Competitive Analysis: Understanding Your Market Position

Why Competitive Analysis Matters

The cost of ignorance:

Without competitive analysis:

❌ Build products customers don't need (competitors already solved problem) ❌ Price incorrectly (too high = no sales, too low = unsustainable) ❌ Waste budget on saturated channels (everyone's doing Facebook ads) ❌ Miss market opportunities (gaps competitors aren't filling) ❌ Get outmaneuvered (competitors launch features you should have anticipated)

With competitive analysis:

✅ Identify white space (underserved segments, unmet needs) ✅ Price strategically (understand market range, positioning) ✅ Allocate resources efficiently (avoid crowded channels, find opportunities) ✅ Differentiate meaningfully (stand out on dimensions that matter) ✅ Anticipate moves (prepare for competitive threats)

Investment: 10-20 hours of research can save months of misdirection

Step 1: Identify Your Competitors

Who are you actually competing against?

Three types of competitors:

1. Direct competitors ⭐⭐⭐⭐⭐

Who: Same product/service, same target audience, same geography

Example (coffee shop):

• Other coffee shops in same neighborhood

Why they matter most: Fighting for exact same customers

2. Indirect competitors ⭐⭐⭐⭐

Who: Different product, but solves same problem

Example (coffee shop):

• Tea shops, juice bars, energy drink brands
• Any "place to work/study/meet" (libraries, co-working spaces)

Why they matter: Alternative solutions to customer need

3. Potential/Future competitors ⭐⭐⭐

Who: Not competing now, but could enter market

Example (coffee shop):

• Starbucks opening in area
• Ghost kitchen delivery-only coffee
• Subscription coffee delivery services

Why they matter: Prepare for threats before they materialize

How to find competitors:

Google search:

• Search your primary keywords
• "[Your category] near me" (local competitors)
• "[Your category] online" (e-commerce competitors)

Example: "Eco-friendly yoga mats" Results: Top 10-20 sites = your competitors

Customer research:

• Ask existing/potential customers: "What else did you consider?"
• Survey: "Who do you currently use for [solution]?"
• Reviews mention competitors: "Switched from [Competitor X]"

Industry resources:

• Trade publications
• Industry reports (IBISWorld, Statista)
• Conference attendee lists
• LinkedIn (companies with similar descriptions)

App stores (if relevant):

• Search your category in App Store, Google Play
• Top apps = competitors

Social media:

• Search hashtags (#yogamat, #ecofriendlyfitness)
• See who's posting, who has engagement
• Check followers of competitors

Funding databases (for startups):

• Crunchbase
• AngelList
• Who's getting funded in your space?

How many competitors to analyze:

Recommendation: 5-10 competitors in-depth

Selection criteria:

• 3-5 direct competitors (most important)
• 2-3 indirect competitors (broader view)
• 1-2 aspirational competitors (who you want to become)

Don't analyze 50 competitors—focus on most relevant

Step 2: Competitive Analysis Framework

What to research:

Create comparison spreadsheet:

Step 3: Product/Service Analysis

What they offer and how:

Features comparison:

Create feature matrix:

Insights:

• Feature 3: All competitors have it, you don't = table stakes (must add)
• Feature 2: You and Comp B have it, A and C don't = potential differentiator

Quality assessment:

If possible:

• Buy/try competitors' products
• Read customer reviews (what do people praise/complain about?)
• Test side-by-side

Questions:

• Is quality superior, comparable, or inferior to yours?
• Do customers perceive it as high-quality (reviews, testimonials)?
• What quality level can they deliver at their price point?

Product breadth:

Questions:

• How many SKUs/variations?
• Do they offer complementary products?
• Are they specialists (narrow focus) or generalists (wide range)?

Example:

• Specialist: Lululemon (athletic apparel, focused)
• Generalist: Target (everything, including athletic apparel)

Step 4: Pricing Analysis

Understanding price positioning:

Collect pricing data:

What to document:

• Base price (starting point)
• Price range (lowest to highest option)
• Pricing model (one-time, subscription, freemium, tiered)
• Discounts (seasonal sales, bulk discounts, student/military discounts)
• Hidden costs (shipping, fees, subscriptions)

Price positioning map:

Create visual:

         Premium
            |
     Competitor B (Luxury)
            |
     Your Brand | Competitor A
         (Mid-tier)
            |
     Competitor C (Budget)
            |
         Budget

Insights:

• Where do you sit relative to competition?
• Is there a gap? (No mid-tier option = opportunity)
• Are you priced appropriately for value delivered?

