How to do competitive analysis.

Read time: 4.5 minutes

Sometimes I wonder, why are we so obsessed with our competition?

Almost every founder I meet talks about the competition and their journey.

Surprisingly, many founders talk about their competition more than their customer journey.

I understand the thinking behind this.

However, looking at just 1 or 2 aspects of your competition will always make you feel that you are behind them.

Back in the day, when I was working with Future Group, my media agency used to present what Reliance was doing on 26th January, what is Amazon coming up with, their estimated reach, sales etc..

I could not fathom the thinking behind this.

I am not against following the competition, I just do not understand looking at what competition is doing in silos or without a structure.

The other thing every business is obsessed with is BENCHMARKING against the competition.

Now let’s come to the point;

Whenever I pick up competition study, I do it comprehensively and in a structured manner.

I have been following a template for years for this now.

You can download the template from here:

While the above template is a great start and you can keep updating it every month or quarter depending on how active your competition is.

There are 6 things I believe a business should consider about their competition.

Let’s break them down:

1.Product and features- Every business or product starts with the goal of solving an important issue.

To do this, much research is done to understand the market and the users.

Successful companies are those that keep making their products and services better, especially in terms of user experience (UX).

Studying your competitors closely helps you create a better design plan for your product or client.

A key part of analyzing your competitors is to figure out three main things:

why they made their product,

what their product is, and

how their product works.

Why is there a problem in the market? Why do competitors do things in a certain way? Why do people like or use a competitor's product? Why is a product one of the top choices in the market?

Use the "Five Whys" method, created over 80 years ago by a Japanese industrial leader, to find the main reason behind a problem.

Asking these questions helps you understand why competitors are successful.

What kind of solutions are competitors offering to solve users' problems? What exactly are they solving? How do they solve it? Which devices or platforms do they use to connect with users? What special features do they have for solving the problem?

These questions help you see what advantages you might have and where competitors might be better.

How do competitors keep their advantage over others? How do they handle the technical side of their platforms? How have they designed their product's look and user experience? How do they set their prices?

Asking these questions helps you learn about competitors' methods.

You might also find weaknesses in their services that your product could improve.

2.Pricing: The first step in checking how your prices compare to others is to find out who your competitors are.

These are companies that sell similar things or services to the same people you do.

You might already know who your competitors are, but you need to sort them into different types.

First, look at direct competitors who sell the same things as you do.

Also, think about indirect competitors who have similar products or services but for different customers.

Primary competitors: These are businesses that target the same customers as you.

Secondary competitors: These are businesses that sell more expensive or cheaper versions of your products.

Tertiary competitors: These are businesses that target your customers but offer different but related products or services. They could become partners or future competitors if they grow their business.

After sorting your competitors, it's easier to focus on direct competitors first when comparing prices.

You should also think about your secondary competitors in the long run and be ready to either work with or compete against your tertiary competitors.

3.Target audience: Analysing the competition audience is one of the most underrated exercises businesses do.

As mentioned above, there are three types of competitors you may have, primary, secondary and tertiary. And every competition would develop their own audience niche.

For example, if a premium financial planner wants to target HNI (high net-worth individuals), this is the base detailing needed:

A person named- Hira Desai

Demographics:

Age: Typically 54-56 years

Gender: Male

Location: Often found in affluent neighbourhoods, major cities, or areas known for luxury living.

Psychographics:

Interests: High-value investments, luxury travel, fine dining, exclusive clubs, philanthropy, art collecting.

Values: Quality, exclusivity, privacy, legacy, and often a strong sense of social responsibility or philanthropy.

Goals: Wealth preservation, legacy building, philanthropy, maintaining or enhancing lifestyle, achieving high social status.

Behaviors:

Habits: Preference for premium services, frequent business or first-class travel, attending high-profile events or exclusive gatherings.

Preferences: Personalized services, high-quality products, unique and exclusive experiences.

Pain Points: Concerns about privacy and security, inefficient use of time, managing wealth complexity, and maintaining lifestyle standards.

Needs:

Problems: Need for effective wealth management, balancing privacy with social engagements, finding trustworthy and high-quality services.

Solutions: Tailored financial advisory, exclusive membership clubs, high-end concierge services, and private banking.

