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What Is a Competitor Analysis and How to Do It

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Competitor analysis is the practice of identifying a specific competitor's weaknesses, predicting their movement within the market, and planning methods to outpace them.

Competitive analysis is the practice of executing a competitor analysis across all of your primary competitors.

Competitor analysis is used every day to develop products, inform marketing strategies, identify target consumers and formulate strategy. If used effectively, competitive analysis reports can provide numerous benefits. Business is a play-to-win scenario. Companies who aim to increase revenue and accelerate growth will analyze their competitors.

This guide will provide detailed explanations, descriptions and recommendations for finding success in the world of competitive analysis.

 

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What is Competitive Analysis?

Competitive analysis is the process of collecting and using data about business competitors. This data may include financial information, acquisitions, website traffic, job postings and news. Using this data, companies can craft clear business and marketing strategies that increase profit. 

Competitive analysis is a great way for companies to gain an edge in any industry and optimize workflow processes. Many use competitive data to perform SWOT analyses and take a deeper look into what needs to change or shift within a company. 

The challenge lies in the many sources for marketing data and the frequency with which that data grows. Experts and teams should be well-equipped with the right tools and know-how to conduct a thorough competitor analysis.

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Who Conducts Competitive Analysis?

A variety of organizational departments will benefit from conducting competitive analysis. Marketing, sales, advertising, manufacturing and production teams are only a few of the teams that may use competitive analysis to inform decision-making and strategy.

Some companies have entire strategy teams dedicated to competitive analysis. Companies ranging from aeronautical engineering and stock brokerage to natural skincare and pharmaceuticals may use competitor analysis to guide direction. Knowing who the competition is and what they’re doing provides benefits for any company within any industry. That said, the analysis is only profitable when met with action.

Use It Well: Competitor Analysis Data

Competitor analysis incorporates a variety of data streams to inform business strategies. These data streams usually originate from online, open-source databases. When conducting competitive analysis, it's important to use data from reliable sources. A casual export of ad data won’t suffice. 

For example, Knowledge360Ⓡ compiles data from sources as varied as government databases, research journals, CrunchBase and ClinicalTrials.org, among many others. It is mission critical to only rely on hygienic, updated data. 

The general exercise of competitive analysis uses both primary and secondary data for research.

Primary Research

Primary research may be single source data. There should be no degree of separation from the origin point. This could include direct testimonials, eyewitness accounts and transcriptions. Rule of thumb: it should be “from the horse’s mouth.” 

Primary data could include:

  • Company authored and published materials
  • Original research papers
  • Current, recent/former employers of competitors
  • Transcripts of testimonials or interviews
  • Recordings of testimonials or interviews

Primary research can only be done with authentic, reliably sourced data that supports assumptions and verifies credibility.

Secondary Research

Reported, cleaned up data is equally important, although it is a degree or more removed from the source. Companies regularly file reports and promote sourced, written content that can be mined for useful competitive analysis. In marketing or PR, these may be press releases and public posts.

This kind of data is most helpful for “on paper” analysis. This information may be used to uncover new ways to increase revenue, grow website traffic or develop products. 

Secondary data may include:

  • Regulatory filings by company
  • Investor relations info
  • Earnings calls
  • Marketing material
  • Intellectual property
  • Job listings
  • Reputable news reporting
  • Company reviews
  • Acquisitions

Secondary data is widely published. It may come directly from a competitor’s website, be present on an industry bulletin or be part of a white paper or article. There are a host of sources for this kind of data, all of which businesses need to know about and tap for comprehensive competitive analysis. It will probably be necessary to activate a data mining tool to sift through this vast quantity of data. 

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Read our complete guide to all the competitor analysis data sources you may need, or peruse some of our specific articles on individual data sources:

Who Uses Competitor Analysis?

Every business can use competitive analysis to outpace the competition. It is useful for any company, any department and any individual. Strategies will be more effective if competitors’ processes and plans are at least somewhat known. This knowledge is only possible with regular, thorough competitor analysis.

