In business, knowing who your competitors are, what they sell, and how they do it, can give you a competitive advantage.
It enables you to design better products, improve your services, implement targeted marketing strategies, engage your audience, and own your niche. You find that advantage by doing a competitor analysis.
In this post, we’ll cover what a competitor analysis is, why it’s important, and a step-by-step guide on how to do it. Let’s get started!
A competitor analysis (also referred to as a competitive analysis) is the process of identifying competitors in your industry and researching their different marketing strategies.
Doing so allows you to discover the strengths and weaknesses of your direct and indirect competitors. A competitor analysis also enables you to capitalize on areas where your competitors are not strong.
The information your competitor analysis provides can also help you stay on top of industry trends, produce and deliver products/services that exceed your competitor’s standards, and identify opportunities the moment they appear.
Let’s look at an example of a company that utilized competitor analysis techniques to their benefit.
Jason Katzenback and Matt Clark burst onto the e-commerce scene in 2012 after Clark created a strategy to crack the Amazon selling code wide open. The strategy, called the Amazing Selling Machine, had many parts, one being competitor analysis. Matt found that analyzing existing sellers’ product listings and looking for their positive and negative attributes gave new sellers a considerable advantage.
Entrepreneurs using Clark’s strategy only had to read their competitor’s negative product reviews and customer comments, keep the good bits, fix the bad, and bring an improved product to the market.
The results were extraordinary. Clark’s strategy revolutionized e-commerce as it played a massive part in driving sales and making Amazon what it is today.
10 years later, both Katzenback and Clark own multiple 8-figure businesses. Amazon’s Jeff Bezos has gone from books to spaceships, and thousands of entrepreneurs around the globe got rich.
And they all did it using competitor analysis.
While it might sound obvious, the first step in researching your competition is identifying who they are.
There are 3 types of competitors you need to identify: Direct, indirect, and substitute competitors.
Direct competitors target the same customers you do, provide a similar product or service, solve the same problems you’re trying to solve, and operate in your geographical area.
A brick-and-mortar example of this is Burger King vs McDonald’s; in the world of e-commerce, streaming giants Amazon Prime and Netflix.
Direct competition means you must continuously update and improve your product or service to match the quality and price of your competitors; otherwise, you could find yourself left behind.
Your indirect competitors either sell a similar service/product to a different audience, or have a similar audience but sell a different service/product.
For example, supermarkets are often indirect competitors of garden centers come springtime. While gardening supplies isn’t a supermarket’s core business, they can undercut local garden centers by selling cheap products to their existing audience because of their size.
Indirect competitors can hurt your business by selling similar products or services at certain times of the year. And as they’re not direct, they’re not always obvious!
But you can use them to your advantage and get inspiration for crossover ideas and opportunities that your direct competitors may not have noticed.
Substitute competitors are brands that provide different services or products to the same target audience to solve the same problem.
For example, Pepsi could be a substitute for Coca-Cola.
Businesses often hop on the substitute bandwagon when a brand brings an original product or service to a marketplace and there’s high consumer demand.
These substitutes provide choices to consumers, creating competition and driving the price down (or sometimes up!).
Some more substitute competitor examples include Samsung vs iPhone, Domino’s vs Pizza Hut, Xbox vs PlayStation.
A high number of substitute products/services can create rivalry and make an industry less attractive by decreasing profit potential and increasing marketing and promotional costs.
Now that you know why competitor analysis is important and the different competitors you’ll need to review, the next step is learning how to identify and analyze them. There are 4 areas to focus on:
Follow these 6 steps to run an effective competitive analysis:
You don’t need to be Columbo (if you’re under 40 and not in the know, he was a detective) to identify your competitors! Sometimes in life, it’s the simple things that work best, like a quick Google search.
Type your primary and secondary keywords into Google and note which brands are on the first page and what they offer. Primary keywords are those that closely describe your product or service. Secondary keywords are those that contain more detail and relate more to the searcher’s intent.
Google Trends will show you how frequently people use a search term within a specific time in a particular location.
