How to Conduct a Competitive Analysis (With Examples) 2024

Comprehensive Competitive Analysis for Marketers

A competitive analysis strategically assesses your current and potential competitors. It involves identifying who they are and analysing their business and marketing strategies to unravel their strengths and weaknesses. This process helps you to pinpoint market gaps, anticipate competitor moves, and build on your own strategies to stay ahead.

This analysis will examine factors like competitor pricing, product offerings, market positioning, and customer feedback. By analyzing these factors, you'll develop more effective marketing plans, improve your value proposition, and ultimately drive better business outcomes.

While competitive analysis is vital to any marketing strategy, it's important to note what it isn't. A competitive analysis does not involve:

Copying your competitors' strategies or products.
Badmouthing your competitors.
Becoming obsessed with your competition and neglecting your own business.

Although competitors can offer a blueprint for success, you should always stay true to your business's strengths and values.

Why is A Competitive Analysis Important?

Wondering if a competitive analysis is worth your time and effort? Here are some key reasons why it's crucial for marketers:

Discover Competitors' Strengths: Identify what makes them successful, be it quality products, excellent customer service, or well-structured and seamless sales funnel.
Understand Your Market: Learn what makes your potential customers tick, whether its price, or personalized service, and how your competitors are positioned in the market.
Set Benchmarks: See benchmarks that are realistic and achievable for your business based on your competitors' success.
Identify Opportunities: Spot gaps in the market where competitors fall short, and seize these opportunities.
Differentiate Yourself: Find ways to stand out, whether through superior customer service, unique products, or innovative marketing.

A competitive analysis removes the guesswork from your strategy, so you're taking action hoping for the best. Instead, you have data and insights to guide your decisions and increase your chances of success.

What is Competitive Market Research?

Competitive market research goes beyond just comparing your competitors' products or services. It's about understanding the entire landscape where your business operates, including market trends, customer preferences, and industry dynamics. This research provides actionable insights to boost your sales and marketing strategies.

Thanks to digital marketing and e-commerce, competitive research is now easier. Online tools, social media, and website analytics offer a treasure trove of information to guide your decisions.

What's Included in a Competitive Analysis?

Every analysis is different since we all operate in unique industries and have different business models ad goals. While an online personal training business focus on social media content curation and pricing, an established coffee shop might focus on location, menu offerings, and community partnerships.

With that said, here are some general areas to cover in your competitive analysis:

Company Overview

First examine your competitors' bare bones, including where they operate, who their target market is, and their overall business model.

Demographics: Who are their primary customers in terms of age, gender, location, etc.?
Industry/Niche: What industry or niche do they operate in?
Business Model: What is the structure of their business? Do they have physical locations, online presence, or both?

Products and Services

Next, you can compare how your offerings stack up next to theirs.

Products/Services: What are their main offerings?
Features: Do they provide any additional features or services that your business doesn't?
Unique Selling Points (USPs): What sets their offerings apart from others in the market?
Comparison: Are their offerings better or worse than yours in terms of quality, price, or value?

Example:

Analysis: Offers project management software with extensive features like task management, time tracking, and team collaboration. While they have more features, we provide a more user-friendly interface.

Plan of action: Focus on highlighting our easy-to-use interface and work on implementing new features to stay competitive.

Pricing Strategy

Check how your competitors price their products and unique pricing stratgies.

Pricing Model: Do they have a subscription-based model, usage-based pricing, or one-time payment?
Price Point: How much do they charge for their products/services?
Discounts/Deals: Do they offer any discounts or deals to attract customers? If so, what is it based on?
Payment terms: Do they provide favourable payment terms such as installment plans or credit options?

Example:

Analysis: Competitor offers a subscription-based model with three tiers: basic, standard, and premium, priced from $10 to $30 per month. They offer a 20% discount for annual subscriptions. In contrast, we offer a one-time payment model with lifetime access at $50, but with no additional discounts or deals.

Plan of action: We can leverage our one-time payment model as a unique selling point and also consider offering discounts or installment plans to attract customers who prefer a subscription model.

Positioning

How do they position themselves in the market? Are they heralded as the most premium or the most budget-friendly option? Are they targeting a specific niche or industry?