A company may use competitor analysis in a variety of ways:

  • Make business decisions
  • Formulate strategies
  • Change budgeting 
  • Hire employees
  • Choose a consumer base
  • Identify investment opportunities

The best competitor analysis tools will provide knowledge sharing and cross-departmental collaboration. This ensures that all stakeholders are accessing and analyzing information in ways they can meaningfully apply in their departments.

Effective Competitive Analysis

Competitive analysis is necessary and globally useful for businesses. With the advent of online advertising, landing pages, Facebook ads and more, the turnover of published information is frequent and fast. If teams are using manual means to glean insight from a competitor’s marketing efforts, they may become outpaced by the system. 

In short, the gap between available data and applied data is vast. Effective competitive analysis relies on actionable steps and company commitment once the data is in. 

Competitors may have prolific content production cycles. Blogs, press, news, ads, influencers and multiple social accounts make for a huge quantity of content. Managing and extracting insight from that data is a daunting task. For most businesses, the amount of data quickly outpaces manual processes.

Effective competitor analysis is challenging, but not complicated. It typically includes these four simple steps:

  1. Collect data
  2. Discover related information
  3. Analyze compiled data
  4. Collaborate and apply

Before data collection processes begin, there needs to be clarity on what kind of information will be the most useful. In the wide world of the internet, almost any kind of data is available on multiple platforms. The use of the data is its power. If unused, it’s a meaningless exercise.

Step one, collection, requires knowledge of the nature and corresponding value of desirable data. Step two is finding a way to access and organize the data. Even these first two steps will open tangential data sources that may not have occurred to internal teams. 

Once key data sources are identified—and tools are active that can pull the data—the analysis, collaboration and application can occur. Either automated tools or designated team members should be assigned to step three. This step should include clear delivery of relevant information and reports.

With reports and analysis in hand, teams reach a tipping point. Assembled and assessed data should be used to make strategic decisions. Companies that apply data effectively have a clear advantage over those who collect data with no intent to act. 

Kinds of Competitor Analysis

Competitor analysis is the best way to discover a company's strengths and vulnerabilities. Analyzing competitors provides insight into their financial, personnel and marketplace decisions. Competitor analysis removes the “secret” from competitors’ success. This can level the playing field and illustrate where a rival’s advantages lie. There are many sectors or commerce that benefit from competitive analysis. Marketing isn’t the only one. Here are some illustrations of how this plays out on different fields.

Competitor Analysis in Finance

In finance, having real-time financial data is necessary for effective performance. Whether a company manages finances, provides investment opportunities for clients or directs mergers and acquisitions, competitor analysis can’t be ignored. 

A competitor analysis platform will provide access to public records and open source info for:

  • Transactions
  • Earnings estimates
  • Market quotes
  • Live stock ticker feeds

This variety of financial data can be source material for charts, reports and presentations. Literally millions of data points are available in finance. These aggregate into observable trends and patterns that can inform best practice and future success. 

Competitor Analysis in Business

Competition and business strategy are virtually synonymous. With linguistic roots in military practices, strategies in business are the vehicles for victory. 

In the past, third-party firms provided competitive data which was analyzed quarterly. With the ease and access of the internet, the process has changed. Competitive data is readily available to any searcher. Competitors' moves are broadcast nearly in real time. 

Instead of just pushing strategic initiatives that constituted the “next logical step,” businesses can now be proactive and operate with more vision and sophisticated tactics. Most of this is due to the availability of competitive analysis data.

There are endless ways to utilize competitor analysis in the business sector. Relevant, timely data points for competitor analysis in business include:

  • Sales data
  • Website traffic
  • Social media presence
  • Product information
  • Market trends
  • Leadership changes
  • Mergers and acquisitions

This data will help teams analyze and adjust business strategies to increase revenue. Using competitor analysis in business is the key to rising to the top of an industry. 

