When you conduct a competitive analysis, you’ll need to spend time identifying your competitor’s strengths and weaknesses. On the surface, it seems like a relatively straightforward task. However, there are many facets of each merchant that you could evaluate. How do you approach assessing your competitors’ strengths and weaknesses?
Many business owners start with the “four P’s” of the marketing mix and branch out from there. Here’s a useful framework to help you assess your competitors’ strengths and weaknesses, as well as some key resources to help you get the information you need to fuel your competitive analysis.
Start with the four P’s: Product, price, place, and promotion
The four P’s is a concept that originated from Harvard in the 1950s. It refers to four essential factors that play a role in marketing a product or service to consumers. The four P’s are:
- Product: What is your competitor’s product like? How is the quality? What features does it offer, especially compared to yours and the rest of the market?
- Price: How much is the competitor charging for the product? Do their prices vary depending on the channel partners? What is their discount policy? Can you tell their pricing model?
- Place: What is their geographic reach? Do they have a similar service area to yours? Do they have an online store, brick-and-mortar locations, or both?
- Promotion: What are their sales tactics? What marketing campaigns are they running? What is their social media presence?
To find information about the four P’s, put yourself in the shoes of the customer. Consider visiting their store in person or online. Research the competitor’s social media channels and website. You may even buy one of their products to compare quality, features, and pricing to your offering.
Add in a few other key metrics
Don’t limit yourself to the four P’s. Other factors influence the customer experience and their purchase decision. It can also be helpful to look deeper into “how the sausage is made” — how does the competitor’s business operate differently than yours?
As you consider the customer experience, look at your competitor’s reputation and positioning. Who is their target market? How are they defining their product in a unique way, relative to the rest of the market? What are people saying about your competitors on online review sites?
In addition, look at the inner workings of your competitors to see where they may have an operational advantage. See how many employees the organization has, what positions they are hiring for, and their suppliers. For example, are their shipping partners offering better rates than yours?
Look at your competitors’ career sites, LinkedIn, Yelp, social media channels, Google reviews, and Glassdoor pages to better understand their inner workings.
[Read more: 6 Steps to Performing a Competitive Analysis]
It’s important to approach this matrix through the eyes of the consumer. You may not think that a competitor’s product quality measures up, but if a customer is satisfied, that’s what matters.
Rank your competitors on a common scale
It can be helpful to standardize the way you assess each competitor so you have an objective view of the market landscape. Create a matrix that scores your competition on common criteria on a scale of 1 to 10, with 10 being the worst and 1 being the best. For instance, if a competitor has a great return policy that customers mention frequently in their online reviews, give that business a 1.
It’s important to approach this matrix through the eyes of the consumer. You may not think that a competitor’s product quality measures up, but if a customer is satisfied, that’s what matters. Customer perception plays a major role in sales and brand preference.
[Read more: Bed Bath & Beyond Tackles Heightened Pricing Competition Amid Quicksilver Online Sellers]
Assess what the results mean for your company
Finally, look at the scores in your matrix to see where there is an opportunity for your business to gain traction. Perhaps you notice that customer service scores in your industry are low across the board. Or you see that all your competitors are using the same supplier. How can you adjust your business strategy to provide better service or avoid the risk of supplier delays?
Tools to research your competitors efficiently
Beyond doing your own primary research — visiting a competitor’s location, exploring their website, and buying their products — there are online tools that can give you deeper secondary research insight. These tools can give you information about:
- Social media: Monitor competitors’ engagement rate, follower count, and mentions to see how their content performs.
- Search engine optimization (SEO): Understand your competitors’ web presence and content marketing performance. See what keywords they use to target customers who also fall in your audience.
- Direct marketing: Some tools can report on your competitors’ email campaigns, SMS, and other forms of digital advertising.
- Market intelligence: Access publicly available financial data, historical performance, and market positioning with these niche research tools.
Some tools, like Semrush, are all-in-one solutions that address many, if not all, of these intelligence categories. There are also specialist options, such as Owletter, for email analysis, or Ahrefs for SEO.
A new line of competitor analysis tools uses artificial intelligence to help you understand a company’s positioning and performance. For instance, products like Crayon and Kompyte use AI to pull competitor updates into a unified dashboard automatically so you’re always kept informed.
How to analyze competitor social media and content strategy
Many platforms can analyze your competitor’s social media and content strategy, but you can also do this manually. Hootsuite and Sprout Social both offer free social media competitor analysis templates you can customize, or you can set up your own system in Google Sheets or Excel.
Start by searching for keywords related to your company and industry on Google and across social media channels to see which companies appear regularly. Perform a SWOT analysis for their content — ideally on one or two channels where they seem to be most active. Hootsuite recommends gathering information such as:
- How large is their following and how fast is it growing?
- Who are their top followers?
- How often do they post?
- What is their engagement rate?
- What hashtags do they use most often?
- How many hashtags do they use regularly?
Then set up a monitoring system so you can get a sense of their overall strategy over time.
“A single analysis provides a snapshot; sustained advantage requires a movie,” wrote Sprinklr. “The final step is to institutionalize a process of continuous learning, transforming your strategy into a living system that evolves based on real-time audience signals and campaign performance. This involves closing the loop between analysis, action, and measurement.”
What to do with your competitive analysis results
Regularly monitoring your competition adds agility and flexibility to your marketing strategy. By keeping an eye on your competitor’s moves, you can sharpen your playbook by triangulating your own internal data and third-party market data. Anticipate when trends start to die, identify opportunities for new products, and understand what audiences engage with to keep your messaging fresh. For instance, when you see competitor content engagement drop, you can start to identify signs of content fatigue before your own key performance indicators suffer.
Competitor analysis can also guide where you invest for growth. “By seeing how the results of your competitive analysis fit with your business strategy, you may identify new areas of opportunity: a ‘sweet spot' you can take over or a gap you can fill to take your business to the next level,” wrote the Business Development Bank of Canada.
Consumer trends change rapidly; use your competitor analysis as a bellwether for reading the market and responding appropriately.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
