How To Conduct a Competitive Analysis

How to do a competitor market analysis

There are no hard and fast rules on how you should conduct a competitive analysis – some companies with the cashflow will have loads of resources to hand and fancy competitor analysis tools, while others may have to budget a little more. This step-by-step process works for most SMEs and you can adapt it to your situation.

Identify your competitors

Do you know who they are? Chances are you have a good idea who the big players are in your industry, but do you know all about their businesses or is your knowledge limited to the occasional glance at their social media? If you don’t know exactly what they’re doing, you could be missing out on some big opportunities. Still, it can feel a bit daunting trying to identify them all – where do you start and where does it end?

You’re never going to be everything to everyone and that’s fine, you don’t want or need to be. So, start by identifying four to six businesses that are your direct competitors both in terms of products or services they offer, their size and their geographic location if that’s relevant.

More competitors will create more meaningful results, but you don’t want to spend your entire life researching other people’s businesses so keep it relevant to your own business. It’s also a great idea to have a mix of SMEs, micropreneurs and corporations so you get a broad range of businesses.

Top tip: If you have time, you can look at indirect competitors. These are businesses in a similar sphere but not exactly the same as you. For example, a specialist cake maker vs a high street bakery – you may well glean valuable information around tactics or products/services you’d not thought of that could apply to your business.

Company profile

• Write a short description about each one, what they offer, what their main selling points are, and anything that makes them stand out.

• If you can, find out when they were established and how much they turn over. About pages on websites are great for the first part, Companies House can help you find some information for the second although this depends on the business size and what’s publicly available.

• What is their management structure? Again, this isn’t always obvious, but company websites, LinkedIn and social media can often provide a wealth of information.

• What is their business structure – sole trader, limited company, partnership?

• How many physical locations do they have and where are they?

• Do they have an online presence too? Is it just for showcasing what they do or do they sell through an online store?

• How many employees do they have, where are they?

• What is their hiring pattern and what do ex-employees have to say about them?

• What do online review sites say about their customer service?

• Do they have any noteworthy assets, e.g. intellectual property?

Products, services, pricing and perks

Once you’ve a fair idea of what the company is about you can start to delve into the details of what they offer.

• Are there specific or noteworthy features about the products or services?

• What’s their pricing strategy
  and range?

• High quality?

• Any warranties offered?

• Style and design?

• Is it easy to use? Does it do what it should?

• What’s their process? Do they do most of it in-house or do they outsource their work or buy in?

• Are they based on volume sales or one-off purchases?

• Is what they offer low or high value?

• How do they distribute their products and services?

• What is their market share?

• What are the main features and needs of their ideal customer? What pain points do they satisfy?

• Are there any bonuses with purchases? Discounts, complementary products or loyalty schemes in place?

Again, a lot of this detail will be available publicly on their website, certainly things like pricing and discounts should be obvious. Finding out their processes is a little harder, but companies are more transparent now in a bid to be more sustainable and ethical, and often actively post behind-scenes-footage on their social media and blogs.

Determine your competitors’ market positioning

Your market positioning is all about defining how you differentiate what you offer from others in the same industry. But it’s also about knowing what your competitors’ positioning is so you can stand out and be known for something that they’re not.

When looking at their positioning you should ask yourself these questions:

• What size are they? Are they going for broad appeal, or do they have a very niche clientele?

• Is their positioning based on operational excellence? Do they do everything quickly and efficiently which translates well into customer service in a crowded market?

• Do they set themselves apart with product leadership? Is what they sell perceived to be the best product on the market, the highest quality, the cheapest, and the most effective?

• Do they have great customer perception? Some companies have consistently excellent customer service and a slew of positive reviews which translates into a positive reputation and brand image.

• Are they operating in a niche market? They may have chosen a particular niche within their sector where there’s less competition, so they become the go-to for that specific product or service.

Profile your competition’s target customers

Delve deep into who they serve – are they the same customers you’re targeting or are you aiming for slightly different clients?

• Who are they and where are they based?

• What does their ideal customer look like? Is it the same or similar to you?

• Do they have a presence on customer review sites? If so, what is the feedback?

• What does social media say about them?

Social media can provide valuable insights into what customers really think about the businesses they buy from. It should help you judge the level of enthusiasm and brand loyalty.

Research your competitors’ sales tactics and results

It can be hard performing a sales analysis as this isn’t information your competitors will make available for obvious reasons!

Considering these questions can help to formulate a picture:

• What channels do they sell through? In-store, online, social media, mobile?

• What does the sales process look like?

• Do they operate out of multiple locations and if so, how does this help?

• Do they partner with any other businesses?

• Do they run regular promotions or discounts?

• What kind of revenues are they turning over?

• Why do customers part ways with them? Again, social media and reviews can help with this.

You may have to do some serious digging to find out the information you require. Companies House can be a great source of information for larger or publicly held companies. Review sites such as Trustpilot or Google Reviews can also be veritable goldmines.