Writing Competitive Analysis Into a Business Plan

Once data has been gathered and analyzed, it can be implemented into a business action plan. Competitive analysis is easiest to write into a business plan based on completed SWOT analysis. Strengths, weaknesses, opportunities and threats can be incorporated into a plan of action.

Careful analysis should identify short and long-term goals. Realistic checkpoints should track progress along the way. Using competitors as a benchmark is a great way to stay on track while following a business plan. 

Competitor Analysis in Trade, Export and Import

Trade businesses have a timely and urgent need to see changes in commodity and share prices. Competitor analysis software provides automated updates related to commodity and exchange rate changes. 

These analysis tools can offer many trade, export and import data points, including:

  • Historical rates
  • Commodity prices
  • Agricultural trends
  • Inflation
  • Foreign entity behaviors
  • Trade agreements
  • Export/import news
  • Port news
  • International currencies and exchange data

Within such a quickly shifting industry, up-to-date information is required for predictable revenue. Competitor analysis can give companies crucial data that will ensure trading, exporting and importing decisions are well-informed.

Competitor Analysis in Medical Fields

Medicine is a vast field with immense profits. The medical field encompasses pharmaceutical companies, medical equipment manufacturers and services related to medical facilities. Companies need strategic growth plans in an industry growing as rapidly as this.

Competitor analysis tools may include access to the following information:

  • Clinical trials
  • News
  • Scientific innovations
  • Sales data
  • Healthcare analytics
  • EHRs
  • IT healthcare data and trends
  • Pharmaceutical research
  • Public health data
  • Surveys

With this information, healthcare companies can gain vital understanding of an enormous industry. The best competitor analysis platforms offer all of the data that medical companies need to inform marketing, advertising and consumer targeting strategies. 

Competitor Analysis in HR

Human resources data names names, or gives the facts about who’s at the helm of a competitor’s ship. Competitive analysis collects other details such as job postings, job announcements and CEO changes. Stocks change immediately based on high-level personnel changes. Massive layoffs are a clear indicator that trouble is brewing. 

All of this is important to know about a competitor. Track it with HR data points, which may include:

  • Job postings
  • Salaries
  • Job availability
  • Company reviews
  • Employee emails
  • News and bulletins
  • Mergers or partnerships

Whether a team is headhunting, consolidating or projecting revenue, HR data is a goldmine of useful information to stay on pace in any industry.

It’s easy to see the overlap between the competitive analysis performed in each of these industries and the kind done for marketing. Marketing competitor analysis is present in all of these. It is a specialized function that informs best practice and yields high return. While software is the best way to deploy sophisticated analysis, traditional tools may provide an entry point for teams new to the process.

SWOT Analysis

SWOT analysis is a corporate planning process started in the 1960s by a consultant at Stanford. The philosophy behind it may have started even earlier at the Corporate Development Planning Department at Lockheed

SWOT analysis is made up of four components. Each is important to gauge a company and competitor position.

For competitive analysis, the traditional SWOT method is used to gain understanding of rival companies:

  • Strengths: what is a company doing right? 
  • Weaknesses: what is a company doing wrong? 
  • Opportunities: what are some external factors that give a company an advantage? 
  • Threats: what could harm a company beyond its immediate control?

Completing this analysis opens the door to flexible strategies that can adjust as factors shift. Often, SWOT analyses are major components of business strategies and plans. 

Analyze - SWOT

Some competitor analysis platforms even automate or allow users to create SWOT analysis. Knowledge360 has tools to inform detailed SWOT analyses. Whether users are writing a business plan or analyzing a department, SWOT analysis paves the way with new perspectives. Request a live, custom demo of Knowledge 360 from Cipher.

