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What Is a Competitive Analysis? (How-To Guide) (2023)

A competitive analysis tells business owners what their competitors are doing and identifies opportunities to outperform them.

Running a competitive analysis is about finding the strengths and weaknesses of the companies in your industry. By researching competitors’ products, sales, and marketing, you can decide how to move forward with your business strategy.

Competitive analyses are valuable at any stage of a business. But how do you make one? This post explains how to run a competitive analysis to meet your goals.

There’s also a free competitor analysis template to make the process easier.

Free competitor research template

Find a strategic angle to achieve sales success, uncover your product-market fit, and stand out from the competition with our free template.

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What is a competitive analysis?

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

Doing a competitive analysis helps you find potential advantages and barriers within your target market or products. It allows brands to monitor how direct and indirect competitors handle marketing, pricing, and distribution.

Competitor analysis example: what does one look like?

There’s no single way to do a competitive analysis. How it looks will vary depending on what you’re trying to learn about your competitors.

You might do a competitor analysis on a specific part of your competitors’ operations—like their website—or you might do a complete analysis of their entire marketing and sales team. The goal is to help you understand your competitors’ actions and how your business should respond.

There’s more than one way to structure a competitive analysis. Here are some types of information often included:

For a broad competitive analysis, you might look at your competitors’:

High-level information can help you understand the fundamental differences between your competitors. For a more specific analysis, try looking at your competitors’: 

  • Website features (design, content)
  • Customer experience (checkout flow, customer support)
  • Marketing content (product descriptions, blog posts)
  • Social media (post frequency, engagement rates)
  • Promotions (sales, discounts)
  • Communications (abandoned cart emails, newsletters)
  • Reviews (customer feedback, complaints)

What’s included in a competitive analysis is up to you. Use your research to answer specific questions that will help your business take action for future growth.

Need an example? Here’s what a simple competitor analysis might look like:

An example of a competitive analysis table comparing two companies

Why competitor analysis matters for ecommerce

It’s easier to compete when you understand the competition. Knowing what your competitors are doing helps you plan a response, whether that’s adjusting your pricing strategy, tailoring your target audience, or copying a good practice.

A wider view of your ecommerce space can also help you see what sets your business apart. 

If you’re starting an ecommerce business, an analysis of competitors will help you:

  • Make informed marketing decisions
  • Identify industry trends
  • Benchmark against competitors
  • Find your unique value proposition
  • Determine pricing
  • Unearth new ways of speaking to customers
  • Find gaps in your marketing or product line

A competitive analysis is a living document that should be updated as a company grows.

As you develop new products, update your marketing strategy, or expand into new areas, a current competitive analysis document is a powerful resource.

It can reveal opportunities to gain leverage on your competitors, while highlighting areas where competition is intense. 

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When to do a competitive analysis

When building a business, a thorough competitive analysis is a great way to deepen your understanding of market factors.

As you grow, repeat your competitive analysis to stay in the loop with the industry’s latest products, features, and marketing tactics. Running regular reports will also help you compare how your business responds to broader trends.

Refresh your competitive analysis any time your business or industry changes significantly. A sudden surge in product demand or a Google algorithm update are both good reasons to review what your competitors are doing.

When deciding how often to revisit your competitor analysis, consider how fast-paced your industry is. Will your data be outdated in a month, quarter, or year? If a new competitor enters your market, remember they’ll likely analyze your activities, too.

How to do a competitive analysis

Keep your competitor research organized by following these seven steps:

1. Select 7–10 competitors 

If you don’t know your competitors, step into a customer’s shoes and search for your products or services on Google, Amazon, or marketplaces relevant to your business. Identify competitors that:

  • Sell similar products
  • Have a similar philosophy or mission
  • Market to your audience
  • Are new to the marketplace
  • Are established in the marketplace 

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

2. Create a spreadsheet

As you collect competitor data, keep it organized in a table or spreadsheet—bonus points if your table design allows for easy updates over time.

Within your document, build sections for comparing competitors based on your research objectives, such as: 

  • Price range
  • Product offerings
  • Social media engagement
  • Lead generation strategy
  • First-time visitor offers

A hand holding a blue pen above some business documents3. Choose direct competitors and indirect competitors

Categorize each business in your spreadsheet as a direct, indirect, or tertiary competitor. This will help you determine how they relate to you.

