How to Do Competitor Research

If you’re running a business, it’s good to think about ideas and practices that can help you grow or  improve. Doing competitor research is a great way to understand your place in the current market and see what similar businesses and brands are doing to engage with their customers. 

Competitive market research is useful as it ensures your products, services, and content are attractive to your ideal audience. Here’s a guide on what’s included in a competitive analysis, why it’s valuable, and how it can help your business.

What is competitor research?

Competitor research involves comparing your business to competitors to understand what’s advantageous about your business strategy compared to their own. It can also help you identify areas where you can improve or gaps you can fill. 

This involves comparing features like your customer base, growth, market share, marketing strategies, and other pillars of what makes a business successful. This is then usually compiled into a breakdown of actionable practices, ideas, and steps that your business can take going forward. You don’t have to take action on everything at once, but you can use the document to set goals, develop products, or update your strategy. 

Why is competitive market research important?

Competitive market research is valuable because it helps you understand the market landscape your business operates in. That can help you shape an idea into something unique or guide you toward areas of improvement for marketing strategies, products, or website design. Here are some key ways it can improve your business.

• Increase revenue: By applying tactics seen in other businesses, you can increase your competitiveness and make more sales.

• Understand your ideal customers better: Evaluating customer feedback can give you a better understanding of your target market. You can learn what they value as buyers and like or don’t like, then integrate these points into their customer experience.

• Keep your business strategy fresh: Competitor market research is a great way to keep your business strategy current. Researching marketing tactics, product lines, or target customers’ preferences and needs ensures your data about the market isn’t outdated.

• Avoid costly risks: Seeing where your competitors could improve lets you avoid implementing similar strategies in your business. That way, you can adapt the strategy in a way that’s more successful or avoid possible negative outcomes of strategies that aren’t doing well for others.

What’s included in a competitive analysis?

You can conduct a competitive analysis for competitors as a whole, or focus on specific parts of their business, like a product-specific competitive analysis. No matter what angle you take, there are some key things to include in your research.

Who your competitors are

You’ll need to consider who is similar in your market to compile a list of competitors. This could be people who offer the same product or service you do or people whose products may be bought to replace yours. 

For example, if you’re a business selling customized calligraphy pens, a competitor would be a rival seller. But this could also include businesses that sell gel pen stationery that a customer may pick up instead of your product.

Your ideal customers

It’s important to think about your current customers and your ideal ones. Who’s in need of your product or services? What are they looking for, and how do they decide which businesses they buy from?  

You can find this information by auditing your own customer base: What are your most popular products? Do your customers fall into specific demographics? Where do they hear about your business, and do they tend to be repeat buyers? 

SEO tools can also help you to get a sense of what they look for when finding your products, by identifying which search terms are sending people to your website.

Your unique selling point (USP)

Explore differences between your company and others. What makes your product or business unique? What’s different about your service? What are you offering that your competitors don’t have? This can be a good way of figuring out how to stand out when selling your products or services.

Even if you sell the same product as someone else, there could be differences in your materials, how you provide service, your tone or way of working with customers, or the specific personal experience you bring to the table.

Learn more about finding your value proposition

Your market share

Your market share is the cut of total industry revenue that belongs to your business. If you can find details of your total industry revenue, compare this with how much other businesses are receiving to figure out your relative market share. 

The market share you get may be very small if you compare across a huge category, like “beauty products.” But the more specific you get to your business, like “organic beauty products” or “locally sourced mascara and lip balms,” the more accurate a view you can get into your share of different parts of the market.

Product or service comparison

This looks at the similarities between your products and services and others on the market, including cost, quality, visual branding, packaging, and more. Comparing these can help you:

• Identify USPs, like better quality or lower cost

• Get new ideas, like ways to refresh your brand or package your products

• Note market gaps, like underserved budget categories or service needs

Marketing strategies 

This looks at where you and your competitors find your customers, source sales, and reach out to potential customers or clients. This could involve looking at a brand’s overall marketing strategy or a specific approach, such as social media plans or email marketing. 

Comparing strategies can help you identify audiences or accounts to engage with, marketing tactics you hadn’t considered, or help you better understand how competitors talk to and interact with their customer base.

When to perform competitive market research

It’s good to perform a competitive analysis before periods of change in your business or prior to implementing new business strategies. This could be before a large change or stage of growth, such as in after the first 6-12 months of launching your business. It can also be useful to perform during market shifts or other changes, especially if you see different behaviors among your customer base.

Competitive market research doesn’t have to be performed only once. It can be useful to run at regular intervals, such as a yearly business review, product launch-specific review, or even as regularly as quarterly.