Brand Personality: Does their brand have a distinct personality? Is it playful or formal?
Messaging: What key messages are consistently conveyed through their marketing materials and social media posts?
Values: Do they promote specific values or beliefs, such as sustainability, social responsibility, or innovation?
Visual Identity: What does their branding look like? Do they have a recognisable color scheme like Coca-Cola's red and white or McDonald's golden arches?
Market Position: Are they seen as the most premium or budget-friendly option? Do they target a specific niche or industry?
Marketing Channels: Where do they advertise and promote their products/services?
Target Audience: Who are their marketing efforts and messaging aimed towards?

Example:

Analysis: Competitor positions itself as a premium option with modern, professional branding, primarily targeting startups and small businesses through social media. While we also offer premium services, we focus on established companies and corporations with traditional, trustworthy branding.

Plan of action: Adopting some of Company A's social media strategies could help us attract a broader, younger audience.

Customer Experience

Evaluate how your competitors treat their customers, and whether there are any areas where you can improve your own customer experience.

Customer Support: Do they offer multiple channels for customer support, such as email, phone, and chat?
Response Time: How quickly do they respond to customer inquiries or concerns?
User Feedback/Ratings: What are their customers saying about their products/services? Is the overall sentiment positive or negative?

Example:

Analysis: While competitor only offers email support, they're known for quick response time and excellent customer satisfaction ratings. In comparison, we offer multiple channels for customer support but can take days to respond, leading to lower satisfaction rates.

Plan of action: Implement a chat feature for faster response times and invest in training to improve our customer service skills.

Customer Journey

Study how your competitors structure their sales funnel, from initial contact to the final sale. Your goal is to gauge how efficient and effective their customer journey is compared to yours.

Start by being a customer yourself by checking their social media, visiting their website, and signing up for their email newsletters. Take note of the user experience at each step of the journey and compare it to your own.

On this journey, take note of the following:

Content: Were you drawn in by a specific piece of content or did you find their website through a search engine?
Touchpoints: How many touchpoints were there along the way? Were they consistent in terms of branding and messaging?
Ease of use: Was their website easy to navigate and make purchases on? Did you encounter any difficulties or frustrations?
Calls to Action: Were their CTAs placed strategically and did they effectively entice you to take action?
Friction Points: What elements create friction or make it difficult to advance to the next step?
Post-Purchase Experience: What do you experience after subscribing or purchasing? Do you find customer support, upsells, and access to a community?

Example:

Analysis: Competitor’s website was easy to navigate and had consistent branding, but their post-purchase experience was lacking. There were no upsell options or access to a community for support.

Plan of action: Implement a post-purchase follow-up email with upsell options and provide access to a community for customer support.

Customer Feedback

Finally, check out your comeptitors reviews, testimonials, and social media comments to see what customers really think about them. Customer feedback gives you a real sense of their strengths and weaknesses.

Reviews: What are customers saying in reviews?
Testimonials: Are there any standout testimonials?
Social Media: What’s the general sentiment on social media?

Example:

Company A: Gets a lot of praise for its user-friendly interface but also non-stop requests for more advanced features from users.

Plan of action: Send a mass email to current customers requesting feedback and suggestions for future features to improve user experience, and prioritize adding advanced features for users.

Marketing Channels

Find out how they're promoting their products and services, and how successful they are at it. This will give you an idea of the most effective marketing channels in your industry.

Marketing Channels: Which channels do they primarily use for promotion? i.e social media or more traditional methods like print ads or TV commercials?
Strategies: What tactics or strategies do they employ to attract customers i.e discounts, free trials, referral programs?

Example:

Analysis: Competitor uses social media ads and influencer partnerships to reach their target audience. They also offer a free trial and referral program to incentivize new users. Meanwhile, while we routinely post social media content, we're not using ads or partnerships to reach a wider audience.

Plan of action: Start investing more in social media advertising and explore potential influencer partnerships to reach a larger audience. Consider implementing a referral program for current customers to attract new users.

After researching all of the factors above, you'll have a more well-rounded understanding of your competitors' business strategies and be better equipped to develop a successful plan for your own company.

Steps On How to Perform a Competitor Analysis

Identify Who Your Competitors Are

Before you can analyze your competitors, you need to know who they are.

Start building a list of notable brands or businesses in your industry, including:

Direct competitors: Those who offer the same products or services as you, i.e. similar pricing, features, etc.
Indirect competitors: Those who offer different products or services but still compete for your target audience's attention and money. This could be Mcdonalds vs Subway or Spotify vs Netflix.
New entrants: Any new businesses that have recently entered the market and may potentially disrupt your industry.
Legacy competitors: Established brands with a loyal customer base in the market for a long time.

