Step-by-step guide for a competitor analysis

No matter how big your business is, at some point you’ll have to conduct a competitor analysis (actually, the earlier, the better). I want to share the guide I have compiled thanks to my 3-year experience as a marketer. I have tried to make it as universal as possible for any industry and business scale.

Share your tips on how you conduct a competitor analysis in the comments, this is going to be valuable for everyone.

Here is what I do:

Ask yourself - Why do you need competitor analysis?

It might seem obvious, but without setting a certain goal, you might get lost while researching. Ask yourself:

Which decisions will your competitive research impact? Are you looking to refine messaging? Experiment with the funnel structure? Get inspiration for A/B or multivariate testing?

You might conduct a competitive analysis around a specific aspect of your competitor (website, certain product) or to do a deep dive of understanding their overall marketing approach.

Once you have answers to these questions, create a spreadsheet and start gathering information on the points below.

1. Identify your competitors (Real and perceived ones)

• Run a Google search;
• Check Google Trends, SimilarWeb, Compete, or Alexa.
• Look at the review sites (e.g. trustpilot, g2, capterra). They often have a section with alternative products.
• Check the list of presenters and companies running booths at your industry’s conferences;
• Ask your customers who else they considered.
• Categorize them to primary (direct), secondary (indirect: high-end or low-end versions), tertiary (market to the same audience, but they have other products).

It will be good to collect at least seven accurate competitors, but the more you or your team can find and analyze, the better.

2. Identify their customers and their expectations

How to find them:

• Look at followers on competitors social media, check comments on posts
• Check reviews websites

How to measure them:

• Customer Demographics (age, gender, location)
• Occupation and Income
• What do your customers like and dislike? What are their expectations? (reviews especially worthy in this matter)

3. Identify competitors positioning and messaging

Understanding these will help you be aware of how to compete against them in the most effective way.

Sources checklist:

• website;
• social media (fb, ig, linkedin, youtube, tiktok, pinterest, twitter);
• press releases;
• product copy;
• customer reviews;
• email newsletter.

- Define their story, the key features/benefits they highlight in sales materials, the biggest customer pain points and how they describe their unique value proposition.

The process of finding information through different channels by hand is possible but very time-consuming. Personally, to save time, I use SmelterAI. It helps automate the process and adds a few more useful things like analysis of different brand attributes and brand's tone of voice.

4. Determine their main differentiator / unique selling point

I usually use this formula to identify their USP ( Unique Selling Proposition ):

<a competetitor> is confident that customers will buy <a competetitor>’s product because <a competitor> solves <a customer problem> better than any alternative due to the following reasons:

Proof 1: (e.g. cost advantage, location and so on)

Proof 2: …

5. Compare price points for similar products or services

Just look up the data from the website pricing section or marketplaces

If we talk about e-commerce: price point across a variety of marketplaces? How do they approach shipping?

6. Conduct SWOT-analysis

At this stage, you already have an understanding of what your competitors are and you can summarize it all with a SWOT analysis. This visualization will be a guiding star for you in determining the place of your product in the market.

- Strengths and Weaknesses (internal factors)

S - Identify what your competitors are doing well and what works for them. Do reviews indicate they have a superior product? Do they have high brand awareness? Can you test a competitor’s products yourself to see where they are performing better?

W - Identify what each competitor could be doing better to give you a competitive advantage. Do they have a weak social media strategy? Do they have just an online store, not a brick-and-mortar one? Is their website outdated?

- Opportunities and Threats (external factors)

O - Opportunities are factors that might work in favor of a business. What trends can provoke growths in the industry? What audience can also be targeted?

T - Define what can potentially harm your competitors’ businesses. This might include politics, new regulations or changing customer preferences.

Final thoughts

A competitive analysis won’t help you with business decisions, such as what product feature to build next. Instead, it will help to understand market conditions, identify your strengths and weaknesses and be aware of what value you offer in comparison with your competitors.

Never copy your competitors, this way you lose your USP. And yes, it’s unethical. This analysis is aimed to make your product better, not to create one more copy of an existing one.

Theory is important, but don't spend too much time on analyzing it. It’s better to focus on what your customers are telling you. Communicate with them - they are the most valuable source of information for your business.