Strategy

How to do competitive market analysis in 10 steps

December 14, 2020

15 min read

Keeping your eye on the competition is vital. Find out how you can use competitive market analysis to stay one step ahead of your rivals.

Competitive market analysis is one of the most overlooked aspects of marketing. All too often, brands are so focused on what they’re doing, they aren’t paying attention to what their competitors are up to.

Keeping your eye on the ball when it comes to your competition is incredibly important to make sure you don’t get blindsided. And it’s not just your closest rivals you need to monitor, it’s the wider marketplace and your consumers. Otherwise, you might be taken by surprise by a plucky newcomer! 

Thankfully, there is a reliable way to make sure this doesn’t happen, and that’s what we’re going to look at in this article…

What is competitive analysis?

Competitive analysis is a form of market intelligence. The process involves gathering a wide range of information on your competitors. You’ll look at their product range and value propositions, their business model and brand and marketing strategies, their sales performance, and the amount of brand equity they have. 

This will allow you to assess each competing brand and put them on a scale to understand how much of a threat they represent. You’ll examine what they’re doing right and what they’re doing wrong. With this knowledge, you’ll be able to devise strategies that will help you get ahead of your closest competitors. It will also enable you to spot marketing opportunities to take market share from competitors who are underperforming. 

Competitive market analysis is a hugely valuable process for both business leaders and marketers alike. 

How to do competitor analysis

Doing a comprehensive competitive market analysis might seem a little overwhelming. It’s true that a lot goes into it but, thankfully, the process can be broken down into much more manageable chunks. Here are the 10 steps to effective competitor analysis and the analysis tools you can use to help you:

  1. Identify your competitors
  2. Analyse your competitors’ product offering
  3. Investigate competitors’ market share
  4. Calculate your competitors’ market reach
  5. Find out how satisfied your competitors’ customers are
  6. Study your competitors’ marketing strategy
  7. Examine the strength of competitors’ content and social media
  8. Investigate your competitors’ tech stack
  9. Test the customer experience 
  10. Carry out a SWOT analysis

1. Identify your competitors

You can’t research your competitors’ businesses if you don’t know who they are. While you’re bound to have an idea of the companies operating in your space – and which ones are the biggest – you might not know which ones are most likely to be considered by your target market.

For example, let’s say you’re a men’s shoe brand targeting affluent hipsters – that’s quite a niche audience. What you actually need to know is which shoe brands have the most share-of-mind amongst that specific demographic.

The most efficient way to find that out is by asking the consumers in question. Using a consumer research platform like Attest, you can get answers from people in your target market. You might ask them:

  • What brands come to mind when they think about your product or service (unprompted recall)
  • What brands they’re aware of from a list you provide (prompted recall)
  • The last time they purchased your product or service
  • Which brand they bought from
  • Brands they’ve bought from in the past
  • Brands they plan to buy from in the future (purchase intent)

By getting respondents to answer in their own words, you gain a true picture of the brands you’re competing against. This might surface brands you’d not considered as direct competitors, or it could show you that a brand you thought was dominant actually isn’t in the eyes of your market. 

2. Analyse your competitors’ product offering

Now you know which brands are on your target audience’s radar, you can start researching them. You’ll want to get familiar with their product range – what do they offer that you don’t (or vice versa)? What price range are they in and how does your pricing compare? Now, look at the quality of the products – are they better/worse/the same? How slick is their website? Be objective about it; it’s important not to look at your own brand through rose-tinted glasses!

You should also try to ascertain each competitor’s value proposition. In other words, what the brand tells people it stands for and why they should shop with them. Look at the messaging on its website – what are the key themes? Maybe it trades on being environmentally friendly or having the best prices? It’s important to understand how your competitors are appealing to their customers. 

Try drawing up a market map. Market mapping involves arranging competing brands/products on an axis according to their positioning. For example, whether they are high or low cost or whether they are complex or basic. 

Finally, what is your competitor’s business model? And which distribution channels do they use? For example, do they sell through third-party retailers or only direct-to-consumer? Do they list on marketplaces? Do they franchise or licence their products, or sell by subscription? Do they have a freemium offering? This process can highlight the potential to innovate your own business model

3. Investigate competitors’ market share

Digging into your competitors’ finances can tell you a lot about how well they’re doing. For UK companies, you can find accounts filed at Companies House. Meanwhile, publicly held companies in the US will publish trading reports on their corporate websites. You can use this information to calculate a company’s market share.

