The Wonderful Guide to Competitive Analysis
One of the most effective ways to gauge your business against others operating in the same space is to conduct a full competitive analysis. This can be a valuable tool in helping you identify new opportunities where competitors may be weak or absent and help you refine your business strategy.
Competitive analyses are often referred to as competitive landscapes because they provide you with a “big picture” view of your primary and secondary competitors. Because understanding your competition is crucial to making informed business decisions, competitive landscapes are a highly important tool.
Quick Reference Glossary
Competitive Landscape: A competitive landscape is an analytical framework that identifies a business’ primary and secondary competitors then analyzes various components of the competitors so the business can identify and take advantage of new opportunities.
SWOT Analysis: A SWOT analysis is a form of competitive analysis that identifies a business’ Strengths, Weaknesses, Opportunities, and Threats. These are internal assessments of a business and are highly useful in forming competitive landscape analyses.
PEST or PESTLE Analysis: A PEST analysis is a form of competitive analysis that identifies the major Political, Economic, Social, and Technological factors that influence its operation. It can also be extended to a PESTLE analysis, which adds Legal and Environmental factors to the analysis. While SWOT analyses assesses a company internally, a PEST analysis looks at external factors that impact a business.
Why Do We Use Competitive Analyses?
A Competitive Analysis can:
Allow you to compare your company’s market position to others in the same space.
Show you where the market is saturated and highlight opportunities for growth, either by adding new products or services or by expanding your current offerings
Identify how and where your competitors are excelling, enabling you to take steps to improve your own processes.
Shed light on your competitors’ weaknesses and expose opportunities for growth.
Uncover threats in the industry early so you can either guard against them
Provide insights into consumer perceptions of your brand and your competitors, which help you understand the advertising, messaging, values, and actions that best resonate with consumers.
Help you better understand how your efforts will be received by your consumers and in the industry as a whole.
Getting Started: Identifying Your Own Data
The first step toward understanding your competition is understanding your own position in the industry. Before starting, ask yourself these questions:
What makes my product or service stand out?
What is my target audience?
What messages am I trying to convey through my marketing?
What are my business’ strengths and weaknesses?
What are my opportunities and threats?
What are the external factors affecting my business’ ability to grow?
Next you’ll need to gather hard data from your own company such as revenue, number of users, sales metrics, price points, and any other figures you’re interested in comparing.
Identifying Your Competitors
Now that we’ve looked internally, it’s time to identify your primary and secondary competitors. Your primary competitors are those that offer a similar product or service as you and target the same audience. Your secondary competitors are those that offer either a lower-end or higher-end product or service that is similar to yours and/or target a different audience.
Your competitive analysis can go deeper and analyze your tertiary competitors - these are companies that are tangentially related to you. They may sell accessories for your product or offer similar services along with multiple other offerings. If you are looking to partner with other companies or are considering expanding your own offerings, tertiary competitors are valuable to include in your analysis.
Identifying and categorizing your competitors are critical steps that will determine the success of a competitive analysis. Most of the time, it’s obvious when a company is a direct competitor, such as Uber and Lyft. But, other times, it’s difficult to pinpoint whether they are secondary or tertiary. For example, all restaurants are competitors, but does a seafood restaurant compete directly with a burger joint?
In the case of our new seafood restaurant, other factors, such as price point, location, target audience, and other factors must be considered.
Starting with an initial competitive landscape with fewer categories can be used to first categorize other companies as primary, secondary, or tertiary competitors before digging deeper into the nuts and bolts. Factors such as product offerings, geographical location, price point, and target market would likely be included in this initial competitive landscape.
If you are considering entry into a market, an initial competitive landscape that identifies the basic information mentioned above is absolutely necessary. In cases like this, you’ll want to identify competitors using tools like Crunchbase, Owler, and Hoovers. Once you’ve done that, your competitors relationship to you should be evident and you can select the companies to include in the deeper analysis.
Setting Up Your Competitive Analysis:
Finally, you’re ready to start assembling the competitive landscape! A useful way to keep information in a competitive landscape organized is creating a spreadsheet that puts your competitors in columns and the data points in rows (or the other way around). This allows you to compare data points across companies. Not a fan of spreadsheets? You can also create a separate document for each competitor if you want to really dig deep into their operations.
Competitive Landscape Categories
At the bare minimum, a competitive landscape should include the following information:
A company overview (year founded, headquarters, brief description, etc.)
Geographical footprint
Products and/or services offered
Price points
Target audience or market
Strengths (may also be called competitive advantage or differentiation)
Weaknesses
Additional information that can be obtained to provide a more complete picture of your competitors can include (but is not limited to), organizational structure, marketing channels, content strategy, customer experience strategy, major clients, social media strategy, discounts offered, etc.
Identifying Your Competitor’s Data
Much of the information you are looking for (pricing, messaging, target audience, etc) will be found on your competitors’ websites. However, for some data points, you may only find surface information and will need to supplement with additional insights.
At Wonder, we use a proprietary research methodology known internally as the “Knowledge Assembly line” that enables our analysts to uncover hard-to-reach data, triangulate hidden statistics, and access information hidden in the far corners of the public domain.
For your purposes, data such as customer perception, advertising messaging, engagement strategies and other customer-facing information can be obtained from social media and review sites. Hard data can be more challenging to obtain, as private companies rarely publish official statistics in an effort to maintain their competitive advantage However, estimates can typically be found using third-party databases.
Conducting a SWOT or PEST Analysis
Once you’ve gathered your competitors data, it’s time to run your first analyses. SWOT and PEST(LE) are two highly useful forms of analysis in competitive landscapes.
Wonder Pro-Tip: These typically require more sources than just the competitor’s website to obtain. Strengths are likely the easiest to find, since companies aren’t usually shy about broadcasting what they do well. However, it is important to confirm these strengths with outside sources as well.
In a SWOT analysis, the goal is to identify all of your competitor's strengths, weaknesses, opportunities, and threats using a format similar to the diagram below.
In a PEST(LE), or “PESTEL” analysis, you’ll analyze external factors (Political, Economic, Social, Technological, Legal and Environmental) that can affect the competitive landscape in which you operate.
Wonder Pro-Tip: Take some time to list out as many items as you can here. The more information you’re able to assess now, the more valuable your competitive analysis will be later on.
Putting It All Together
Once the data for your competitors is found and organized, you can begin the analysis to discover your business’ competitive position in comparison with other companies in the space. Look for unmet needs and niches where your product or service can shine. Use the information to refine your strategies and prepare your business to take advantage of opportunities that may arise as a result of your analysis.
Curious what this looks like in action? Check out our sample below or a few live examples from the Wonder Library:
Sample Competitive Analysis
In this example, we took a look at a couple of Uber’s main competitors: Lyft (Primary), Yellow Cab (Secondary), and Lime (Tertiary), then compared each company along a set of preselected criteria.
