Keeping an eye on your competitors helps you anticipate shifts in the market, spot new trends and successful tactics, and stay on the cutting edge of what’s working within your niche.
But it’s not enough to just check out your competitors’ social media accounts and subscribe to their email list. You need a strategy behind your efforts to ensure you’re effectively monitoring your competitors on an ongoing basis and updating your view of the competitive landscape as it changes.
Enter the tried-and-true competitive analysis. If you’re not sure what that is or how to do one, you’re in the right place.
This post outlines a method for conducting a competitive analysis that any business can use, whether you’re a successful store owner that’s re-evaluating your view of the current market or you’re just getting ready to launch your business for the very first time.
Below, we’ll show you the tools you need to research the competition and help you identify what to make note of (e.g., social/search presence, pricing, etc.). We’ve even included a free template you can follow along with and fill out while conducting your own competitive analysis.
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First things first: let’s get on the same page about what a competitive analysis is.
A competitive analysis is a comparison of competitors’ strategies used to evaluate the strengths and weaknesses of different marketing approaches within an industry. It helps a business determine potential advantages and barriers within a market around a product or service and generally helps brands monitor how direct and indirect competitors are executing tactics like marketing, pricing, and distribution.
The competitive analysis can vary widely depending on what it is you’re trying to learn about your competitors. You might do a competitive analysis around a specific aspect—like a competitor’s website approach, for example—or you might do a high-level look at their marketing approach as a whole.
There are a lot of different ways you can structure a competitive analysis, so let’s look at the different types of information that are frequently seen within this type of research.
If you’re doing a high-level competitive analysis, there are a few major elements you’ll want to be sure to include around around competitors’ market positioning, such as:
These sections will help you get a zoomed out look at what separates your competitors from each other and how they’re working to differentiate themselves from competition within your niche.
If you’re wanting to look at more specific elements of your competitors’ approaches, you might consider adding sections like these to your competitive analysis:
Generally, competitive analysis can take on many shapes and forms depending on what a company wants to evaluate about its competitors—but this gives you a rough idea of what could be included within the different sections.
Maybe at this point you’re thinking, “OK, but why does competitive analysis matter for me as a business owner or marketer?”
The main reason this activity is important is because you can’t effectively compete without knowing your competitors—and you can’t differentiate yourself if you don’t know what actually makes you different.
If you’re starting an ecommerce business, an analysis of competitors helps you to:
This type of analysis is not just for first-time ecommerce retailers either. A competitive analysis can, and should, be a living document that’s constantly evolving as a company grows and matures over time.
Maintaining a resource like this is a powerful way to stay on top of how your brand stacks up against the competition right now—but it also can help provide clear direction on how you’ll continue to excel in the future.
Need an example for reference? Here’s one showing what a competitive analysis might look like:
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Once you’re ready to dive into a competitive analysis of your own, follow the steps outlined here to keep your research structured and organized appropriately.
To identify relevant competitors to include in your analysis, start with searches on Google, Amazon, and Alexa around your product and business idea. You want a mix of competitors that:
To put together a list of diverse competitors that will give you a good look at the competitive landscape that’s not too small and not too large, it’s a good idea to stick with a group of seven to 10 relevant competitors.
As you collect data on this group of competitors, keep it organized within a table or spreadsheet that can easily be shared and updated over time. Within this document, you’ll compare and contrast competitors based on different criteria such as:
Starting with your list of competitors, begin your spreadsheet by categorizing each one as a primary or secondary competitor. This will help you better determine how they’ll relate to your business.
Positioning is the most persuasive marketing tool for a business. Good positioning helps you connect with a target audience and keeps them around longer. It also determines your messaging, values, and overall business strategy.
This is exactly why understanding your competitors positioning is so important. You can learn how to separate yourself and build a favorable reputation in your customers’ eyes. Differentiation also helps increase brand awareness and justify your prices, which impacts your bottom line.
Analyze these key channels to determine positioning and messaging:
When identifying your competitors’ positioning, ask yourself the following questions:
Understand how competitors interact with their followers, customers, employees, partners, and shareholders. If you can pinpoint their communication framework, you’ll be able to position yourself differently and set yourself apart from competitors.