You can determine a company’s market share by dividing its total sales or revenues by the industry’s total sales over a fiscal period (Most industries have formal associations which compile and track industry sales data and have information on overall market size). Use this measure to get a general idea of the size of a company relative to the industry. 

You can also see if the company’s market share is growing. A company that is maintaining its market share is growing revenues at the same rate as the total market. But a company that is growing its market share will be growing its revenues faster than its competitors.

You’ll also be able to find out other valuable information about a competitor by searching trade publications and other online sources. Look for:

  • Funding the company has received
  • Investment the company has made 
  • Plans to expand or enter into new markets
  • Notable new hires, vacancies and current number of staff
  • Or anything that signals a downturn, like redundancies or store closures

4. Calculate your competitors’ market reach

As well as understanding competitors’ market share, it’s also worth understanding their market reach, meaning how many customers can they access (or access them)? For brands with physical stores, how many do they have and where are they located? 

For those selling online, what are their logistics like? Can they deliver to all parts of the country? Do they ship internationally? If they do, is shipping priced competitively? These factors will affect the number of people who are able to shop with the brand. 

You should also review the company’s delivery terms in general – do they offer free delivery? How long does delivery take? How do they handle returns? These are all areas where you might be able to offer your customers something better.

5. Find out how satisfied your competitors’ customers are

Hard financial figures don’t tell the full story. A major consideration when conducting competitive market analysis is how happy a brand’s customers are. Looking at feedback from real customers can tell you so much. It can help you understand why people shop with a competitor, what they like about them, what they don’t like about them.

There are a number of sources to obtain this information. Social media is a good place to start. You can use social listening tools to assess the levels of positive vs negative sentiment towards a brand. But it’s also worth spending some time actually reading comments and posts to get a feel for the things people love… or what they’re frustrated with.

You should also read reviews posted to Amazon or the brand’s own site because it will show up in detail any areas of weakness that your competitor’s product has. Maybe lots of people are complaining about faulty products, or slow delivery or poor customer service. Whatever it is, you will have identified a chink in their armour. 

Market research is another great resource for competitor intelligence. You can obtain a Net Promoter Score (NPS) for your competitors, by asking consumers how likely they are to recommend the brand to a friend or colleague. It gives you an instant snapshot of the general sentiment towards the brand and is a metric you can benchmark against. Meanwhile, combining NPS with purchase intent data allows you to measure overall brand equity.

Other questions you can ask through consumer surveys to get a complete picture of how people feel about particular competitors are:

  • Which of the following qualities do you associate with brand x?
  • Why do/don’t you buy brand x?
  • How would you describe brand x to friends?
  • Why did you stop buying brand x?
  • What could brand x do better?

6. Study your competitors’ marketing strategy

You’ve looked at the messaging your competitors are putting out, now look at the methods they use to convey that messaging. Try to find out which marketing channels they’re leveraging. These might include:

  • Owned media – blog, newsletter, podcast, downloadable content or in-house magazine
  • Paid social – ads on Facebook and Instagram etc.
  • Organic social – which social media platforms do they use?
  • Paid search – what keywords are they targeting for PPC/AdWords?
  • Organic SEO – where do they appear in organic search results and what optimization techniques are they using? 
  • Display advertising – banner ads on third-party websites
  • Native advertising – promoted content like articles or videos on third-party websites
  • Affiliate advertising – do they have an affiliate marketing scheme?
  • Print media – adverts or advertorials in newspapers or magazines
  • Broadcast media  – radio or TV ads
  • Sponsorships and partnerships – are they linked to any other brands?
  • Out of home – billboards, ads in stations, on buses/taxis etc. 
  • Sales collateral – leaflets, brochures, direct mail 
  • Event marketing – hosting or participating in online or offline events
  • Influencer marketing – do they have brand ambassadors? 
  • PR – do they issue press releases or stage PR stunts?

This process will give you a good idea of where your competitors are spending their marketing budgets. You might find that they’re under-utilizing certain channels which could represent a potential opportunity for your brand.

Start compiling examples of each type of marketing your competitor uses. Study how each piece expresses their brand identity and compels consumers to take action. What could you imitate? What could you do better? 

7. Examine the strength of competitors’ content and social media  

Just because a brand is present on lots of platforms, it doesn’t mean they’re really using them to their best advantage. As part of your analysis, you should look at how many followers they have on each social media platform and what level of engagement they enjoy. Observe how often they post, and how many likes, comments and shares they typically get. 