  • Direct competitors sell a similar product or service to a similar audience. Nike and Adidas are primary competitors.
  • Indirect competitors offer a high- or low-end version of a product to different audiences. Victoria’s Secret and Walmart are secondary competitors.
  • Tertiary competitors are brands that market to your audience but don’t sell similar products or directly compete with you. They represent potential partners or future competitors—think Gatorade and Under Armour.

A hand holding a blue pen writing in a notebook4. Identify your competitors’ positioning

Positioning is a business’s most persuasive marketing tool. Good positioning connects you with a target audience and informs your messaging and values. 

Understanding your competitors’ positioning is essential. You can learn how other companies talk to your customers and find a unique, relevant voice for your brand. 

Analyze these channels to see how competitors position themselves:

  • Social media
  • Press releases
  • Website copy
  • Events
  • Interviews
  • Product copy

When identifying your competitors’ positioning, ask yourself:

  • What story is being told?
  • How are products described? 
  • How is the company described? 
  • What is the unique value proposition

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

A blue and gold mural showing the relationship between “information” and “strategy.”5. Determine competitive advantage and offerings

Most successful companies sell unique products or offer distinctive experiences. It could be an innovative feature, a secret recipe, or unparalleled customer service.

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

A fashion retailer’s competitive advantage might be high-quality products sold with expedited shipping. An online educator’s USP could be their 20 years of experience.

Look at your competitors’ goods and services and decide where their advantage lies. Their brand will likely be closely tied to their unique offering.

Read customer reviews to see why your target audience shops with competing companies. They may like lower price points, premium materials, or sustainable practices.

Learning about the competitive advantages in your space will help you figure out where you should and shouldn’t try to compete.

A rack of clothes in a clothing store.6. Understand how your competitors market their products

Successful ecommerce stores often outpace the competition through marketing, not with their products alone.

But don’t assume you need to compete across all marketing channels to stay in front of customers.

Instead, use your competitive analysis to find out how your competitors are reaching customers and where they focus their marketing resources. 

Maybe your competitors are all about targeting customers through Instagram or capturing traffic with helpful blog posts.

Use software tools (listed below) to collect marketing data. Then, assume the role of a customer for a first-hand experience of competitor marketing.

You can try:

  • Signing up for newsletters
  • Subscribing to blogs
  • Following competitors on social media
  • Abandoning products in a shopping cart
  • Purchasing a product

As you study competitors’ marketing and document your findings, you can decide whether to compete in popular marketing channels or reach your customers through less-used avenues.

The insights gathered during this stage will be helpful for sales and marketing teams. 

Two people working on a business chart on a laptop.7. Conduct a SWOT analysis

Consider conducting a SWOT analysis to accompany the data you collect. 

SWOT is a competitive analysis framework that lists your company’s strengths, weaknesses, opportunities, and threats. SWOT leans into your competitors’ strengths and compares them to your business to find areas for improvement. 

Strengths and weaknesses are elements of your business that you control and change over time, including:

  • Product offering
  • Partnerships
  • Intellectual property
  • Number of employees
  • Market share
  • Assets

Opportunities and threats are outside your control. You can plan for changes but can’t influence these elements. They include:

  • Competitor products
  • The economy
  • Consumer trends
  • Regulation
  • Market size
  • Market demand

Aim to run a SWOT analysis annually. It helps inform your break-even analysis and keeps tabs on the competitive landscape. You’ll want to include an updated SWOT analysis in your business plan if you seek funding.

A person sits at a table, writing in a notebook while checking charts on a phone.

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Collect data with these competitive analysis tools

Once you know which competitors to study, it’s time to research and collect data for your competitive analysis. The good news is that many tools and software are available to make data collection easier.

Let’s look at a few resources that can help you gather insights into your competition’s keywordscontent marketing, social media strategy, and more.

SEO Analysis

  • Ahrefs: See your competitors’ top-performing keywords and estimated traffic.
  • SE Ranking: Find out your competitors’ paid and organic search performance.