For example, suppose you’re opening a pizzeria and need to know who your main competitors are. Google Trends can show you which businesses people search for most when ordering pizza in your area.
Bonus: You can also use Google Trends to find keywords to use in your SEO strategy and marketing campaigns.
You can search for local businesses nearby using relative keywords, such as “pizzerias near me.” Google will provide a list of competing brands in your area, as well as reviews and rankings.
Successful brands that are active on social media with large followings are often your main competitors. By studying their campaigns you could gain ideas for your own social media strategy.
You can see which platforms they’re on by looking at their websites (during your Google search). Or with a tool like Social Mention that scours through 100+ social media sites looking for mentions of your competitors.
Your local business directory contains crucial information about your competitors, such as their contact options, opening hours, website, store images, and branding. Local business directories can refer to sites like Yelp for restaurants, Google My Business for helping your address to show up on Google when people search for businesses like yours, etc.
Basically, consumers use local business directories to find local businesses. If you’re a brick-and-mortar store, that’s where you’ll find your competitors.
Understanding your competitors’ marketing strategies can help identify which channels they’re using to connect with your target audience and identify marketing opportunities that they’re not yet using.
Search Engine Optimization (AKA, SEO) is how you get visitors to your website.
When you produce content and use keywords people use when searching for your product/service, you’ll rank higher in search engines like Google bringing more people to your site.
You research your competitors SEO strengths using a competitive analysis that examines their content, keywords, links, and social media presence.
You can then use your content SEO strategy results to improve your rankings and attract more customers.
How to check your competitor’s SEO strategy:
Although it might sound complicated at first, competitive SEO analysis helps determine which brands you’re competing with for space on Google.
Brands use social media to promote their products/services and connect with their target audience. That’s good news for you because when you find their go-to platforms you can see what they’re selling and how they do it.
Your direct competitors should have their social media information on their websites. If not, a quick keyword search on the most popular social media platforms will show you who’s most active.
Once found, review their content, the visual mediums they use (are they posting videos and images of their products?), their style, and regularity.
Look at their engagement rates — do they have large numbers of likes and shares? What are people sharing and can you use that info to improve your brand offering?
You can use the following social media competitor analysis tools to help you find what you need:
Knowing your competitors’ YouTube presence provides you with many advantages, for example:
When reviewing your competitors, look for which products they’re marketing, the metrics of their latest videos, the most viewed videos, and the frequency of publications.
Any brands paying for ads on search engines are your competitors—they compete with your content and for your audience’s attention.
Find them by searching sponsored listings on Google using various keywords relevant to your niche.
Or use paid software tools like Product Hunt and SpyFu that show your competitor’s marketing campaigns.
You can use this information to see which competitor’s ad campaigns were most successful, which keywords were most profitable, and what ad copy had the best results.
Major brands have always been taking products and services from other businesses; it’s how they compete.
Your niche is no different. You have to review your competitor’s products and service offerings to understand why they’re successful and how you can improve upon them.
If you deal with high-ticket items or expensive services, this one might not be an option. But if affordable, buying your competitor’s product and using it for its intended purpose over an extended period is how you’ll learn to beat it.
As C.S. Lewis once said, “Come live with me, and you’ll know me.”
Approach your research as a consumer, let the experience develop organically, and use the product as much as possible. Strip the product down to its working parts to see how it ticks and compare it with your own.
Note all the positives and negatives, then design a better product.
You can assess your competitor’s online reputation by looking at what people say about them on review sites like Google My Business, Amazon, Facebook, and Trip Advisor.
Also, read your competitor’s social media reviews, any comments on their blogs, and industry websites where people talk about their experiences with brands.
The top 3 customer review sites in 2020:
Learning what people have to say about your competitors — both positive and negative — helps you identify where you can improve and provide a better product or service.
And don’t forget to check out Yelp to see what your target audience is saying about your competitors.
Whether you’re testing out a competitor’s product or researching their website, you have to focus on specific areas.
