How to Run a Competitive Analysis to Best Understand Your Market

So your boss has come to you and said you need to do a competitive analysis. Maybe you’ve never done one before, or maybe it’s been a while and you need to brush up on your skills before you conduct another one. Either way, we’ve got your back.

By the end of this post, you’re going to…

• Learn what a competitive analysis is (and why you should care)
• Easily be able to conduct your own competitive analysis (because I’m breaking it down into three easy steps)
• Get an example of what one looks like (for easy reference later)
• AND be able to download your very own competitor analysis template down below.

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Let’s get to it.

What Is A Competitive Analysis?

If you’ve never done a competitive analysis before, this is a good place to start.

Every business that I know of has competitors.

(This isn’t just for the Nike’s of the world, because the smaller you are, the more vulnerable you are to the competition.)

Understanding the strengths and weaknesses of your competition is important to the success of your business. Besides better understanding the environment your business operates in, conducting regular competitive analyses also helps you:

• Understand how you can improve your own promotional tactics…
• Forecast the future of the market (especially related to the economic climate)…
• Better target current customers…

AND helps you read new audiences.

Said another way – conducting a competitor analysis is crucial to how you decide to operate your entire business.

Competitive Analysis Definition

According to Entrepreneur, the competitive analysis definition is this:

“Identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product or service.”

Competitor analyses are more complex than just figuring out what your competitors are (or are not doing). They’re about taking what you learn and improving your own business. After all, data that doesn’t drive change is just a number.

So without further ado…

Let’s jump into how to do a competitor analysis!

How To Do A Competitive Analysis

Performing a competitive analysis might seem like just another task on your ever-increasing to-do list. And, while it might seem daunting at first, they’re not that complicated and they are really beneficial.

And to prove it – I’ve broken down how to do a competitive analysis in THREE (yes, just three) easy steps.

Step 1: Identify Your Competitors

This is an obvious first step.

To start, perform a Google search of the products/services YOUR business offers, and take note of the results.

For example, if you sell camping materials, you would type “camping tents, lantern, camping equipment, etc.” into the search engine, and then review the results, and compile a list of companies who also sell camping materials.

It’s important to be realistic about who your actual competitors are.

Here are a couple of examples:

If you’re a small business owner with a local brick-and-mortar women’s clothing boutique, your competition is not the men’s retail store across the street (even though they are also selling clothing).

The competition you should really focus on would be another women’s clothing store who is selling the exact same product as you. They are the ones who will have the largest impact on your success.

OR

If you’re a marketing agency in Minneapolis, Minnesota, your direct competition is other similar-sized marketing agencies in the area – not Ogilvy (a major advertising agency) in New York City.

And once you feel confident about your pool of competitors, it’s on to the next step!

Step 2: Research Your Competitors

After you’ve identified who your direct competitors are, it’s time to research them!

This step is often the most time-consuming of the three, but it’s also is the MOST important step. The data you collect here will directly impact the outcome of your analysis.

The first phase of the research should be focused on the business of your competitors.

Things you should look for include:

• Pricing strategies.
• Sales format. I.e. online or physical location?
• Product offering

Next – you need to figure out why a customer would choose to purchase from your business and not one of your competitors.

The best way to do this is to survey new /current customers.

Here are a few questions you could ask new/current customers:

• What other business were you considering before you picked us?
• What do we have that our competitors did not have?
• Is there anything you wished we did have that our competitors do have?

This honest feedback is one of the best ways to figure out how you stack up against your competitors in the eyes of your customers.

Finally, you need to dig into their marketing materials and comb nearly every aspect of their website, social media and email communication.

Here are the major things you need to consider:

• What are they doing with their marketing content?
• What are their overall strategies when it comes to demand generation, PR / social media, and product marketing?
• Who is their target audience? (I.e. Young professionals? College students? Professional marketers?)
• How many followers do they have on all the social networks?
• How are they positioning themselves in the market? (I.e. Are they the highest / lowest $$$ option?)

Step 3: Compare Your Business

The last step is to compare yourself with your competitors.

The best way to do this is by performing a SWOT analysis for each competitor, which helps you identify your own strengths and weaknesses, and in turn, identify your future opportunities and threats (this is where the term SWOT comes from).

Once you’re done, you will have a clear picture of how you stack up against your competitors, and have all the information you need to decide what changes need to be made to optimize your business.

And just like that….

Your competitor analysis will be complete. 🙌

Competitive Analysis Example

Now that you’ve gotten the scoop on how to do a competitive analysis, let’s jump into a competitive analysis example.

Our guinea pig is…

…Isle Surf and SUP – a surfboard and paddleboard retailer. For the sake of not overcomplicating this example, we are going to focus solely on their paddleboard competitors.