Example:

To illustrate this step better, we'll use Spotify as an example.

Direct competitors: Apple Music, Amazon Music, Tidal, Deezer

Indirect competitors: YouTube Music, SoundCloud, Pandora

Legacy competitors: iTunes, Napster

Disruptor competitors: Audius, Bandcamp

This breakdown will help you see how Spotify compares to various competitors in the music streaming industry.

Analyze and Benchmark Your Competitors

Next, it's time to analyse how your competitors have positioned themselves in the market place. This is where you gather information about things like financial performance, customer satisfaction, and overall brand perception.

Here are the core factors to consider when benchmarking competitors:

Quality: Look at the quality of your competitors' products or services. Are they known for high-quality offerings, or do they have a reputation for cutting corners?
Pricing: Check out their pricing strategy. Are they more expensive, cheaper, or similar? Perhaps they offer flexible payment plans that help negate a higher price point.
Customer Service: Look at how efficiently they handle customer inquiries and complaints through available phone, online chat, or email channels. Also consider any unique features they offer, like 24/7 customer support or a dedicated account manager.
Market Share: Evaluate your competitors' current share of the market. This will give you an idea of their reach and potential impact on your business.
Customer Satisfaction: Look at reviews and ratings from current or past customers to gauge their satisfaction with the brand. Pay attention to common themes in the feedback, both positive and negative.
Brand Reputation: Research any recent news or controversies surrounding your competitors. This can also give you insight on what not to do in terms of brand management and public relations.

Use this information to improve or refine your own products or services, pricing, and overall customer experience. Additionally, benchmarking can also help you identify any gaps or weaknesses in your own brand that you may need to address.

Evaluate Your Competitor's Marketing Strategies

Here are some aspects to consider when evaluating your competitors' marketing strategies:

Marketing Channels: Which traditional and digital channels do they use to promote their services? Which of these channels do they seem to prioritize and invest more resources in?
Promotional Tactics: What tactics do they employ to attract and retain customers (e.g., discounts, loyalty programs, influencer partnerships, free trials)?
Content Strategy: What content do they produce, and how often (e.g., blogs, videos, podcasts)?
Social Media Engagement: How active are they on social media, and what is the level of engagement (e.g., likes, comments, shares)?
Advertising Spend: If possible, estimate their advertising budget and where they are investing it (e.g., Google Ads, social media ads, TV commercials).
Public Relations: Do they engage in PR activities, and how effective are they (e.g., media coverage, press releases, partnerships)?

Study each aspect of their marketing strategies thoroughly and compare them to your own. This will help you identify any missing or underutilised opportunities in your brand's marketing efforts.

Conduct a SWOT Analysis Of Your Competitors

After thoroughly analyzing your competitors, structure your observations into a SWOT analysis. This will give you a clear overview of their Strengths, Weaknesses, Opportunities, and Threats relative to your business.

When creating a SWOT analysis, ask your self the following:

Strengths: What are your competitors doing better than you? Is it the more unique product features, more aggressive social media presence, or better customer service?
Weaknesses: What areas of their business seem to be lacking? Are there any negative reviews or recurring complaints from customers?
Opportunities: Are there any gaps in their marketing strategies that you can capitalize on? Are there potential partnerships or collaborations that could benefit your brand?
Threats: What external factors could potentially harm their business? This includes market shifts, emerging competitors, or changes in consumer behavior.

Use this analysis to inform your own marketing strategies and make necessary adjustments to stay ahead of your competition. Remember to regularly revisit and update your SWOT analysis as the competitive landscape is constantly evolving.

SWOT Analysis Example:

Here’s a SWOT analysis matrix I created for Spotify as a competitor in the music streaming industry:

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Strengths

Weaknesses

Large music library with over 70 million tracks

Free version has frequent ads

Strong brand recognition and market presence

Limited social sharing features

Personalised playlists and recommendations

Higher subscription cost compared to some competitors

Cross-platform availability

Limited offline listening features in free tier

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Opportunities

Threats

Expansion into podcasting and audiobooks

Intense competition from other streaming services

Partnerships with artists and record labels

Potential regulatory changes in music licensing

Growing demand for high-quality audio streaming

New entrants with innovative features

Increasing global internet penetration

Dependence on major record labels for content

By incorporating these insights into your strategy, you can strengthen your competitive position and stay ahead in the market.

