyze your competitors’ products
- Understand your competitors’ target audience
- Decode their positioning and messaging
- Consolidate your findings with a SWOT analysis