Other Types of Analysis

There are several other types of analysis that are helpful to developing responsive and proactive plans for marketing:

  • Capabilities matrix: this analysis shows the skills and capabilities a professional should have as they develop in their career. Companies use this tool to identify and track professional progress.
  • Gartner quadrant style positioning: the Gartner quadrant places the challengers, leaders, niche players and visionaries in an industry onto a plot. This may be used to identify key competitors or to map possible investment opportunities. 
  • Industry value chain: this analysis explores the journey of raw materials becoming finished products. Whether businesses sell a product or service, this can be used to map time or financial loss at any point in the production process. 
  • Porter's five forces: Porter’s five forces analyze existing rivalries, new entrant threats, substitute threats, bargaining power of suppliers and bargaining power of buyers. Porter’s five forces model can help a company flesh out the competitive landscape.

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Competitive Intelligence

High quality competitor analysis calls for comprehensive intelligence. “Intelligence” has become a buzzword of sorts, which may confuse best practice use. Marketing competitor analysis requires a holistic understanding of markets, customers and business. 

Market Intelligence

Market intelligence is all about gathering and analyzing data that relates to the industry’s entire market. Market data could include trends, predictions or sales. Marketing teams are not the only ones who may use this information. 

Market intelligence informs virtually every aspect of operations. Every department in any business should be interested in gathering useful market intelligence. When a market is better understood, each move is made with a broad view of the entire field.

Customer Intelligence

If a company sells a product or service, they do so having performed customer intelligence analysis. Customer intelligence could include social media interaction, demographics research or website traffic. 

Companies driven by consumer response will benefit most from customer intelligence. This practice provides necessary insight to reach a target group. Customer intelligence translates into executable advertising and marketing that maximizes reach. 

Business Intelligence

Business intelligence refers to internal data coming to and from a business. It could include data mining and analytics specifically related to manufacturing, production, finance and other sectors that use traveling data. 

Business intelligence is used to inform stronger processes that save a company money or increase productivity. Business intelligence software puts ideas into action. 

Cipher helps clients create comprehensive competitive strategies that leverage all types of intelligence.

What to Look at When Analyzing Competitors

While marketing competitor analysis brings great advantages to a company, it can be difficult to know where to start. 

Here are a few questions to ask when analyzing a competitor:

  • How are they reaching consumers: social media, website, direct mail?
  • What investments are they making: mergers, acquisitions, digital properties
  • How have they grown in the past five - 20 years? Number of storefronts, increase in sales, etc. 
  • How are they influencing the industry: trendsetters/influencers, innovations?

These questions barely brush the surface of what competitor analysis can look like. 

Read on to learn more specific ways to analyze competitors.

Competitor Analysis in Marketing

Marketing competitor analysis sheds light on what is and isn’t working. It illuminates the cohorts and demographics that competitors are targeting. Brand language, marketing pitches and ads are all part of a marketing competitive analysis data pull. This analysis can further dive into whether competitor marketing is working and how it can be copycatted or used to improve tactics.

Businesses may use data from competitors’ websites, published ads, landing pages, social media feeds and more to inform a digital marketing analysis.

Competitive Analysis Online

A company’s website promotes everything they think is worth sharing. It also has immense stores of valuable data. Competitor analysis software can provide a peek under the hood, giving hard numbers to views, clicks and overall traffic. One of the best ways to increase website traffic is through target keywords and backlinks informed by competitive analysis research. 

Doing this boosts ranking on a search engine result page. It is also worthwhile to look into SEO competitor keywords and competitor’s backlinks to provide insight into the health and competitive quality of a website. This targeted analysis may have the added benefit of uncovering future competitors. 

SEO Competitor Analysis

While businesses may be using an SEO tool to inform keyword use and distribution on a site, it is not a substitute for competitor analysis. Relying on one tool to inform SEO strategy is inadequate to paint a full picture of the competitive landscape. 

A holistic understanding of the competitive environment is essential to magnetize a website for organic search. Instead of a siloed approach, consider using competitor analysis platforms to refine SEO strategies. 

