What Is a Competitive Analysis & How to Conduct It?

By: Locobuzz Editorial
Last Update: August 23, 2024
Reading Time: 11 minutes

Whenever you prepare for a big game, you always analyze your competitor, be it’s strengths or weaknesses. Same analysis should be conducted for planning your brand strategy. Competitor analysis is an in-depth analysis of the market positioning of your brand and your competitor. It helps you to evaluate business development ideas, and prepare a growth […]

Whenever you prepare for a big game, you always analyze your competitor, be it’s strengths or weaknesses.

Same analysis should be conducted for planning your brand strategy.

Competitor analysis is an in-depth analysis of the market positioning of your brand and your competitor. It helps you to evaluate business development ideas, and prepare a growth strategy.

As said by Jack Ma, “You should learn from your competitor but never copy. Copy and you die”.
Hence the only competitive advantage is the ability of your brand to learn faster than your competition.

What is competitive analysis?

Competitive analysis is a process of gathering information on the products, services and marketing strategies of your rival brands – i.e. the competitors of your brand in the same industry.

This analysis helps brands to find out their advantages and disadvantages and prepare a strong marketing strategy to grow and thrive towards success.

This helps in enhancing your judgments and also to comprehend the market environment and positioning yourself in the industry.

Why is Competitive Analysis Important?

Competitive analysis is important because it provides you with an opportunity to build concrete strategy for your brand and eliminates guesswork.

The following are the reasons for performing a competitive analysis :

Identifying market gaps

Competitive analysis helps you identify market gaps, stay relevant to current trends and shifts, and plan your marketing strategies accordingly.

It helps in identifying those market gaps that your brand can analyze and invest their capital, resulting in new potential for development and innovation in your brand, and uncovering new opportunities.
Informed Strategic planning

Analyzing competitor’s strengths and weaknesses helps you to judge your brand strategy thus increasing the chances of success.
Improves Differentiation

When you know what your competitors are providing to their customers, it would be easier to find a differentiator between your competitor's brand’s product and services, facilitating the success of your brand by giving a compelling reason to your customers to buy your products and services.
Improved Marketing Strategy

By understanding your competitor's market strategy, you may be able to improve your tactics and retain your customers and clients for a long time.
Lessening your risk

A good competitive analysis aids in analyzing the anticipated risks for future competitor threats, allowing you to manage your upcoming problems and in turn decreasing the business risks proactively.

What is competitive market research?

Competitive market research is an in-depth form of research of the market parameters and your target customers that would differentiate your product offerings from those of your competitors.

It is an essential operation that extends beyond just comparing your products and services with your competitors.

A deep dive research into the market not only helps to find distinguishers but also to capitalize and invest in them.

It also helps in laying a foundation for the sales and marketing plan that would genuinely differentiate your brand from the industry.

Factors to consider in Competitive analysis

Before diving into the steps of competitive analysis it’s important to consider a few factors that you should include while identifying a brand as your competitor:

A brief of the company

An overview of the company - including its location, target market, and target customers.
Analysis

A breakdown of what your competitor sells and how it compares to your brand.
Pricing and Positioning

A comparison of prices between your brand and your competitors and a review of their core mission to see how they position themselves within the market.
Customer Feedback

Research the compilation of customer reviews and feedback as to what they think of the brand.

The importance of competitive analysis in marketing

A thorough analysis of your competitor’s plan can help you identify their product offerings, mission and vision statements, target markets, marketing techniques, and many more.

You might even discover new competitors who earlier you didn’t know existed in the market.

Refining targeting and positioning

Through competitive analysis, you can understand who your competitors are targeting in the market and how they position their products, which can in turn help you to better define your target markets and position your products.
Improves customer insights

Researching your competitors helps you to understand your customer’s buying habits and preferences, which can then help you to prepare your marketing strategies.
Optimizing Pricing strategy

Understanding your competitor's pricing can enable you to set competitive prices for your product and services by attracting more customers by offering them lucrative deals and remaining profitable in the business as well.
Improves Campaigning efficiency

You can take inspiration from the marketing campaigns of your competitors and adapt from their best practices resulting in curating better market campaigns.
Improves brand differentiation

Competitive analysis helps you to stand out in the marketplace by uncovering your unique selling points and highlighting them while you market your brand.
Increases Market Share

By staying ahead of your competitors through constant analysis you can easily respond to rapid developments and capitalize on good opportunities, resulting in increased market share.

How to conduct a competitive analysis in 6 steps?

Competitive analysis is conducted to understand the unique selling points of your brand and how you stand out from others in the industry.

Let’s see the following steps to understand your brand positioning in the market.

Identify your competitors

Analyze direct and indirect competitors for your brand. ( Direct competitors are those offering similar products and services ), (Indirect competitors who provide alternative solutions to the same problem).

To curate a complete list, research industry publications, client comments, customer feedback, online searches, etc.

For example: If you are a coffee shop your direct competitors would be other coffee shops and indirect competitors would be cafes, fast food chains, convenience stores, and restaurants that also sell coffee as well in their menus.
Determine the Target Markets

Examine the demographics and psychographics of your competitors and customers.