Failing that, you might have to go through their sales process yourself to gain an insight into how it looks. Playing at being the customer for a while can offer valuable information. Don’t forget to leverage your own customer base, particularly customers who decided to use your competitors instead. Direct interviews can be a great way of finding out what made them stop using you and where you need to improve.

Examine your competitors’ marketing and sales strategy

Here you’ll look at how they promote their business to their customers. You should consider:

• Advertising – Are they in print media, magazines and newspapers? Or are they on the radio or TV? Do they hand out flyers or put up posters?

• Social media – Is their marketing purely organic or do they run Instagram, Facebook and TikTok ads? How often do they post, what kind of things do they post and what is customer engagement like? Do they use sites like Pinterest,
  Snapchat and LinkedIn too?

• Events – Do they run any? If so, what are they, how often and where? Do they attend trade shows, local events, markets and so on?

• SEO – Do they have a strong SEO presence in organic searches or do they appear to use PPC advertising to rank, or a mixture of both? What search terms do they rank well for compared to your business?

• Content strategy – As well as social media, do they have a newsletter or blog they update regularly? Have they got a YouTube channel? Do they create whitepapers? Do they have eBooks, pdfs, case studies, slide decks, FAQs or webinars to drive traffic to them as well?

• Press interaction – Do they have a media kit? Are there featured articles? Do they appear on other news sites regularly?

You can learn more about email marketing here

Analyse strengths and weaknesses of both you and your competitors

Once you’ve gathered all your data in your competitive analysis you need to use it to discover what you and your competitors do well and areas where you’re lacking. There are competitor analysis tools that will help you with this but fundamentally it comes down to human judgement.

You can start to identify the areas they do well in and the ones they don’t and compare your own situation. As a hands-on business owner you no doubt have an idea of the parts that work well and areas you could improve but by comparing your business to others you might come up with some surprises which could give you an idea for a new business opportunity, a new customer segment to market to or a different way of marketing your existing products or services to make the marketing more effective.

A SWOT analysis can be useful at this stage where you create a table laying out strengths, weaknesses, threats and opportunities. You can find out more about SWOT analysis here

Find out the specific technology stack utilised by your competitors

It might be obvious what software a competitor is using online if the branding is on their website. If not, there are various ways you can find out how it’s built.

Builtwith.com will tell you what platform they use. You can also look at the source code in Google Chrome or Firefox through their developer tools, but you do need some tech knowledge to do this and understand it.

Signing up for their newsletter can give you an insight into what email software they’re using, while actually visiting the store and making a purchase will hopefully tell you what payment hardware they rely on.

Evaluate your competitors’ online presence

To some degree, you may already have done this when looking at their social media but it’s also a good idea to look at their website for functionality and user experience.

• Is it easy to use?

• Is it purely an informational website or are they running an online store?

• Is the design pleasing to the eye?

• Does the website showcase the brand well?

• Are there any features you like or dislike?

• Aside from a website, what does the rest of their digital footprint look like? Are they on Google Business? Can they be found in online directories? Do they have an Amazon or eBay store too?

If you haven’t got an online store yet, it’s easy to build a free e-commerce website and be ready to start selling in minutes. Similarly, you can level up your social media for business with a few easy tweaks.

Identify potential opportunities for growth and development by examining gaps in your competitors’ offerings

Your data analysis should have identified areas where your competitors are missing out. It’s time to revisit them and see if you can turn them into areas to grow your own business.

Is there a new market you could target, or could you target an existing market more effectively? Could you diversify and launch a new product to solve your existing customers’ problems? Could you segment the market even further and niche down to target a specific audience? Are there opportunities to become the go-to business for that particular product or service in your industry?

Develop business strategies to address any weaknesses or threats posed by your competitors

Consider how you can mitigate or reduce the threats you’ve identified and how you can exploit the weaknesses to your own advantage.

• Improved customer service

• Reassessing your price point

• More vigorous marketing efforts informed by your awareness of competitor campaigns and which areas/customers/revenue streams are most worth targeting

• Releasing a new or updated product that improves upon that offered by your competitors

• Use their SEO template to reinforce yours

• Improve your social media strategy and plan content to really resonate with your customers

Regularly monitor and update your competitive analysis to stay current on industry trends and changes in the market

Trends in business can shift rapidly so you should aim to update your competitive analysis quarterly. If you’re in a particularly fast-paced, competitive market, upping it to monthly might be a safer option but for most SMEs every three months is more than enough.

Competitor analysis example

If you’re not sure what competitive intelligence looks like when laid out, then try this table on for size:

Features	Own Business	Competitor 1	Competitor 2	Competitor 3	Competitor 4	Competitor 5
Company profile
Products / services
Quality
Price
USP
Target market
Market share
Distribution channels
Customer service
Customer feedback
Locations
Marketing strategies
SEO
Strengths
Weaknesses
Opportunities
Threats
Trends

Apart from the last five in the table, you can rank the features on a scale of 1-10 to give an arbitrary view of where you sit amongst them. Next, dig into the details to gain a much deeper insight into where you excel and where you could improve.