Master Your Market With This Step-By-Step Competitor Analysis Guide

There’s always some form of competition in the business world – even the most niche industries have competitors just itching to surpass the competition and win the hearts of their target audience to find immense success.

 

 

When you don’t know your competitor and haven’t taken the time to analyze their strengths and weaknesses, you’re putting yourself at a significant disadvantage over the competition – and when a business isn’t getting sales and earning loyal customers, there’s no growth!

 

That’s why businesses across all industries are conducting something known as a competitor analysis to not only find out what’s working best – but do it even better than the competition.

 

Conducting a successful competitor analysis is no easy task, however, and in order to maximize your research time as well as the results found, you’ll need to hone in on a strategy that guarantees results.

 

Where do you start? What do you need? How do you make the most of your time and get meaningful results? This guide will take you through all of the key ingredients to cooking up the best possible competitor analysis and maximizing the results you find.

 

Whether you’re a beginner and have no idea where to start or are a pro looking for tips to further hone your craft, this guide is for you!

 

We’ll cover how to make a competitor analysis – including everything from a social media competitor analysis to an SEO and eCommerce competitor analysis with no corners cut, no topics skipped, and nothing unexplained.

 

What Is A Competitor Analysis?

 

A competitor analysis is the process of researching a business (or multiple businesses) within a target market or industry to identify key strengths, weaknesses, products, market dominance, and growth to compare it with your business.

 

This allows for companies to strengthen their brand by following trends or strategies that work, improving upon strategies that need improvement, and outlining gaps in the market where a brand can make a big impact.

 

If you follow restaurant or food-related news, you may recall the overwhelming popularity of the Popeyes chicken sandwich and how just about every single fast-food chain began to jump in on that trend by making some sort of authentic chicken sandwich of their own.

 

This is because the competition was taking note of the shifting trends and sheer popularity of a product and began to shape their strategy around that same product to try and get similar results. In a way, a competitor analysis is much like that – where you’ll be identifying what products or trends are working best while also identifying opportunities to take part in that trend or product craze, and perhaps even expand or improve upon it.

 

What’s The Importance?

 

It should come as no surprise that a competitor analysis is a very important part of business and at times should play a large role in the direction or strategy of your business.

 

If a competitor within a relevant industry is making, doing, or following something that’s working well and getting them sales, then it should be a no-brainer that taking notes and seeing if your business can jump in and get similar results is important.

 

Aside from that, it also allows you to get ahead of your competition. By honing in on what’s working and what isn’t, you can make dynamic improvements to your strategy and get results where other businesses in the industry aren’t.

 

Proper, effective use of analyzing competitors can save businesses time and money: two very crucial factors in any business. With the definition and importance out of the way, it’s time to start setting the groundwork for your competitor analysis so you can make the most of it.

 

The Basics – Setting The Groundwork For Your Competitor Analysis

 

When first starting, it can be confusing to try and figure out where to start, and as much as you may want to immediately jump in and start researching your competition, you’ll want to start by analyzing your own business and the general market/industry that you’re in.

 

By taking a few extra precautions and taking some notes beforehand, you’re setting yourself up for success immediately by bringing additional knowledge and results to the table – further allowing your business to get ahead of the competition AND make the most of your competitor research.

 

 

  • Research The Strengths And Flaws Of Your Business

 

 

It’s essential to understand the strengths and weaknesses of your business to evaluate your position, strength, reputation, and impact on the market. Be sure to analyze everything from SEO and website analytics to social media growth and customer testimonials to identify what’s working best and what can be improved upon.

 

While it may seem counterproductive to focus on the flaws of your business when preparing to work on a competitor analysis, it significantly benefits your results as you’ll be able to know where you should be investing time and resources alongside your competitor analysis efforts.

 

 

  • Analyze Market Trends

 

 

Before analyzing the competition, you’ll need a good understanding of the trends and events unfolding in your market/industry. You’ll want to identify trends, small details, changes, and potential products that are on the rise within the general industry to discover potential opportunities to reacher a broader (or more niche) audience.

 

For example, if you’re in the restaurant industry and there’s a particularly widespread summertime dish taking customers by storm, you’ll likely want to hone in on that trending dish to see if your establishment can include it on the menu as well – or perhaps take a whole new spin on the trend.