Value analysis:

Price alone doesn't tell story—value matters:

Calculate value ratio:

Value = (Quality + Features + Service) / Price

Example:

• Competitor A: High quality, many features, great service, $100 = High value
• Competitor B: Medium quality, few features, poor service, $100 = Low value

Your goal: Deliver better value ratio than competitors

Step 5: Marketing & Positioning Analysis

How they communicate and attract customers:

Messaging audit:

Visit competitor websites, note:

Homepage headline:

• What's their main promise?
• Emotional or functional appeal?

Value proposition:

• How do they describe themselves?
• What benefits do they emphasize?

Brand voice:

• Formal or casual?
• Humorous or serious?
• Technical or accessible?

Social media analysis:

For each competitor:

Platforms active on:

• Instagram, Facebook, Twitter, LinkedIn, TikTok?

Follower count:

• Larger = more brand awareness (or they've been around longer)

Engagement rate:

• (Likes + Comments + Shares) / Followers × 100
• 1-3% = average, 3-6% = good, 6%+ = excellent

Content strategy:

• What do they post? (product photos, lifestyle, educational, user-generated)
• How often? (daily, 3x/week, sporadic)
• What gets most engagement? (look at top posts)

Paid ads:

• Use Facebook Ad Library (public database of active ads)
• See what creative, messaging they're running

SEO & Content:

Organic search presence:

Tools (free):

• Google search: "[keyword]" - see who ranks top 10
• Ubersuggest, Answer the Public: Keyword research

Questions:

• Do they rank for primary keywords?
• What content do they create? (blog, video, podcasts)
• How often do they publish?

Backlink analysis:

• Use Moz Link Explorer (free tier) or Ahrefs
• Who links to them? (media, bloggers, partners)

Email marketing:

Subscribe to competitor newsletters:

Observe:

• How often do they email?
• Subject line style (urgency, curiosity, value)
• Email content (promotional, educational, storytelling)
• Design quality
• Calls-to-action

Note best practices and mistakes

Step 6: Customer Experience Analysis

Walk through their customer journey:

Website UX:

Test their website:

• Is navigation intuitive?
• How many clicks to purchase?
• Is checkout smooth or complicated?
• Mobile experience quality?
• Page load speed?

Use tools:

• Google PageSpeed Insights (speed test)
• GTmetrix

Customer service:

Mystery shop:

Test:

• Send email inquiry (response time? Quality of answer?)
• Use live chat if available
• Call phone support (if exists)
• Read support documentation (helpful?)

Questions:

• Are they responsive?
• Helpful and friendly?
• Do they solve problems or deflect?

Reviews analysis:

Read 50-100 reviews across:

• Google Reviews
• Yelp (for local businesses)
• Amazon (for products)
• Trustpilot
• G2, Capterra (for software)

Look for patterns:

Complaints (1-3 star reviews):

• What frustrates customers repeatedly?
• Product quality issues?
• Customer service problems?
• Shipping delays?

Praise (4-5 star reviews):

• What do customers love?
• What words do they use?
• Why do they choose this brand?

Insight: Competitor weaknesses = your opportunities

Step 7: SWOT Analysis (Theirs and Yours)

Synthesize findings:

For each major competitor:

Strengths:

• What do they do well?
• Competitive advantages?
• Resources (capital, team, technology)?

Weaknesses:

• What do they do poorly?
• Customer complaints?
• Limitations?

Opportunities (for them):

• Market trends favoring them?
• Expansion possibilities?

Threats (to them):

• Market trends hurting them?
• Regulatory changes?
• Your company?

