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Jory MacKay on February 13, 2024

Jory MacKay

Jory is a writer, content strategist and award-winning editor of the Unsplash Book. He contributes to Inc., Fast Company, Quartz, and more.

February 13, 2024 · 10 min read

Whether it’s projects, products, or even whole companies, initiatives fail if they don’t properly address users’ needs. Fully understanding customer demand, the broader market, and the competitor landscape is vital to ensure you don’t fail - and that’s where a competitive analysis can help.

A competitive analysis allows you to understand your entire market, including your customers and competitors, to ensure you have all the information you need to make the best strategic decisions.

In this guide, we’ll go deep into what a competitive analysis should include and then provide a step-by-step guide (including examples and templates) to help you create your own.

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If you’re a founder, product strategist, or team leader looking to beat the competition and deliver for your customers, this article is for you!

What is a competitive analysis?

A competitive analysis is a strategic market research activity undertaken to understand customers’ needs, competitors’ strengths and weaknesses, and opportunities for new products and growth in a particular market.

In the process of developing a competitive analysis, you’ll gather and analyze data on your ideal customer base, competition, distribution channels, and pricing and marketing strategies.

While a good competitive analysis first aims to understand the here and now, a great one also looks to the future.

By doing this, it uncovers any external factors that might change the market in the future, such as changes to legislation, new technologies, or socioeconomic and ethical attitudes.

Most organizations complete a competitive analysis when forming their go-to-market strategy or writing a business case, but in truth, they can be used at any time.

You can use a competitive analysis to unlock a range of critical benefits, including:

• Validating new ideas. If you already have an idea in mind, a competitive analysis will help you validate whether it’s a good or a bad one. If it’s a good one, you’ll have a ready-made opportunity to take advantage of, but if it turns out to be bad, it stops you from heading down a rabbit hole.
• Distilling customer complaints. For organizations already occupying a market, competitive analysis is also a great way to help elicit and dive deeper into customer complaints. This can help you optimize an existing product or help you pivot to a new problem-solving niche.
• Poking into a competitor’s weaknesses. A competitive analysis isn’t just about you. It’s also a great way to dig into your competitors’ weaknesses, ultimately helping you to exploit them. This may allow you to steal customers from them in the future and further establish your brand as the go-to provider.
• Turbocharging your go-to-market strategy. If you’re ready to go with a new product or service, a competitive analysis can help boost your go-to-market strategy. This is all thanks to insights on pricing, sales, and marketing strategies that help you stand out from the crowd and excite new customers.
• Understanding trends and risks. A forward-looking competitive analysis helps you stay ahead of any future trends and identify on-the-horizon risks to your organization. This enables you to build resilience, adapt your strategy, and optimize your resources to remain competitive.
• Providing a benchmark for growth. A competitive analysis is a great way to gather deep information about a market and provide a benchmark from which to grow. Some key competitive metrics you may gather include market share, brand awareness, NPS, or conversion rate.
  

What to include in your competitive analysis

To make a competitive analysis effective, it needs to provide insights that help you reliably improve your strategy, understand your users, and beat out your competition.

Here’s what you’ll want to include in a competitive analysis:

The target market

Every competitive analysis starts with a detailed view of the ideal customer, the problems they need solving, and what makes them tick. Many organizations break down their target market using customer personas or segments based on personal characteristics, demographics, and buying patterns.

The commercial metrics

No analysis is worth its weight without a detailed look at the numbers behind it all. While market share (often based on sales or revenue) is the leading metric, looking deeper into the volume of products sold, customer conversion rate, and retention period helps paint a richer commercial picture.

No competitive analysis is worth its weight without a detailed look at the numbers behind it all.

Your product’s unique selling proposition (USP)

Next, most competitive analysis exercises include a detailed view of your own product - specifically, what makes it unique? Your product’s benefits should fix the problem statements of your target market, otherwise, you’re at risk of a poor product-market fit.

Your competition

Now, the analysis begins as you compare your product against your competitors. While the exact points of comparison will vary, you should include information on product features, pricing points, strengths, weaknesses, and ancillaries (e.g., support packages, delivery options, warranties).

The sales vs. marketing landscape

Reviewing the sales and marketing landscape helps you understand how best to turn a potential customer into a paying customer. The customer persona, product type, and current market conditions will all determine whether a sales-led or marketing-led approach is better for driving conversions.