PPC/keyword performance

  • SimilarWeb: Get insights into estimated monthly visits and traffic to gauge your competitors’ market share.
  • SpyFu: Download your competition’s most profitable keywords from their PPC campaigns.
  • iSpionage: See which keywords your competitors target on Google Ads, plus their projected monthly budget.
  • SEMrush: Run audits on competing sites and analyze their backlinks.

Social media performance

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

Email marketing

  • Owletter: Analyze changes and spot trends in your competitors’ email strategy.
  • MailCharts: Aggregate emails to get insights into email frequency, subject line tactics, and more.

Content marketing performance

  • BuzzSumo: See the top-performing content for general topics and specific competitors.
  • Monitor Backlinks: Monitor backlinks and get notified each time someone references your or your competitors’ content.

Use resources like these to gather data and drop it into your competitive analysis spreadsheet to store your findings in a single, organized space.

A competitive analysis template

If you’re unsure how to start your competitor analysis, here’s an example template to get the ball rolling. 

Let’s say you sell makeup brushes. To compare competitor approaches and identify where you can stand out, you might develop a table like this:

competitive analysis table

Add as many sections as needed to your template, but remember to keep the group of primary and secondary competitors below 10, so things stay relevant.

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

Free: Competitive Analysis Template

By evaluating the strengths and weaknesses of your competition, you can begin to formulate how to give your company an advantage. Download our free competitive analysis template and gain an edge over the competition.

6 pitfalls of competitive analysis in marketing 

Now that you know how to create a competitive assessment, let’s go over some of the pitfalls that may affect the insights you’ve gathered.

1. Competitive analysis is not a one-and-done exercise

Never updating your data can create a false picture, which leads to poor decision-making. Businesses are constantly evolving, so it’s important to consider competitor analysis as an ongoing process.

2. Confirmation bias is real

We all have a tendency to favor our initial assumptions. This is called confirmation bias. As you work through your analysis, try to challenge preconceived ideas about your competitors. Let the data build an objective picture of your competitor landscape.

3. Data without action is useless

If you’re putting in the work to do a competitor analysis, don’t let your findings gather virtual dust. Make a strategic plan to respond to your competitors’ activities with your own updates.

4. Working harder instead of smarter

Don’t reinvent the wheel and do things the hard way: leverage the latest data collection tools to provide the right information without the legwork.

Many of today’s tools significantly speed up competitor research and provide bespoke insights and data points.

5. Starting without a direction

If you’re directionless while creating your competitive analysis, finding actionable takeaways will be more challenging. Before diving into research, define your goals and what you hope to learn about your competition.

6. Not accounting for market timing

When looking at competitor data, study how companies have grown and progressed over time, rather than examining their approach at a single fixed point.

Sometimes, information about how your competitors have evolved can be more valuable than knowing what they’re doing now. Understanding how similar companies have successfully navigated your industry will help you make better decisions.

Competitive analysis: your business edge

Competitive intelligence is vital when starting a business. By doing market competition analysis on an ongoing basis, you can stay on top of your competition. You’ll be able to break into new markets, launch new products, and keep tabs on your competitors’ customers—giving you a cutting-edge approach that keeps your business or startup agile. 

Competitive Analysis FAQ

What is a competitive analysis?

A competitive analysis is a research document comparing your competitors and your business. By evaluating your competition’s strengths and weaknesses, you can find opportunities for advantage.

What’s inside a competitive analysis?

  • A competitor’s target customers
  • Their market share
  • Their major competitive advantages
  • Key product features
  • Product price points across marketplaces
  • Shipping policies
  • If competitors received funding or venture capital.

How do you write a competitive analysis?

  1. Choose seven to 10 competitors.
  2. Create a spreadsheet to track your data.
  3. Determine competitor types.
  4. Identifying positioning.
  5. Determine competitive advantage and offering.
  6. Understand how your competition markets themselves.
  7. Conduct a SWOT analysis.

Is SWOT a competitive analysis?

SWOT is a competitive analysis framework that helps gain insight into a current business situation. SWOT represents Strengths, Weaknesses, Opportunities, and Threats

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