How Competitive Analyses Can Help Small Businesses

Small businesses often fail due to poor strategic decision-making, with statistics showing that about 20% fail within their first year. Additionally, 82% of small businesses fail due to cash flow problems, and 47% fail due to other factors.

A competitive analysis can help mitigate these risks. By thoroughly understanding your competition and the market, you can use your limited resources more efficiently and effectively.

Let's compare two hypothetical small businesses in the same industry: a pet supply store that uses competitive analysis effectively and a grooming salon that doesn't.

Pet Supply Store

Market Insight: Discovers that local retailers are experiencing supply chain issues, causing them to have low stock and high prices.
Strategic Action: Uses this information to negotiate better terms with their suppliers and offers competitive pricing, attracting more customers.
Result: The pet supply store gains a competitive advantage and maintains steady sales and profits.

Grooming Salon

Market Insight: Ignores competitors and market trends.
Strategic Action: Continues with traditional marketing and services without adjustments.
Result: Misses opportunities to target niche markets or improve services, leading to stagnant growth and a higher risk of failure.

While both businesses are taking action, the pet supply store's use of competitive analysis allows them to make better, more informed decisions and ultimately gain a competitive advantage.

How MagicBrief Enhances The Competitive Analysis Process

Ever wondered how your competitors' top-performing ads on Facebook, Instagram, and TikTok manage to captivate audiences? Look no further than MagicBrief, your essential tool for thorough competitive analysis.

Key Features for Competitive Analysis:

MagicBrief connects directly to your ad account, providing real-time insights that allow you to understand how your competitors' ads are performing across key metrics. The AI-powered analysis not only transcribes and tags the ads but also estimates their performance, letting you pinpoint competitor strategies that can also work for you.

Comprehensive Ad Library: Access the world’s largest ad library and scrutinise the best ads from your competitors.

Actionable Insights: Get real-time visual breakdowns of your competitors' ad performance metrics.
AI-Powered Analysis: Automatically transcribe, tag, and estimate the performance of competitor ads with MagicBrief’s advanced AI.
Collaborative Brief Creation: Create detailed briefs with embedded references and storyboards that you can easily share with your team.
Track Competitors: Follow and monitor key competitor brands and their ad strategies.
Curated Ad Packs: Browse through expertly curated ad packs to understand industry trends and uncover winning strategies.
Easy Sharing: Seamlessly collaborate and share insights with your team members.

Try MagicBrief for free today and transform your competitive analysis process. Stay ahead of the competition with the insights and tools you need to succeed.

Competitor Analysis FAQ

What is a Competitor Analysis?

Competitor analysis is a process of evaluating your competitors' strengths and weaknesses to your own business. This involves studying their products, pricing strategies, marketing efforts, target audience, and brand image. These insights help businesses make informed decisions about their strategies and identify improvement areas.

Why Do a Competitor Analysis?

A competitor analysis reveals why your competitors are successful. It also unravels their weaknesses, such as poor customer service or outdated products, which you can use to your advantage.

Conducting a competitor analysis will also give you more perspective on how customers view and engage with your competitors, helping you understand how to position your brand in the market.

When Should You Do a Competitor Analysis?

A competitor analysis should be performed before the launch of a new business or product and twice a year to stay updated on changing market trends. Conducting a competitor analysis when your business experiences a significant change, such as a merger or acquisition is also important.

How Do You Do Competition Analysis?

To conduct a competitor analysis, do the following:

Identify all indirect and direct competitors in your industry.
Gather information on their products, services, pricing strategies, and marketing efforts.
With this information, identify their strengths and weaknesses.
Analyze the data and build on their strengths to improve your own business strategies.
Use the insights gained to identify missed opportunities and areas for improvement.
Keep an eye on their future plans and product releases to stay ahead.

Is Competitor Analysis the Same As SWOT analysis?

A SWOT analysis examines your business's strengths, weaknesses, opportunities, and threats. While it may include some competitor insights, its primary focus is on analyzing your own business rather than comparing it to others in the market.

On the other hand, competitor analysis takes a broader view by directly comparing your business to others in the market. It identifies competitors' strengths and weaknesses and uses that information to improve your own strategies. Overall, its a more comprehensive analysis that helps you stay competitive and relevant in the market.

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