 

 

  • Know Your Competition

 

 

Knowing your competition is the first step towards creating a stellar competitor analysis. When it comes to analyzing your competitors, it’s best to start by funneling them into three categories: direct, indirect, and replacement. Let’s take a closer look at what each of these categories means:

 

 

  • Direct Competitors

 

 

These competitors sell products or provide services that most closely rival yours. This can range from selling the same kind of product or a very similar one.

 

Think Pizza Hut and Dominos, or Nike and Adidas. These are the kinds of competitors you want to be focusing on primarily in your competitor analysis.

 

 

  • Indirect Competitors

 

 

This category of competitor contains businesses within the same market/industry as your own, but specialize in providing different services or selling different products while still being relevant enough to potentially take your target audience.

 

If you’re in the restaurant industry but primarily sell sandwiches, an indirect competitor may be a restaurant that primarily sells seafood. These kinds of competitors are noteworthy to keep an eye on and analyze when necessary, but should not be prioritized over your direct competitors.

 

 

  • Replacement Competitors

 

 

These kinds of competitors are still in the same industry as you, but their products and/or services are vastly different than your own. However, these competitors can act as replacements to the products/services you offer and still get your target audience.

 

In this case, suppose you’re a five-star restaurant that specializes in high-quality gourmet food, requiring reservations ahead of time. A replacement competitor would be something like a fast-food chain: very different from your five-star restaurant, but still relevant enough in the industry to attract the same kinds of customers.

 

Once you categorize your competition, you’ll have a much better time honing in on the businesses that rival yours the most, allowing you to prioritize them over indirect or replacement competitors.

 

 

  • Set Goals Ahead Of Time

 

 

You shouldn’t be trying to skyrocket to the top immediately if you’re a new business in a competitive industry – you’ll want to be methodical and use a competitor analysis as the foundation for your organic growth, increase in credibility, etc.

 

That way when the time comes, you’ll be experienced and credible enough to skyrocket to the top. Be sure to set goals for your business and establish benchmarks by analyzing top competitors in the industry to understand a roadmap for success, and also analyze smaller competitors to identify potential risks/threats to your audience base and see if they’re approaching the market differently.

 

A good balance of large competitors and small ones allows for a wider range of opportunities to discover for your business.

 

 

  • Get Organized

 

 

One of the most common and effective ways to categorize all of the results and metrics you find across your competitor analysis is a competitor grid. By using tools such as Microsoft Excel or Google Sheets, you’ll be able to compile everything and compare results across a wide spectrum of competitors.

 

If you aren’t sure what to be categorizing, start by deciding what in particular you’re going to be analyzing for each competitor. If you’re analyzing social media statistics, for example, make sure you categorize a sheet with sections to place certain analytics, such as follower counts, engagement, etc.

 

Once you’ve set the groundwork for your competitor analysis, it’s time to start putting the more crucial details together and building your analysis.

 

  • Building Your Competitor Analysis – Researching, Learning, Adapting

 

If you’ve reached this stage in your competitor analysis: congratulations! You’ve established the groundwork for what you should be looking for during your analysis and can now start getting into the juicy research of the competitors you’ve chosen so you can learn from them, find opportunities, and adapt your business accordingly to get ahead of them.

 

This section of our guide will cover all of the essential tips and steps to build and fine-tune your competitor analysis.

 

 

  • Hone In On The Target Audience Of Your Competitors

 

 

It’s imperative to understand and hone in on the target audience of your competition. As you begin to build your competitor analysis after having set the groundwork, get an idea of who each competitor is trying to sell to.

 

Analyze their brand tone/voice, who they interact with on social media, the clients they’re showcasing on their website, etc.

 

It may seem like a waste of time considering you’re likely going to be analyzing your direct competitors – who will certainly be trying to cater their products/services to a similar target audience – but you’ll need to hone in on even the smallest details regarding the target audience of your competitors to see what they’re doing differently.

 

 

  • Analyze The Background Info Of Your Competitors

 

 

If you’re a local small business that’s emphasizing selling local products to your local community in California, you probably don’t want to be analyzing a large-scale corporate company based in Florida over another small-scale company based in the county next to yours.