Make sure to check out the following to get a complete picture:
Features: Your top competitor’s products or services have features that appeal to their target audience. Review these to learn what elements you should add to yours.
Pricing: Online shoppers consider pricing one of the most important criteria when making purchasing decisions. You must review your competitor’s pricing strategy to ensure you don’t overprice (or underprice) yourself out of the market.
Ease of use: Product and service ease-of-use helps increase client satisfaction and reduce the need for customer support. Look at your competitor’s reviews to see where they get it right and wrong.
Guarantees: Your competitors use guarantees to help reduce perceived purchase risk, increase sales, and promote positive word-of-mouth marketing. Are you offering that same level of assurance to your customers?
Limitations: Your competitor’s limitations enable you to create unique products and services that show your target market your brand is superior. Look for areas where your competitors fail and capitalize on them.
A content competitor is any business or person who produces similar content as you in order to engage and connect with the same target audience.
Understanding your competitor’s content strategy shows you which topics they’re talking about and measures their audience engagement. It also allows you to find content gaps you can use that your competitors are not.
4 ways to find and understand your competitor’s content strategy:
Brands use blogs to connect with audiences by providing helpful information, but it’s not all one-way traffic. Blogs are great for making readers take action, like visiting a website or signing up for an email marketing list.
You can use your competitor’s blog to measure their success and find topics and keywords to gain additional ideas for your content marketing strategy.
What to look for:
Social media is powerful for connecting with current and potential customers and encouraging users to promote your brand.
The odds are that your chief competitors have active social media content strategies in place. You should monitor them to see how yours compares.
What to look for:
Your social media content research can also provide insights into your ideal audience as they’ll overlap with your competitors, providing invaluable information about your target audience’s likes and dislikes.
Once you identify your competitors, it’s time to analyze their video content marketing strategy.
It’s essential you do this step because 86% of brands say they’ll use video marketing in 2022, which is up from 61% in 2016. Plus, 92% of those who use video say it’s crucial to their marketing strategy.
Businesses use several platforms to engage through videos, including YouTube, TikTok, Sprout Video, Vimeo, Dtube, and Twitch.
You can use tools like the free MWP Video Marketing Comparison Tool to research your top 10 competitors’ analytics to find out how they do it.
What to look for:
Educational content includes online courses and e-books. Both are popular ways to provide valuable information and gain consumer contact information.
Brands use educational content to build trust with users and drive leads to their websites, converting them into paying customers.
See if your competitors use educational content as part of their marketing strategy. You may have found another way to increase your customer base if they do.
Customer experience extends to every touch-point a customer has with your brand, products and/or services.
When you find gaps in your competitor’s customer experience package, it can provide you with opportunities to make yours better.
The first place to look is their website:
Open the top 10 websites in your niche and look at what products or services they offer compared to your brand.
Next, make notes of the following design elements:
Analyze your competitor’s websites through a customer’s eyes and record your first impressions. Then answer the following questions:
These design elements provide insights into your competitor’s strengths and weaknesses, and how successfully the business brands itself compared to you.
A great customer service experience makes life easier for the customer. Successful businesses provide excellent communication channels to ensure their customers remain happy at all times.
Visit all your competitors’ marketing platforms and see if they’re making their customers happy!
What to look for:
Look for competitors that score high with customer service, then ensure you provide an equal, if not better, experience.
After you’ve finished your analysis, you’ll have a ton of data. Identify quick wins and highlight any points you can address straight away to gain an advantage. Then identify areas that you’ll need time to work on to reach the level of (or surpass) your competitors.
Time to Start Analyzing
There’s a lot to consider when doing competitive analysis for the first time. Approach it slowly, one step and one competitor at a time.
Make an Excel spreadsheet to record all your findings. Use as many software competitive analysis tools you can afford (tip: Many provide free trials which is a great place to start!).
And when you’ve completed your first competitor analysis, use your results as a benchmark for the next and the one after that. The more you analyze your competitors, the better you’ll be able to position your business in the marketplace.
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.