How to Perform a Competitive Analysis

How to Perform a Competitive Analysis

Understanding your competition is absolutely. It tells you a lot about how to run your business, and is key to creating a successful business strategy.

But what exactly is competitive analysis? Competitive analysis is the process of evaluating the strengths, weaknesses, opportunities and threats (SWOT) associated with your competitors.

By studying their products, services and market approach, you can find ways to improve your own offerings, stand out in the market and increase your business’s market share.

Below, we bring you a step-by-step guide on how to perform a competitive analysis:

Step 1: Identify Your Competitors

Who exactly are your competitors? Before you can analyse them, you need to know who they are.

Your competitors fall into two main categories. These are:

Direct Competitors:

These are businesses that offer a similar product or service to the same target audience as you. For example, if you’re a product developer in the coffee industry, other coffee brands are your direct competitors.

Indirect Competitors:

These businesses may not offer the same product or service but could still satisfy the same customer need.

For example, if you run a coffee shop, a smoothie bar could be an indirect competitor because it also serves people looking for a drink on-the-go.

Now that you’ve identified your direct and indirect competitors, it’s time to list them. Consider creating a competitive analysis template.

This template will help you organise and structure your findings as you progress through the analysis.

Step 2: Define Your Target Market and Audience

Knowing who your target audience is will help you focus on competitors that are relevant to your business.

Define your target market by considering factors such as:

Demographics: Age, gender, income level, education, etc.
Geographics: Location or area served.
Psychographics: Lifestyle, interests, values.

It’s essential to understand your target market. This is because it ensures you analyse the right competitors. Then, you will focus on attracting the customers most likely to buy from you.

Step 3: Research Your Competitors’ Products and Services

Visit your competitors' websites. This will help you to understand what they’re offering and how they present it to the market.

Pay attention to:

Range of Products: What types of products or services do they offer? Do they have a broad range or focus on a few specialised items?

Product Quality and Features: How do the features and quality of their products compare to yours?

Pricing Strategy: How do your competitors price their products? Are they on the more affordable, mid or premium range?

Customer Reviews: What do customers like or dislike about their offerings? This can reveal your competitors’ strengths and weaknesses directly from the consumer’s perspective.

Step 4: Analyse Their Marketing Strategies

It’s a great idea to assess your competitors' marketing tactics. This can show you how they are reaching and engaging customers.

Focus on:

Digital Marketing: What is their presence on social media, email campaigns and search engine advertising?

Content Marketing: Are they sharing blog posts, videos or newsletters? This content often targets the same audience you want to reach.

Website Usability: Evaluate their website’s design, functionality and user experience. A well-designed website with clear navigation is a strength that attracts and retains customers.

Examine competitors’ marketing to determine if there are opportunities to improve your own strategies to attract a larger share of the target audience.

Step 5: Assess Their Market Share and Position in the Competitive Landscape

What is market share? It is the percentage of the total market that a company controls.

For instance, if a competitor sells more units of a similar product than anyone else in the industry, they likely hold a large share of the market.

Tools like surveys, industry reports and data from market research firms can help estimate this.

Yes, market share indicates a competitor’s dominance. However, it also reveals where there might be opportunities for your business to capture a portion of that share.

Step 6: Evaluate Their Strengths, Weaknesses, Opportunities and Threats (SWOT Analysis)

A SWOT analysis provides a clear picture of your competitors’ position in the market by examining:

Strengths: What does the competitor do well? Are they known for high quality, excellent customer service, or strong branding?

Weaknesses: Where do they fall short? Are there complaints about product durability, slow delivery, or poor customer support?

Opportunities: Are there market trends or new technologies they could take advantage of?

Threats: What external factors could threaten their success? For example, new regulations, economic downturns, or new competitors could impact them.

Use a competitive analysis template to list these points for each competitor.

This structured approach will make it easier to compare different competitors and see how your business can find a competitive advantage.

Step 7: Examine Their Unique Value Propositions (UVP)

Your competitors’ unique value proposition is what sets them apart. It’s what they promise to deliver that no one else does.

For example, a coffee company might highlight its organic sourcing as its UVP.

 Meanwhile, another might focus on its rapid delivery system. Understanding your competitors’ UVPs can help you define or refine your own.

Step 8: Use Analysis Tools to Gather Data

There are many tools available that can simplify the competitive analysis process:

Google Alerts: Set up alerts for competitor names, products, or relevant industry terms to keep up-to-date with their activities.

SEMrush or Ahrefs: These tools allow you to view competitors’ online performance, including search rankings and website traffic.

Social Media Analytics: Check competitors’ social media engagement using tools like Facebook Insights or X Analytics. High engagement often means they’re resonating well with the target market.

Using these tools will make it easier to gather accurate data on competitors' products, services, and marketing efforts.

Step 9: Identify Your Competitive Advantage

Once you’ve gathered all this information, it’s time to find your own edge. Your competitive advantage could be anything that makes your business more attractive to the target market compared to your competitors.

This could be:

Lower Prices: Competing on cost, while maintaining quality.
Better Quality: Offering a higher quality product or service.
Exceptional Service: Providing better support or faster delivery than competitors.

Identifying your competitive advantage will help you position your business to stand out and attract customers.

Step 10: Monitor and Update Your Analysis Regularly

Competitive analysis is not a one-time task. The competitive landscape can change as:

· New competitors enter the market
· Existing competitors launch new products
· Market demands shift

Regularly update your competitive analysis to stay informed. Then, adjust your business strategy as needed.

Are you ready to perform a competitive analysis?

Want to succeed in a crowded market? Then you need to perform a competitive analysis.

By carrying out the above steps, you’ll be well-equipped to create an effective strategy.

Whether you’re a product developer or a business owner, performing a competitive analysis will help you to stay ahead in the game.

Reach out to EWM to learn more about our services.