 

Analyzing the background info of your competitors allows you to learn more about their brand tone, where they’re located, and how big the company is.

 

Making use of these details lets you see how your competition is approaching the industry and if their background info plays a role in how they’ve approached the industry and their audience.

 

 

  • Research The Competition’s Content Strategy

 

 

In most industries and for most competitors, you’ll often find that companies have a diverse range of content. Successful competitors will almost always include testimonials, a blog page, success stories/case studies, webinars, and/or white papers.

 

Analyze the quality of this content, see how often they’re being shared, and what the content is highlighting/talking about. Are they sharing the content on social media as well? Be sure to take note of all of these and how their audience is responding to them.

 

If they’re speaking to a similar target audience (which they likely will be), what tone are they speaking to the audience in? Is it working? How is the content structured? Is their content in-depth, accurate, and grammatically professional? Take note of what they’re posting, how they’re presenting it, and how the audience is responding to it.

 

 

  • Discover What Kinds Of Technology Your Competitors Are Using

 

 

Oftentimes one of the most overlooked parts of a competitor analysis is the analysis of what technology your competitors are using. You’ll have to do a bit of digging to find this info, but the results can benefit your business tremendously.

 

A common way to see what your competition is using (or wants to use) is to look at their job openings and positions, but another more intuitive way to see what the competition is using is to make use of a tool called “Built With” which allows you to see exactly what the competition is running their website with – and all you need to do is type in their URL!

 

By analyzing what technology your competition is using, you can identify key features and enhancements that you can bring into your own business and website to further enhance the user experience.

 

 

  • Product, Promotion, Place, Price

 

 

The term “marketing mix” refers to 4 key parts of any product or service that’s being brought to a market: product, promotion, place, and price. You should focus on asking key questions about each of these parts of the marketing mix. Here are a few questions you can ask for each key part:

 

 

  • Product

 

 

What is it they’re selling?

 

Are they selling an item or offering a service?

 

How is the product different from yours?

 

How are customers reacting to this product?

 

What is included in the product/service?

 

 

  • Promotion

 

 

How does your competitor promote their product? (Email, social media, newspapers, word-of-mouth, etc.)

 

If they use social media, what platforms are they using?

 

What is the tone/voice used in their promotional content?

 

What are they claiming as “better than the competition”?

 

What are they emphasizing about their products to encourage the audience to choose them over the rest?

 

 

  • Place

 

 

Are they a physical location, an online store, or a delivery service?

 

Do they have their own website?

 

Are their products being sold directly through them or via third-party marketplaces?

 

Do they emphasize being a local business or do they not emphasize their location?

 

 

  • Price

 

 

How much are they charging for their product/service?

 

Is it cheaper or more expensive than the average market price?

 

Is it cheaper or more expensive than your pricing model?

 

Do they offer sales/discounts?

 

Does their pricing reflect the quality of their product/service?

 

What pricing model is used? (Subscription, multiple payments, one-time purchase, etc.)

 

Remember, these questions aren’t meant to get you all of the results you’ll be looking for in your competitor analysis – but they act as a starting point and can be expanded upon as you further your research and find the answers to each question you ask about the competition.

 

 

  • Record How Much Engagement Your Competitors Are Getting

 

 

When performing a competitor analysis, one of the most important parts is recording the engagement your competitors are getting from the content they create.

 

For example, if you’re analyzing the social media performance of your competition (more on that later), you’ll want to be taking a look at their metrics and results and ask yourself some questions such as what platforms they’re prioritizing their content on, what kinds of posts are receiving the most engagement, how they’re responding to comments, etc.

 

If your competition is utilizing something like Instagram Reels and getting great results, then it’s important to consider creating some IG Reels content of your own, for example.

 

 

  • Keywords, Keywords, Keywords

 

 

When analyzing their social media presence, blog posts, or general website content, it’s important to be analyzing and researching the keywords your competition is using.

 

This allows you to further tap into what’s working best for your competitors and what keywords are driving the most results – allowing you to utilize similar keywords or even take advantage of ones the competition hasn’t been emphasizing as much.