Competitive analysis example: A step-by-step guide

If you’re ready to start your competitive analysis, it’s helpful to look at examples beforehand. Here’s a step-by-step-guide to completing your own competitive research.

1. Identify your competitors

Start off by identifying who your competitors are. A simple way to do this is to look for companies who offer similar products and services to your own, or those that might service your customers interchangeably. 

Resources like search engines, trade industry magazines, or directories can be good ways to find competitors. It’s important to look further than just other companies that come to mind, as you might be missing potential competitors if you do so.

Competitors can be split into a few different categories: direct, indirect, and substitutes.

Direct competitors

These are companies who offer the same items or services you do and are targeting the same market. For example, if you are a company selling stationery and journals targeting the midwest area, a direct competitor might be another local company selling the same thing.

Indirect competitors

An indirect competitor may not offer the exact same products or services, but will serve the same market. This might apply to companies that sell similar products and services to your own. 

If you run a social media copywriting agency, an indirect competitor might be a graphic design house that offers 360 packages, including copy. A customer may swing to one or the other, but are unlikely to purchase both of your products.

Substitutes or substitute competitors

These are businesses selling items customers may swap in for your services, even if they’re not intentionally aiming for the same market. For example, a substitute for a pizza delivery company may be a business selling a home pizza making kit, as customers may purchase this instead of eating out.

2. Find your target points of comparison

Look at the business overview, products, and services of your competitors to decide where you want to compare. Different data points to consider include: ratings, pricing, and promotion strategies.

Customer ratings

Look at feedback from customers about competitor products and services and compare this to your own. You can find detailed feedback from website reviews, message boards, social media, and through independent research, like surveys.

Take note of customer descriptions of others’ products and services compared to your own. How do their ratings compare on topics like ease of use, quality, satisfaction, and ability to access what they need?

価格設定

Look at the costs of similar products and services offered by your competitors. Do they cost more or less, and if so, why? This can give insight into appropriate pricing ranges for your own products as well as seeing if you are over or undercharging your target market.

Marketing, branding, and social media strategy

This considers how your competitors show up in the marketplace and how their brand positioning differs to your own. Look at where they show up in advertising or what marketing channels they use.

A company with increased market share may be better at targeting Gen Z audiences with TikTok, for example. Let others’ practices give you guidance of where you could show up differently or where you might have a competitive advantage.

3. Analyze your data

A good format for analyzing your competitor data is through doing a SWOT analysis. This is a popular competitive market research technique that breaks down your gathered data into actionable tactics to use for your business going forward. 

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. For each competitor and point of comparison, note down the following.

• Strengths: Think about what’s performing well in your business and where you excel over your competitor. This might include what customers resonate with or positive feedback about your company as opposed to others.

• Weaknesses: This looks at what might be lacking in your business strategy, or criticisms from customers that don’t appear in a competitor’s feedback. 

• Opportunities: List identified areas for improvement. This might take inspiration from what other companies are doing well, such as a marketing strategy you’re yet to try or other untapped practices that resonate with customers.

• Threats: This identifies areas of concern and forecasts possible downturn in areas of your business. This might list areas where competitors risk outperforming you in future. For example, if a competitor has a more established social media presence, you could lose market share with customers who use social platforms to hear about new products.

4. Identify next steps

Once you’ve completed your research, use your findings to pick out some actionable strategies to use for your business. This could include a change in marketing strategy, a review of your branding, adjustments to pricing, or similar measures. 

Make sure you take note of relevant metrics before implementing any changes, such as current market share, so you can measure the impact of new strategies going forward.

Competitive analysis example

Here is a product competitive analysis example for a company selling customized sweaters.

• Find your competitors. Use search engines, SEO tools, and visit garment maker directories to compile a list of competitors. A direct competitor might be a fellow local sweater maker, while a substitute competitor could be one selling knitted hoodies. 

• Make a list of features you want to compare. This may be price points, quality of materials, and site reviews from your respective customers.

• Plot your data on a SWOT grid to outline your next steps. In this case, your strengths might be the quality of your materials, and your weaknesses compared to a competitor might be that they offer lower price points. An opportunity here might be to lean into your sweater quality in marketing to differentiate yourself. A potential threat would be losing out on the market of potential customers who are looking for more affordable options. Ensure you measure any relevant changes you plan to implement.

It’s important not to let competitor research take away from the uniqueness of your business and brand. The goal is not to plainly copy what your competitors are doing, but to stay informed and find areas where you have an edge or opportunity to adapt. Plus, copying competitors could possibly infringe on copyright in some cases or be viewed negatively by customers. 

Avoid losing sight of your USP. Rather, ensure any actions you take are tailored for you personally and are right for your business and the people you’re trying to serve.