Competitive Analysis in Social Media

Social media has become one of the best ways to reach current and future customers. Posting quality content with well-researched hashtags can build a company profile. Social media is also full of data. Platforms like YouTube, Facebook, Instagram, Twitter and more can provide a wealth of information for competitive analysis.

Understanding a target market through social media competitive analysis is the best way to serve the right content to the right people. There are many different social media platforms, each with a different user base. Competitor analysis software can provide data on users and their behavior.

Competitive Analysis and Technology

There are numerous platforms that automate and simplify competitive analysis. Some are great. Others are adequate or insufficient. The best platforms access all relevant databases, sources and data points. Not all competitor analysis tools are created equal.

Competitor Analysis Tools

Most competitor analysis tools will automate data collection and provide a display that helps users identify trends and important details. To choose a competitive analysis software, users must clearly identify what data matters most. Knowing the data needed and where it lives is fundamental. That early, missional step will help teams choose a software based on their specific objectives.

When executing and presenting a competitor analysis, there are a few different types of tool that may come in handy. A handful of them are listed below:

Tableau

Tableau is more of a visualization tool than a database. With Tableau, users can see and understand the data being collected. It’s a useful resource for sharing data. This is why Knowledge360Ⓡ has integration software that allows users to implement Tableau on their personal dashboards. 

PowerBI

This Microsoft business analytics software, similar to Tableau, allows users to interpret graphically displayed data. With highly customizable reports, charts and tables, users can implement data analytics in a way that works best for them. 

R, Python

These language programming softwares are used by the team at Knowledge360Ⓡ to implement intuitive searches with customized filters. Cipher’s platform also includes integrations with these systems so that users can easily input data into web pages, apps and more.

ThinkCell

ThinkCell is a computer software program that allows users to create presentations, reports, charts and more. Once companies have completed competitive analysis, they may want to translate that information into a visually compelling report or chart. Presentation designs are available through Knowledge360Ⓡ integrations with ThinkCell.

Elements of a Competitive Analysis

Conducting a competitive analysis is straightforward but labor-intensive. Once the “what” and “where” have been established, data must be collected and organized. Finding the right sources and distilling data into meaningful conclusions that drive action is the ultimate goal. 

The easiest way to do this is to use a competitive analysis platform with filtered searches and automated data recommendations. Once competitive analysis platforms are active, they can be automated to perform numerous tasks at regular intervals. This alleviates a lot of the workload previously associated with competitive analysis tasks.

How Competitive Analysis Works in Market Research

Goals for competitive analysis may differ by industry. If competitor analysis is being used for market research, it will be crucial to learn about competitors’ customers, products and pricing. 

How to Identify a Competitor’s Target Customer

One of the most important elements of competitive analysis is identifying a competitor’s target customer. 

This provides answers to questions like: 

  • Who is reviewing a competitor and where?
  • Where is a competitor marketing?
  • Where is a competitor taking out ads or publishing social media content?
  • What demographics does a competitor reach?

Once a competitor’s target market is defined, rivals can refine their own targets. 

What Are Competitors’ Products and Pricing?

Products and pricing require immense market research. Knowing the market is vital to creating products that meet legitimate needs and create revenue streams. How these are priced competitively is essential to success in sales.

Pricing models take into account things like target market, costs of production, product quality and uniqueness. Price comparisons are important to stay competitive. 

Here are steps to follow:

  1. Market research for competitor products, including features and function
  2. Identify overlap between competitor products and company products
  3. Buyer research
  4. Identify overlap or departure between ideal buyers
  5. Find placement on a pricing continuum
  6. Find competitors’ placement on the continuum
  7. Consider any additional factors that influence pricing
  8. Price the product

These steps relate to new products but merit ongoing consideration for any product that lives on the market for any length of time. Knowing what competitors are doing will result in well-informed pricing decisions. 

Direct v. Indirect Competitors

Direct and indirect competitors both impact a business. To use competitor analysis effectively, businesses must differentiate between the two. Identifying whether a competitor is direct or indirect can be accomplished with a manual review of goods and services. 

