What is Competitive Analysis?

Competitive Analysis is the process of systematically identifying your competitors and evaluating their strategies, product offerings, market presence, customer base, sales and marketing tactics, financial performance, operational efficiencies, technological capabilities, strengths, and weaknesses compared to your own. Also known as Competitor Analysis, it is a subset of market research.

Think of it like scouting your opponents before a big match – you want to find out what their game plan is. Then, you can develop your own winning strategy.

In today’s fiercely competitive marketplace, just focusing on your company is not enough. To succeed and thrive, you need to understand the whole business landscape. This is where competitive analysis comes into play.

The Business Development Bank of Canada, which belongs to the government of Canada, says the following about the term:

“A competitive analysis is an assessment of your competitors’ products, services and sales tactics, evaluating their strengths and weaknesses relative to your own. It’s good business practice to conduct a full competitive analysis at least once a year.”

“It will help you see your own unique advantages as well as any potential barriers to growth so you can strengthen your marketing and business strategies.”

A countable or uncountable noun

We can use the term ‘Competitive Analysis’ as both a countable and uncountable noun. When we use it as a countable noun, it refers to specific instances or types of analyses, for example, “We conducted three competitive analyses this quarter for different product lines.”

As an uncountable noun, it refers to the general process or concept of analyzing one’s competitors, for example, “Competitive analysis is essential for staying ahead in the market.”

  • Definition of countable and uncountable nouns

The term “countable noun” refers to items that we can count, such as “One apple, two apples, one bottle, two bottles.” The words apple and bottle are countable nouns. Uncountable nouns, on the other hand, cannot be counted, the term refers to masses or abstract concepts, such as “information” or “water.” I CANNOT say “One information, two informations, one water, two waters.”

Two people studying:monitoring a street market, plus a definition of Competitive Analysis
Image created by Market Business News

The benefits of competitive analysis

A well-conducted competitive analysis offers several key benefits. Let us take a look at some of them:

  • Get to Know Your Market

It helps you understand the overall industry, trends, and what your target audience truly wants.

  • Find Your Edge

You will be better able to pinpoint your unique advantages and disadvantages compared to others. This will help you carve out a distinct space in the market.

  • Spot Opportunities and Threats

It can help you uncover potential gaps in the market or anticipate moves your competitors might make.

  • Make Better Decisions

You can use the insights you have gained to guide your pricing, marketing, product development, and overall business strategy.

  • Identify Market Trends

By observing your competitors, you can identify emerging trends within the market, such as customer preferences, technological advancements, and regulatory changes.

How to conduct a competitive analysis

Here’s a simplified breakdown of the process:

  • Identify Your Competitors and Rivals

Go beyond the obvious. Consider direct and indirect competitors. Direct competitors sell similar products to your own while indirect competitors offer alternative solutions. A ‘rival’ is a competitor that is similar to your company in size, market share, product offerings, and business performance.

  • Gather Information

Research your competitors’ websites, social media platforms, product offerings, pricing, marketing campaigns, and customer reviews. Gather as much data as you can.

  • Analyze the Data

Create a comparison chart or use a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to organize your findings.

  • Take Action

Act on those insights! Identify areas where you can improve, find ways to differentiate yourself, and adapt your plans to stay ahead of the curve.

Final thoughts

Competitive analysis is an ongoing task. The market is constantly evolving and the gathering and analysis of data is a never-ending process.

Make it a regular practice to keep tabs on your competitors and adjust your business strategies accordingly. By staying informed about the competition, you’ll improve your chances of long-term success.

Major corporations, recognized as some of the most successful in the world, prioritize competitive analysis as a key part of their strategy.  Don’t you think you should too?