Benefits: Assurance of quality and exclusivity, time-saving services, enhanced lifestyle experiences, and security in wealth and personal dealings.

4.Marketing- Keeping track of competition marketing initiatives helps you to take inspiration many a time.

This step is straightforward but you will need to define this responsibility for someone in the team.

I remember one of the brands I consulted in the highly competitive real estate category, they had an intern just to track competition initiatives and report it to the CEO on weekly basis.

Here is a breakdown of what the intern used to cover in her report (a crunched-down version):

Digital Footprint Analysis:

Website Monitoring: She used to regularly check their websites for updates, new listings, and any special offers. She had access to the tool- Wayback Machine to view historical changes.

Social Media Tracking: She used to create themes of posts 3 competitors used to do on LinkedIn Follow their social media profiles (LinkedIn, Facebook, Instagram, Twitter) to observe their posting frequency, content type, and any CSR activity done to enhance the brand image and audience engagement.

Email Newsletters: She was Subscribed to their newsletters to receive updates on new properties, virtual tours, open houses, and other marketing activities. (Although I believe Indian real-estate developers are yet to take this channel seriously)

SEO and Online Advertising:

Google Alerts: She had set up Google Alerts for their company name, competition name, and key projects to stay informed about online mentions.

Ad Campaigns: She was using Facebook ads library and Google competition tracking to stay updated on the ad campaigns of the competition. She also bifurcated the ad types into vanilla property ads, emotional triggers used, payment plans and how other developers create urgency.

Marketplace and Listing Sites:

Property Portals: She used to regularly check property listing websites like MagicBricks, 99acres, and Housing.com for their listings and how they present their properties.

She had a master sheet of new property listings, their price range, their possession dates and a few more details.

Collaborations and Partnerships:

Developer Tie-ups: She was also responsible for at least 1 collaboration every quarter. These collaborations could be with Architects, Interior designers or even premium or luxury brands.

Similarly, she was responsible for tracking the collabs competition is doing.

5.Differentiators- Having a clear Unique selling proposition that is also sustainable is key in many businesses.

Let’s say you are in the business of vegan meal delivery service:

According to me, USP (be it yours or your competition's) can be categorised in one or more than one ways:

• Quality (e.g., organic ingredients, fresh delivery)

• Variety (e.g., cuisines, dishes, flavors)

• Convenience (e.g., easy ordering, flexible plans)

• Sustainability (e.g., eco-friendly packaging, carbon offsetting)

• Social impact (e.g., donations, partnerships)

Whenever you want to understand the USP of any of your competition, try to break down your study into one or more than one of the above categories. It will help you to navigate and define yours.

You can add more categories if relevant for your business. Important is to give your thoughts a structure.

6.Strengths and Weakness - Strengths are the aspects of your product or service that give you an advantage over your competitors.

List and analyze your strengths in your competition analysis. So that you know what you can double down on.

For example, if you run a cloud storage service, you might identify strengths such as:

Security (e.g., encryption, backup)

Speed (e.g., upload, download)

Storage (e.g., space, files)

Collaboration (e.g., sharing, editing)

Innovation (e.g., features, updates)

Strengths are the aspects of your product or service that give you an advantage over your competitors.

List and analyze your strengths in your competition analysis. So that you know what you can double down on.

For example, if you run a cloud storage service, you might identify strengths such as:

Security (e.g., encryption, backup)

Speed (e.g., upload, download)

Storage (e.g., space, files)

Collaboration (e.g., sharing, editing)

Innovation (e.g., features, updates)

Weaknesses

Weaknesses are the aspects of your product or service that put you at a disadvantage compared to your competitors.

List these out as well. Acknowledge them. Analyze how they affect your performance and results.

And then work on improving them.

For example, if you are selling a video streaming platform, you might want to identify weaknesses such as:

Content (e.g., quantity, quality, exclusivity)

Pricing (e.g., cost, value, affordability)

User experience (e.g., interface, navigation, personalization)

Customer service (e.g., support, feedback, retention)

Competition (e.g., rivals, threats, substitutes)

That’s it for today, folks!

Wish you all a very happy 2024.

May you achieve all of what you have been hoping, wishing and praying for.

Always with you in your journey of learning and growing.

Cheers,

Apurv