Existing customer insights

Too many companies focus their competitive analysis on attracting new customers and forget to consider how to retain their current clients. Good competitive analysis exercises should also focus on existing customer insights, including NPS, customer satisfaction, and current customer complaints.

Go-to-market analysis

This part of the competitive analysis is essential if you’re looking to launch a new product or service. Consider the barriers of entry for your market, the typical costs involved, and the path to building brand awareness. To ensure you learn the lessons of previous initiatives, look back at how others entered the market, especially focusing on those who failed and what they did wrong.

Future market outlook

For all the areas covered above, also include a forecast of how they may change in the next 6-24 months. This may include projections on the financial markets changing, political/regulatory movements, the attitudes of customers, or new technologies available to the market. Launching a product can take months or even years, so don’t rely on what you know now when planning for the future.

A good competitive analysis first aims to understand the here and now. A great one also looks to the future.

A competitive analysis can range from a simple one-pager to a whole essay, depending on the level of detail. To help you decide how much detail to go into, consider these different factors:

• For individual products: Keep your competitive analysis less detailed than a company-to-company or industry-to-industry comparison.
• For high-level ideas: Keeping things simple is okay. But if you’re approaching a crucial investment stage, it’s probably worth going into more depth.
• For existing products: Many companies complete a competitive analysis refresh every 6-12 months for existing products and services. This helps them stay up to date with changes in their market.

How to write a competitive analysis in 8 steps

Even after understanding what to include in a competitive analysis, it can feel intimidating to start building out your own.

Below, we’ve outlined eight steps to take to create a competitive analysis for a new product or feature. By the end, you’ll have a document that helps you better understand your market, customers, and competition.

If you want to follow along, you can use our free competitive analysis template, which we have prepared for you to fill out and use for any future competitive analysis you do. Let’s get started:

Step 1: Define your target market & customer personas

A competitive analysis should always start by defining your target market. After all, these are the customers everyone is fighting over, so you need to clearly understand who they are, their needs, and what they want from a product or service.

Remember: No two customers are the same - especially if you’re operating in a B2C market. Don’t try and put everyone in one box, instead, create customer personas based on key themes, characteristics, and behaviors. This will help you effectively target your message.

Step 2: Understand where your product sits in the market landscape

Before you can shine a light on others, you must objectively examine where you currently sit in the market. This won’t just help you benchmark your own position but also help you understand what information you have to find out about your competitors further in the process.

Try these strategies to help you get an objective assessment of where you are right now:

• Talk to your customers. Nothing beats speaking to real customers, so nail this step with a round of customer or user interviews. If you’re looking to launch a new product, it will help you understand who your customers are, what they’re looking for, and what makes them tick. If you’re already in the market, this will help you gather feedback on your current performance.
• Stay objective. Whatever you do, do not use this as an opportunity to stroke your ego. Actively seek our positive and negative feedback to get the true reflection on where you sit in the market. If you only let yourself hear the good news, you’ll fall flat later on in the process.

Step 3: List your competitors and create an overview of each

There are only so many slices of the pie - so, once you understand what your customers want, it’s time to identify your competition. Competitors should include anyone with a similar product or service offering that is ideally already successfully operating in the market.

If you’re struggling to identify your competitors, try this:

• Start with a simple search. Jump onto Google or Bing and begin typing search terms that are relevant to your market. For example, if you’re entering the CRM market, try phrases such as “best CRM system” or make it location specific such as “CRM systems in the US.”
• Keep your list small but varied. When building a list of competitors, keep the number between 5-10 but ensure there’s some variety. Include direct and indirect competitors, startups and established corporates, and local and international organizations. This will ensure you’ve captured a good sample of your market.

There are only so many slices of the pie - so, once you understand what your customers want, it’s time to identify your competition.

Step 4: Conduct primary and secondary market research

With your list of competitors built, it’s time to start gathering some information on them. You’ll want to ensure you get a full picture of their current position and offering, and any plans or strategies for the future.

Aim for a mix of primary and secondary research. Here’s how they’re different:

• Primary research is first-hand information direct from a customer or user. To gather this, try running focus groups, sending questionnaires, conducting user interviews, or simply purchasing the product or service yourself.
• Secondary research is information gathered by someone else. For this, review each competitor’s website, check out their reviews on sites like Google or G2 Crowd, and look for any news articles about the organization.