How to Identify a Direct Competitor

To identify a competitor that competes directly, consider the following:

  • What product or service do they provide? 
  • Who is their target market?
  • Where are they marketing and advertising?
  • What are their price points?

The overlap between this and a company's own offerings will immediately indicate direct competition.

Direct competitors are a more pressing threat to a company, but may also provide the best opportunity for SWOT analysis and benchmarking. Apples to apples comparisons can yield a better understanding of who’s on top. These businesses have the most valuable marketing data, as they’re selling similar products to similar people.

How to Identify an Indirect Competitor

The same parameters will identify an indirect competitor. Even if it’s not an exact match, similarities merit consideration:

  • Could services or products be used as an alternative?
  • Does their target market have the same goals?
  • Are the price points similar?

These answers will establish how much of a threat a rival company poses. While less of a threat than direct competitors, indirect competitors can undermine a business’s place in the market. 

How Competitor Analysis Directs Business, Sales and Marketing Strategies

Competitor analysis is the most comprehensive resource for implementing improvements in business, sales and marketing strategies. Not only does it provide invaluable competitor and market information, but through it companies can conduct complete SWOT analyses and establish realistic benchmarks. 

Competitor analysis highlights areas of improvement:

  • Identifying incremental, realistic changes that competitors have made
  • Finding goals and initiatives that align with a company’s model
  • Refining current strategies to better fit the market
  • Uncovering new roles and positions that are better suited to meet goals

Competitive analysis isn’t just about market research and marketing.

How Does Competitor Analysis Change Other Areas?

The benefits of competitor analysis aren’t relegated to the sales or marketing department. Every department can benefit from competitor analysis. Here are some examples of additional benefits:

  • Reallocate expenditures and labor based off of new projections
  • Learn new techniques to improve product quality and lead times
  • Develop new products to satisfy unmet demands
  • Identify wasted labor and time on unprofitable deliverables

The information found is only useful when applied. For the data to deliver any benefits, needs to be converted into an action plan, where it will systematically produce tangible results. 

How to Conduct a Competitive Analysis With Cipher Tools

Useful competitive analysis requires cutting edge tools. For newbies, an analysis template may be the ticket. 

An analysis template should include:

  • Company profile
  • Data gathering and analysis
  • Knowledge gained
  • Action plan

An analysis template provides the outline to help answer the most important questions. To answer these questions, it’s vital to assess competitors' strengths, market analysis, competitor’s website and more. As users delve further into competitive analysis, they will begin to formulate their own questions and areas of analysis. 

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Go here to download the Cipher Competitor Analysis Template.

It is important to conduct a competitive analysis at least once a year. For companies with ambitious growth trajectories, this process happens far more often. Knowledge360Ⓡ is the right tool to facilitate steady growth.

In addition to competitive analysis, Knowledge360Ⓡ provides the data necessary to monitor industry news, UX research, market trends and shifts, target market data and so much more. 

Top companies employ personnel whose main role is to monitor competitive analysis software. Other companies use software to gain competitive intelligence. 

Knowing what the competitive landscape looks like is the key to innovation. To avoid bias, it may even be best to have someone outside of the company conduct competitive analysis.

Cipher offers consultants to help companies gain a competitive edge in their industry.

Knowledge360 for Competitive Analysis

Businesses need a competitor analysis platform that can provide access to all of the data and capabilities explored in this article. They need Knowledge360. This platform focuses on automation, customization and collaboration so that users can receive and share the data they need when it is needed most. 

With Knowledge360, users have access to millions of data points and all of the crucial source material. Easy-to-use features, such as drag and drop technology, paired with customizable searches and dashboards offer easy organization and display important information. Stay one step ahead of the competition and optimize business strategies with Knowledge360

To unlock the full potential of competitive analysis, get a free demo of Knowledge360

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