Analyze the commercials, marketing materials, customer feedback, and reviews of your competitors to understand and figure out who they are targeting.

Similarly research about the age, gender, income (demographics) and lifestyle, interests, and values (psychographics) of your customers.

For example: A premium coffee shop might target young professionals to serve their customers high-quality coffee and provide them with a classy ambiance and on the other hand another shop might target college students to provide them with a comfortable atmosphere with lower-priced coffee.
Identify the 4P’s of the Product

Product: Examine the features, quality, and range of the products or services that your competitors provide. Take note of any unique selling factors that they promote and that you can include to enhance your product.

Price: Look at their pricing strategy, and which category they fall in, Like premium, mid-range, or cheap. Look, do they compete by offering lower prices? Try to navigate trends in discounts, promotions, and packages.

Place: Look into their distribution channels and actual places. See to it that whether they are exclusively available online or they have a physical presence.

Promotion: How do they interact with their target audience? Check out their promotional activities like social media pages, advertising, sales and marketing strategies, etc.

These 4 P's will help you to understand how accessible your competitors are to their target audience.

For example: A coffee brand can provide its customers with a wide range of special beverages by opening cafes in downtown locations or selling them through online delivery platforms.
Get to know their SEO Strategy

SEO or Search Engine Optimisation plays a big role in online marketing.

You need to analyse keywords and content. Use SEO tools to determine what content your competitors create on social media platforms and search their keyword rankings.

Also consider their backlink profiles, website structure, and blog entries for evaluation of their online presence.

For example: A competitor’s Instagram post can be about brewing coffee generating interest in the audience to learn more about how coffee is made or similarly a post on a seasonal drink with discounts for a limited period can be a lucrative way of attracting customers.
Evaluating Engagement Metrics

Examine what kind of social media posts, blog topics or content pieces generate the most engagement in the form of likes, shares, comments, or other forms of interaction.

This might help you understand what kind of storytelling format resonates with your target audience.

For example: A competitor’s Instagram post of a 50% discount deal on a seasonal drink means customers are more attracted to limited-time deals, or a blog post on the 20 best coffees in the world can indicate that the target audience is interested in coffee education.
Final SWOT analysis

Strengths: Identify what your competitors are good at. Are they doing successful branding, offering premium quality products, or good customer service?

Weaknesses: Find out where your competitors are lagging. Is it high prices, negative customer reviews, or lack of product innovation or development?

Opportunities: Look for market gaps, and try to fill them up, such as growing trends that your competitors haven’t covered yet or unmet customer demands.

Threats: Be aware of any external factors that can create a negative impact on your firm like entry of a new brand or changes in customer preferences.

For example: For example for a coffee brand weakness could be strong brand devotion and weakness could be a lack of new variety in the products.

Thus a growing demand for gluten-free and vegan lifestyles can be an opportunity to launch new coffees or threaten if they continue their same products in the market.

Locobuzz: Your CX success partner

Locobuzz can be a powerful partner in your competitive analysis.
By monitoring your competitors’ social media and online mentions, you can gain valuable insights into their customer sentiment, brand perception, and overall performance.

Our advanced sentiment analysis tools help you understand how customers feel about your competitors, allowing you to identify opportunities to differentiate your brand.

Additionally, Locobbuzz’s customer journey mapping capabilities enable you to compare your customer experience against competitors, pinpointing areas for improvement and innovation.

By leveraging Locobuzz, you can make data-driven decisions to outperform your competition and deliver exceptional customer experiences.

Examples of competitive analysis

Here are a few examples of scenarios where competitive analysis can help you get a clear picture of your competitors and how you can cope with the market trends.

Coffee Shop Competitor

You observe that rival coffee shops provide a wide variety of cold brew drinks contrasting to your menu, wherein you have just 1 cold coffee drink.

So you then decide to broaden your menu recognising the latest trends and include more cold beverages in the menu to attract more customers to your shop.
E-commerce clothing website

Looking at the current trends you observe that your competitors are increasingly investing in eco-friendly and sustainable clothing brands.

Thus looking at the growing public interest towards sustainability you also decide to launch an eco-friendly clothing line and promote it via marketing campaigns.
Tech Startup

Your closest competitors have begun implementing AI and machine learning technologies to create an enhanced customer experience for their clients.

Moreover, in response, you start investing more in the development and promotion of AI-generating responses to introduce a new AI-driven product line.
Local Restaurants

Competitors are attracting their customers through creative social media posts or offering free home delivery.

So to keep up you also create a social media presence for your restaurant and tie up with food delivery apps to reach a large customer base.

Conclusion

Incorporating competitive analysis into your business would be very essential and critical to remain in the industry.

Examining your competitor’s strengths, weaknesses, and shortcomings can provide you with useful insights and help you to make better decisions and judgments for your brand.

This analysis allows you to keep up with the new trends, and new possibilities and prevent potential pitfalls.

It guarantees that you can manage your resources wisely, integrate market trends into your brand, and fine-tune your plans to satisfy the needs of your customers.

Lastly conducting a thorough competitive study allows you to position your brand in the market and eventually leads to making profits and achieving long-term success.