Once you understand your competitors’ messaging, take a look at their competitive advantage and offering. Most companies are founded on a competitive advantage or some criteria toward developing their competitive advantage.
For example, a fashion retailer’s competitive advantage may be high-quality, reasonably priced products and expedited shipping services. An online educator may have 20 years of experience teaching and working in their specific industry. Unique selling propositions like these are not easy to replicate and can drive brand name recognition for a business.
Take time to look at your competitors’ goods and services and compare them to your own. Read online reviews to see why customers choose their company. It could be that they offer similar products at a lower price or have a focus on sustainability. Either way, you’ll want to learn their competitive advantage and figure out how you can offer something better.
Marketing is the secret to the most successful ecommerce stores. A good offering is the cost of entry, but marketing takes you to the top. Unfortunately, most businesses fail to undertake a review of their competitors’ marketing. They assume that everyone is on Instagram, running Facebook ads, and optimizing their site for search.
And a lot of them are. But understanding how your competitors market their products takes a different perspective. You want to find out what offers they are promoting, how they are building and managing their contact lists, and how they are distributing content online.
Along with the research you’re doing through software and tools, it’s a good idea to get hands-on with your competitive research, too. Assume the role of a potential customer and check out what your competitors are doing in the marketing department.
You can do this by:
As you execute these activities, be sure to document your findings with notes on each tactic you see. By studying their approaches to cart abandonment and looking at how they deliver support via social media (and beyond), you can spot interesting approaches your competition is using to attract more customers and to drive sales.
Consider conducting a SWOT analysis to accompany the data you collect. It’s a competitive analysis framework that lists your company’s strengths, weaknesses, opportunities, and threats. It leans into your competitors’ strengths and compares them to your business to define areas of improvement.
Strengths and weaknesses focus on the present. They are elements you control and can change over time, including:
Opportunities and threats are outside your control. You can plan for changes but can’t influence these elements. They include:
Aim to run a SWOT analysis annually. It helps inform your break-even analysis and keeps tabs on the competitive landscape. You can anticipate problems and make continuous improvements to your business. Should you seek funding, you’ll want to include an updated SWOT analysis in your proposed business plan.
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Once you know which competitors you’ll be studying, it’s time to start diving into research and data collection for your competitive analysis. The good news is that today there are many different tools and software available that can make data collection for your competitive analysis simpler, more efficient, and more accurate.
Let’s look at a few different resources that can help you gather key insights into different aspects of your competition’s marketing approach.
Using these resources, start gathering data and dropping it into your competitive analysis spreadsheet so your findings are all stored in a single, organized space.
Now that you know how to put together a competitive assessment, let’s go over some of the main pitfalls to be aware of that can throw off the insights you’ve gathered.
Never revisiting your original insights (or never updating them, for that matter) can lead to faulty data and poor decisions. Businesses are constantly evolving, so it’s important to remember that keeping an eye on your competitors is an ongoing process—not something you do once and then never again.
As humans, we have a tendency to jump to conclusions around our assumptions. This is called confirmation bias. As you work through your competitive analysis, it’s important to be aware of your initial assumptions and to test them thoroughly rather than leaning on what you “think” is true about your competitors. Let the data inform your decisions rather than letting assumptions take the lead.
If you’re putting in the work to do a competitive analysis, be sure that you’re acting on the findings rather than letting them gather virtual dust on your computer, buried in an obscure file folder. Make a strategic plan around your findings and execute on the unique angles and marketing tactics that you’ve discovered during this process.
With so many great resources available that simplify the data collection process around competitive analysis today, putting together a top-notch, highly accurate comparison is easier than ever before. Don’t reinvent the wheel and do things the hard way: make the investment into tools that speed up the process and provide the important insights you need to make informed, data-backed decisions about your business.
If you’re directionless while putting together your competitive analysis and have no clear end objective, the work will be much, much harder. Before diving into research, define your goal and what you hope to learn about your competition.
When looking at competitor data, be sure to study how companies have grown and progressed over time rather than examining their approaches at a single fixed point. Sometimes information about how your competitors have evolved their tactics can be even more useful than knowing what they did in the early days (or what they’re doing right now).
Competitive intelligence is key to starting a business. By doing market competition analysis on an ongoing basis, you can always be 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 to small business that keeps your business or startup agile.