Let’s go!

Step 1: Finding Isle Surf and SUP’s Competitors

First, let’s see what Google brings up for us and we can evaluate from there (for best results, search for your competitor’s product or service in Incognito mode).

Listed below are the search results (psa: for the sake of example, I removed a few ads that were in the way).

^Looking at the above list, the competitors that Isle Surf and SUP should focus on are YOLO Boards, Tower, Boardworks, Walmart, REI, and DICKs.

Before we move on, you might be wondering…

“Why Walmart, REI, and DICK’s? Those are HUGE retailers!”

Even though Isle Surf and SUP is a much smaller retailer, they are selling the same product – paddleboards – as Walmart, REI, and DICKs. So Isle Surf and SUP should also include them in their competitor analysis.

And now that we have Isle Surf and SUP’s list of competitors*…

*There are probably MANY more competitors for Isle Surf and SUP – but for the sake of getting you through this example faster…I kept it to seven.

Step 2: Research Isle Surf and SUP’s Competitors

Pick one of the listed competitors to research

For the sake of the example, we are going to research just one of the listed competitors (Boardworks), and then you would just repeat the same process for each competitor.

First, let’s jump into researching the business side of Boardworks and find answers to these three questions:

• How does Boardworks pricing model compare to Isle Surf and SUP?
• What type of retailer is Boardworks compared to Isle Surf and SUP?
• What is included in Boardworks product line compared to Isle Surf and SUP?

In this stage, it was easy to find all the information by visiting Boardworks and Isle Surf and SUP’s product pages on their website, and here’s a breakdown of the business side of Boardworks vs Isle Surf and SUP via infographic:

Next, we need to figure out why a customer would go with Isle Surf and SUP versus Boardworks (and vice versa).

The best way to execute this portion of the competitor analysis (and would provide them with information on all their competitors) would be for Isle Surf and SUP to create a survey they could email to new/current customers – or in this case, someone who has just bought a paddleboard.

They could easily include a link to the survey in an email thanking the customer for their purchase (separate from the order confirmation).

Here’s an example of the email:

And an example of how the survey could look:

A key to a great survey?

Use a mix of open-ended and multiple-choice questions. This ensures you get the answers you need, plus long-form answers written by customers (which are great for Isle Surf and SUPs marketing team to use when they are writing marketing copy).

Finally, let’s get all the marketing deets we can on Boardworks.

As a refresher, here are the major things that Isle Surf and SUP should consider:

• What is Boardworks doing with their marketing content?
• What are there overall strategies when it comes to demand generation, PR / social media, and product marketing for Boardworks?
• Who is Boardwork’s target audience?
• How many followers do they have on all the social networks?
• How are they positioning themselves in the market?

Based on my research throughout Boardworks (and Isle Surf and SUP) website, here is a breakdown (via infographic) of the differences between their marketing strategies:

And voila!

Let’s move onto the final step!

Step 3: Compare Isle Surf and SUP With Boardworks

AKA…time to perform the SWOT analysis!

Here’s a nice visual of how this would look:

^The most important part of the SWOT analysis is how you use the information you learn from it…

So in this case, it looks like Isle Surf and SUP should capitalize on their main strengths, their website and overall marketing strategy, since both are far superior from Boardworks’…but it also looks like (based on their threats) that they should consider making adjustments on pricing and potentially their target demographic (depending on their overall market strategy) – or Boardworks might be able to close the gap on market share.

And once Isle Surf and SUP is finished researching and comparing their business against all their competitors…

They would have a clear picture of how they stack up against their competitors and have all the information they need to decide what changes need to be made to optimize their business.

And just like that….

Their entire competitor analysis would be complete!

(Well, until they decide to do it again- which *cough* you should do every few months to make sure you’re making business decisions based on the most current information out there).

Tools to Help You Perform a Competitor Analysis

Rival IQ

Rival IQ is a social media analytics software that allows you to easily track the activities of your competitors side-by-side.

You can see follower count, posting cadence, engagement rates, and what their most successful posts look like – all from one place.

Buzzsumo

Buzzsumo gives you key insights about your competitors. For instance, you can easily see what content marketing activities are gaining the most traction, which influencers are sharing their content and what channels are most successful for them.

Ahrefs

Ahrefs is my favorite competitor analysis tool for SEO purposes. The site explorer tool allows you to check any URL’s top organic keywords. You can also check which of your competitor’s content is gaining the most backlinks.

Perform Your Own Competitor Analysis

Now that you know what a competitive analysis is (and why you should care)…

How to conduct your own competitive analysis (in three easy steps)…

You’re equipped with an example of a competitor analysis (for easy reference later)

AND you have your very own competitor analysis template.

It’s time to get to it.