How to Conduct a Competitive Analysis

Now, we wouldn’t normally encourage you to take business advice from The Godfather, but there’s something to this classic line, especially in the age of digital marketing.



You can learn a lot from your friends, but even more from your enem… — err, competitors. When you examine what your competitors do and how they do it, you learn what your target market wants and needs. In digital marketing, we call this a competitive analysis. We’re here to tell you why it’s so important, how to conduct one, and what to do with the results.

What Is a Competitive Analysis?

A competitive analysis is a data-centric review of your competitors and their offerings. It examines their products or services, marketing strategies, and sales patterns — everything that matters when customers are deciding what to buy. Businesses use competitive analyses at all phases of their lifecycle, from the initial concept development to advanced stages of growth.

Why Are Competitive Analyses Important?

Conducting a competitive analysis is the best way to understand your market. It gives you an objective view of the other products and services that might serve your potential customers.

Learn What Sets You Apart

A competitive analysis reveals what you do that your competitors don't, and vice versa. That knowledge can be a game-changer for your marketing strategy. It may even guide your overall business development, particularly if your company is in its early stages.

Identify Competitors' Strengths and Weaknesses

The competitive landscape is full of tips and tricks for running your business. Your top competitors must be doing something right, and this is your opportunity to learn their secrets. 

Look at where they’re surpassing you. What aspects of their business model are missing from yours? Those insights can inspire you to develop your strategy further.

Weaknesses are also educational and more than just cautionary tales. Remember, anything your competitor isn't doing is a potential customer pain point. Offer what their customers have been asking for, and they'll switch to you faster than your competitor can say "churn rate."

Envision Your Journey

A competitive analysis shows you the journeys other businesses have taken and the milestones that have defined their success. It can also tell you if you're headed in the right direction.

You can even use other businesses' success markers to evaluate your own progress. For example, after how many years did Competitor A open up its second location? When did Competitor B reach a certain revenue level?

Answering these questions can give you a broad view of your progress. Be careful not to compare too directly, though — every business follows its own path.

How to Conduct a Competitive Analysis

An effective analysis is strategic and structured. Go in with a plan and goals, and you'll likely come away with valuable insights. 

Identify Your Competitors

First things first — you need to choose which businesses to analyze. Evaluating every competitor will require time and effort, so you'll want to focus on your most direct competition.

Direct competitors offer similar products and services to your target audience. If you're a brick-and-mortar business, your direct competitors also serve the same geographic area.

In some cases, you might need to analyze an indirect competitor. Indirect competitors offer different products and services but serve similar needs.

For example, suppose you own a dog-walking company, and the local doggy daycare just expanded to a larger location. By exploring what it offers and how it does so, you'll learn more about what local dog owners need.

When in doubt, ask yourself, "Does this business actively compete for my audience's attention?" 

Create Competitor Profiles

Next, you'll need a brief overview of each competitor. Aim to include as many of the following details as possible:

• Annual revenue
• Market share
• Key leaders and employee count
• Primary selling point
• Target customer personas
• Industry reputation
• Claim to fame

Some of this information will be available on your competitors' websites and social media pages. To obtain the nitty-gritty financial details, dive into market research databases such as IBISWorld or Gale Business Insights.

Organize the information you gather into a spreadsheet or database so you can easily find it later.

Analyze Competitors' Product, Pricing, Place, and Promotional Strategies

Once you've gathered the basic information, you can analyze your competitors in detail. Structure your investigation using the "four p's" of marketing:

• Product: what the competitor sells and how that product or service meets a customer's need
• Price: the cost for customers and how it compares to their other options
• Place: major customer touchpoints, including where customers buy from
• Promotion: the channels and strategies the business uses to market itself

Note the similarities and differences in your approaches, especially when you're analyzing a competitor with a higher market share. What can you learn from that company's strategy?

Evaluate Competitors' Marketing Strategies

The next step is to dig deeper into each competitor's customer outreach efforts. Visit the company's website and evaluate its marketing tactics, including whether it uses any of the following:

• FAQs
• Press releases
• Blog posts
• White papers
• E-books
• Videos or webinars
• Podcasts
• Featured customer reviews
• Image-based content, from infographics to memes

Then, go investigate the business's paid advertising strategy. Learn about its pay-per-click (PPC) advertising strategy using a competitor analysis tool such as SpyFu or Google Ads Auction Insights. Look for other online and offline advertising strategies as well. Are there areas where the top players have a presence but the hang-backs don't?

Complete a SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats:

• Strengths: What does the business do better than others?
• Weaknesses: What's holding the business back from achieving its goals?
• Opportunities: Where can the business develop and grow by gaining a competitive advantage or filling an unmet need?
• Threats: What could put its position at risk?

You'll want to create a SWOT summary for your own business and each competitor you analyze. Review them side by side to see where each company excels and where each falls short. 

Follow Up on the Results

A competitive analysis is only as valuable as its results. Document any changes you make due to the analysis and note the effects of those changes. Use that data to adjust your future strategy and do more of what works.

Create an Informed Marketing Campaign With Optimize

A competitive analysis can power your marketing strategy. At Optimize, we work with businesses to ensure their strategies are the best they can be. We'll help you take your competitive knowledge to the next level with an informed approach that targets your needs, customers, and industry.

To learn more about how Optimize can help you develop a meaningful marketing strategy, schedule a free consultation today.