 

Not sure where to start with keywords and keyword research? We’ve also created a step-by-step guide to doing keyword research the right way. 

 

 

  • Take A Closer Look At The Sales Tactics/Marketing Strategy Of Your Competition

 

 

Your competition may not be marketing their products/services in the same way as your business – and that may be getting them more or fewer results. When working on your competitor analysis, don’t miss out on analyzing their sales tactics and seeing how their strategy is stacking up to other competitors as well as your own strategy.

 

Ask yourself key questions such as: are they marketing to the same target audience? Is their strategy getting them results? And if so, are they performing better or worse than your marketing efforts?

 

That’s not all you should be looking for though. You should also be researching and asking: how exactly are they marketing their product/service? Are they taking an informative approach? A funny/relatable one?

 

Are they enlisting the help of influencers or famous people to share their thoughts on the product? Researching these questions allows you to make adjustments to your strategy if needed and find potential opportunities to get more results for your brand.

 

 

  • Research The Pricing, Sale/Discount Opportunities, And Perks

 

 

If your competition is selling a similar product or offering a similar service to your own, how are they approaching their pricing model? Are their products of lower quality/reliability or are they more professionally made? Are they the EXACT same as the product you’re selling?

 

Be sure to research everything from pricing to the sale/discount amounts and frequencies, and even take the time to identify the deals and perks they may be offering customers – such as “buy one get one free” offers or “50% off your next purchase” and if possible, see if those deals are getting them results.

 

 

  • Thoroughly Research The Social Media Presence Of The Competition

 

 

Social media is the best friend of a business in the digital age – allowing them to use a variety of platforms to reach their audience like never before and grow their brand organically in new ways.

 

Your competition will likely be taking advantage of social media, so take the time to analyze everything you can about their presence on social media. This ranges from analyzing what kind of content they’re sharing, how their content looks and flows, and how often they’re posting.

 

Analyze how many likes, comments, and shares they’re getting – how their tone is influencing customer choices, and what they’re showing off about their product, service, or company.

 

If you aren’t sure what to look for, or how to funnel your social media findings into results, our blog post on social media content strategy tips might be for you!

 

 

  • Don’t Sleep On The Customer Reviews!

 

 

Let’s face it: barely any business is going to be emphasizing or bringing light to negative reviews, feedback, and flaws in a public light.

 

However, by reading customer reviews, you’ll be able to get a good grasp at certain trends, strengths, and flaws your competition has – allowing you to make adjustments to your strategy accordingly before any negative reviews come your way, effectively sorting out problems before they even begin.

 

Sometimes though, competitors may be trying to cheat the system by creating false reviews or paying reviewers to give high-rated feedback, and as much as Google Reviews or Yelp may try to counter these, there will be some that slip through the cracks. Be vigilant!

 

 

  • Fine-Tune Your Competitor Analysis Based On Results, Industry, Etc.

 

 

By now you’ve likely built an extensive competitor analysis and discovered some key findings, opportunities, and improvements to add to your business strategy. However, it’s important to fine-tune your competitor analysis based on the results you find!

 

Depending on the industry, product, or service, your analysis will provide different findings and results compared to other businesses. That’s why it’s just as important to trust your own judgment and add, tweak, or remove statistics/findings that are irrelevant, less important, or have led to dead-ends in the process.

 

You’ll be thanking yourself later when you’re using your business competitor analysis as a starting point for an updated business strategy!

 

Congratulations! You Now Know How To Master A Competitor Analysis

 

With these tips and our step-by-step guide at your disposal, you now have the tools and knowledge needed to plan, research, execute, and optimize a competitor analysis with ease.

 

It may seem intimidating at first, but you’ll master these strategies in no time and build a solid business strategy based on your findings, allowing you to improve organic growth, earn more sales, and turn consumers into happy, loyal customers.

 

It’s no surprise that the business world is changing all of the time, and as a result, so are trends in industries, so be sure to optimize, research, and make adjustments accordingly every few months so you stay at the top of your game and ahead of the competition.

 

Need more help with creating a competitor analysis? Our team at PalmPons is ready to develop a perfect strategy for your small business and your target demographic. So contact us today, check out The Menu, and let’s boost your business together!