Step 5: Compare your 4 Ps (Product, Price, Promotion, Place)

Once you’ve dived deep into each competitor, you need to organize your information to help you complete a fair and equal comparison. The 4 P’s marketing mix is a great way to do this, providing a structured way to review a competitor’s product, price, promotion, and place.

If you’re new to the 4 Ps method, here are some questions to ask for each category:

Product:

• What exactly are they selling?
• What features are included?
• What do customers like? What don’t they like?

Price:

• What’s the pricing model? For example, one-time purchase vs. subscription.
• Do they run offers or discounts?
• Is the pricing high-end or low-end? Does it match their product offering?

Promotion:

• What channels do they use? For example, social, media, print, etc.
• What’s their USP?
• What’s their brand perception? How do they connect with customers?

Place:

• Where do they sell their product? For example, online vs. in-store.
• Do they sell direct or through partners/resellers/distributors?

Step 6: Use a SWOT analysis to uncover opportunities and weaknesses

Now that you have a super clear picture of your customers and your competitors, it’s time to start thinking about your strategy. To do this, start by uncovering strengths and weaknesses in yourself and your competitors to understand where opportunities and threats exist.

Try these frameworks to help you out:

• SWOT (Strengths, Weaknesses, Opportunities, and Threats) is perhaps the most well-known environment analysis framework on the market. Strengths in yourself and weaknesses in competitors = opportunities. Weaknesses in yourself and strengths in others = threats.
• Porter’s Five Forces model is another fantastic framework for analyzing your current and future market conditions. Specifically, it offers a guided approach to understanding the competitive rivalry, supplier power, buying power, and threats of substitution and new entry within your market.

Step 7: Estimate the size of the prize

Any venture into a new market or a pivot in an existing one needs to create value. This is where data is essential to help you further analyze your opportunities and threats by putting a commercial value to them.

Here are some tips on how to estimate the size of the prize:

• Start with the total market size and competitor split. First, analyze the market size and how your competitors currently split the market share. If you’ve identified weaknesses in those competitors, estimate the rewards if you can steal 5%, 10%, or even 20% of their customers.
• Don’t ignore changes in the market. On the flip side, it may not be all about stealing from others. Research the change in your market over time - is it shrinking or growing? Hopefully, it’s growing, which means more and more customers are entering the market looking for a product like yours! Overlay this against your pricing model to estimate the upside.

Step 8: Strategize and make your move

If the numbers stack up, it’s time to launch, re-launch, or update your product to the market. This is an exciting time, but you must execute your marketing strategy carefully to maximize the impact.

Here are some final tips to help you make your move:

• Take your time and focus on creating a solid go-to-market strategy. This includes lining up your business case with stakeholders, securing resources, and signing off on a marketing plan. Once those key deliverables are in place, you’re ready to execute!
• Use the right tools to stay organized. The best way to ensure your strategy goes to plan is to use a project management tool, such as Planio, that keeps everything and everyone in one place. With task management, communication, and knowledge repository features, you can set yourself up for success by aligning all your competitive analysis notes, project plans, and customer feedback forms!

Competitive analysis example: CRM System

To finish up, let’s bring a competitor analysis to life by simulating a real-life scenario.

This will help you understand the areas to focus on when completing your own and the common data points to capture to create a strategy-defining analysis.

The scenario:

On-The-Go CRM is a startup looking to enter the CRM market with a mobile-only CRM offering.

In a remote world, they know users are more mobile than ever and grow tired of CRM systems that don’t properly work on mobile. To better understand the competitive market, they complete a 4 Ps analysis versus their biggest competitor, TurboCRM.

So what did they learn? At the end of the day, the On-The-Go CRM team discovered that, while they might not be able to take a huge chunk of the market share due to not having a desktop app, their mobile-first approach and founder’s online influence will be enough for them to succeed at the level they want to.

It’s time to get competitive – Let Planio help you!

Whether you’re looking to launch a new product, in a post-growth stage, or you just want to cement your status in an existing market, a competitive analysis is a great way to get under the skin of your market, customers, and competitors.

Like many things in project management, following a structured process for a competitive analysis is the best way to go with our 8-step process and free template there to support you every step of the way.

And, of course, whether it’s task management, communications, or storing documentation, bring your team together and execute a killer competitive analysis with Planio - the project management tool that’s seamless collaboration to any team!

Try Planio with your team - free for 30 days (no credit card needed)