Your comparative SWOT:

Based on competitive research:

Your strengths relative to competition:

• Example: "Better customer service than Competitors A, B, C"

Your weaknesses relative to competition:

• Example: "Limited product range compared to Competitor B"

Opportunities from competitive gaps:

• Example: "No competitor serves mid-market segment well"

Threats from competitors:

• Example: "Competitor D is well-funded, could undercut on price"

Step 8: Perceptual Mapping

Visualize competitive landscape:

Two-axis map:

Choose two key attributes customers care about

Example attributes:

• Price (low to high)
• Quality (low to high)
• Features (basic to advanced)
• Experience (transactional to experiential)
• Innovation (traditional to cutting-edge)

Example map: Athletic shoes

           Premium
              |
         Nike  |  On Running
              |
Traditional ——+—— Innovative
              |
        New   |  Allbirds
        Balance
              |
           Budget

Insights:

• Gap: Budget + Innovative (potential opportunity)
• Crowded: Premium + Innovative (competitive, but large market)
• Your position: Where do you fit? Where do you WANT to fit?

Step 9: Competitive Intelligence Tools

Leverage technology:

Free tools:

SimilarWeb (free tier):

• Competitor website traffic
• Traffic sources (organic, paid, social, referral)
• Top pages
• Audience demographics

Facebook Ad Library:

• See all active ads competitors are running
• Ad creative, copy, targeting hints

Google Alerts:

• Set alerts for competitor names
• Get notified when they're mentioned (press, reviews, etc.)

BuiltWith:

• See what technology competitors use
• E-commerce platform, analytics tools, marketing tech

Paid tools (worth it for serious analysis):

SEMrush or Ahrefs ($99-199/month):

• Keyword rankings
• Backlink analysis
• Traffic estimates
• PPC competitor analysis

SpyFu ($39/month):

• Competitor keywords (organic + paid)
• Ad history
• Budget estimates

Crayon (enterprise):

• Automated competitive intelligence
• Tracks competitor website changes, pricing, messaging

Step 10: Turn Insights into Strategy

Analysis is useless without action:

From insights to decisions:

Finding: "Competitor A has poor customer service (100+ complaints)" Action: Emphasize your superior customer service in marketing, invest in support team

Finding: "No competitor serves budget-conscious millennials" Action: Position product for this underserved segment, adjust pricing

Finding: "Competitor B's Instagram ads get high engagement using UGC" Action: Adopt user-generated content strategy

Finding: "All competitors use Google Ads heavily, but few on Pinterest" Action: Test Pinterest ads (less competitive, potentially cheaper)

Finding: "Competitor C raised $10M, likely to undercut on price" Action: Differentiate on quality/service, prepare for price war, or target different segment

Competitive strategy options:

Head-to-head:

• Compete directly on same terms
• Requires resources, differentiation

Niche focus:

• Serve specific segment competitors ignore
• Dominate small pond

Leapfrog:

• Offer superior product/innovation
• Requires R&D investment

Flank:

• Attack from unexpected angle
• New business model, channel, geography

Ongoing Competitive Monitoring

Analysis isn't one-time:

Set up systems:

Monthly:

• Review competitors' social media, ads
• Check for new product launches, features
• Monitor pricing changes

Quarterly:

• Update competitive analysis spreadsheet
• Review performance (are you gaining or losing ground?)
• Adjust strategy based on competitive moves

Annually:

• Comprehensive competitive audit
• Re-identify competitors (new entrants?)
• Refresh positioning based on landscape

Ethical Boundaries

Competitive intelligence vs. espionage:

Ethical ✅:

• Publicly available information (websites, ads, reviews)
• Purchasing products (mystery shopping)
• Attending public events, conferences
• Analyzing job postings (hint at strategy)

Unethical ❌:

• Hacking, stealing proprietary information
• Posing as customer to extract secrets
• Bribing employees for insider info
• Industrial espionage

If you wouldn't want it done to you, don't do it

Conduct competitive analysis by identifying 5-10 competitors (direct, indirect, potential), creating comparison spreadsheet documenting products, pricing, target audience, marketing channels, customer experience, and strengths/weaknesses. Analyze pricing positioning (premium, mid-tier, budget), marketing strategies (messaging, social media engagement rates, SEO rankings, email campaigns), and customer reviews for patterns. Complete SWOT analysis for competitors and your comparative position. Create perceptual maps plotting key attributes. Use tools like SimilarWeb (traffic analysis), Facebook Ad Library (competitor ads), SEMrush (keyword rankings), and Google Alerts (monitoring). Transform insights into strategy: exploit gaps, counter threats, adopt best practices. Monitor monthly for changes, quarterly performance reviews, annual comprehensive audits.