Which platform are they strongest on? What type of content do their followers engage with most? Are they making use of all the features on a platform, such as Facebook Live, Instagram Stories or Instagram TV? Do they sell directly through social media via services like Instagram Shopping?

Now, look at the content your competitor publishes on their own website. How often do they post to their blog? Do they produce downloadable guides or whitepapers? You can use a tool like BuzzSumo to see how successful their content marketing is. Just enter your rival’s URL to see their top content and the number of shares and engagements achieved across Facebook, Twitter and Pinterest. You can even see who is sharing their content, helping you identify their most important influencers and develop your own content strategy. 

8. Investigate your competitors’ tech stack

What technology and tools are your competitors using to give them an edge? You can often find case studies on provider’s websites detailing how they work with different brands and this can provide you with lots of insight. 

For example, you can find out exactly how brands like Gymshark, Bloom & Wild, Little Dish, World Remit and Bought By Many work with Attest to gather consumer insight and use it to grow their businesses. 

You can also take a peek at the mechanics behind a competitor’s website with a tool like Built With. Just type in the company’s URL and you’ll be able to see what technology your competitors’ site runs on, including any third-party plugins and widgets they’re using.

9. Test the customer experience 

There’s no better way to understand the customer experience your competitor offers than by experiencing it yourself. So, pose as a customer and buy something. If they have physical stores, go to one. Make detailed notes about your experience:

  • How appealing does the shop look from the outside? What’s the window display like? What offers are being promoted?
  • How are things displayed in the shop? How tidy is it? What sort of welcome did you get?
  • What’s the range like? Is everything in stock? Are the staff helpful? Is there any cool tech?
  • Is there a big queue for checkout? What payment methods are accepted? Are your purchases packaged up nicely?

If you’re buying online, use a screen recorder to make a recording of the experience and narrate as you go. How easy is it to navigate the site and find what you want? What’s the checkout process like? Pay attention to all the follow-up communications too and look at how they try to nurture you as a new customer. 

10. Carry out a SWOT analysis

The final step in carrying out a competitive market analysis is taking everything you’ve learned and using it to do a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. Consider all aspects of your competitor’s business, from their proposition and marketing to their infrastructure and financial standing. Here’s how to break the analysis down:

Strengths – What does your competitor do really well? What sets them apart from others in the market? How robust is their business financially and operationally?

Weaknesses – Where is your competitor failing? What could have been better about the experience you had when you shopped with them? What resource limitations do they have?

Opportunities – What’s missing from their offering? What product features are lacking? Are there any markets they’re underserving? Are they failing to use some marketing channels? 

Threats – What are they doing that presents a threat to your business? Are their prices more competitive than yours? Are they planning new retail outlets near yours?

This process will help you understand your competitor’s strengths, who you’re able to compete against, and the best ways to do it. You should also carry out a SWOT analysis for your own brand.

How often should you carry out competitor analysis?

Competitive research is usually carried out as part of a market analysis when companies are putting together a business plan for a new product or venture. But just because your business is up and running, it doesn’t mean you should take your eye off the ball when it comes to your competitors.

In fact, you should continuously monitor your competition and keep collaborative files on each one of your competitors that your team can feed into. Having this information to hand when you need it will give your brand a competitive advantage. There are a number of competitor tracking tools you can use to stay up-to-date on your competitor’s movements without much effort:

  • Google Alerts – set up an alert for when your competitor’s name appears in articles, blogs and research.
  • Companies House alerts – get notified when your competitors file accounts or make changes to their board of directors.
  • STAT – get alerts every time your competitor moves up or down the SERPs (search engine results pages).
  • Attest – schedule a brand tracker survey every six months to see if your competitor’s NPS has changed.

The competitive intelligence you receive through these channels should flag up anything that needs to be investigated further. But don’t forget to periodically repeat step one to make sure you’re monitoring all the competitors you need to be, and that there aren’t any new competitors gaining ground. The competitive landscape can change at any time and an indirect competitor can easily become a direct competitor by adding a new product line. 

You can also carry out a competitor analysis any time you need to reassess your own position in the marketplace. The process gives you an unbeatable perspective on how you’re performing, what your unique value proposition is, and any areas for improvement within your business.

Want to get started with competitive market analysis today? Download our free analysis template.

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