What is a Competitor Analysis?

competitor analysisA competitor analysis is a statement of your business strategy in terms of how you relate to your competitions’ strengths and weaknesses. As a marketing strategist, you need to be as fully aware as possible of your competitors’ place in the market. This means being as informed about your competitions’ strengths and weaknesses; their customer base; their product line or service; and their marketing strategy as you are about your own. As a matter of fact, you should be so informed about your competition that you can virtually think just like they do.  Your competitive strategy should be formulated in such a way that it takes into account your competitors’ likely responses to your strategic moves. Will your competitors retaliate with a similar strategy (e.g. airline warfare)?  What is the likelihood of the success of their response?  How will your competitors respond to potential changes in the market place? If you know the answers to these questions, you can develop your business strategy one step ahead of your competition.

A marketing strategist must also be well-informed about the state of the current market. You should be able to spot and anticipate any new trends in the market and determine whether or not these trends pose a threat or present an opportunity, for either you or your competition. This is called an Industry analysis. All of this information is integral to your competitive analysis.

Identifying Your Competitors

The first step in compiling your competitive analysis is identifying your competitors. It is important that you try to let go of all preconceived notions about who your competitors are. For example, would you would have predicted a cell phone would be a competitor for an IPod?

The most obvious competitors are any companies with a product or service similar to yours, that is, one which addresses similar needs.  You are going to write out a complete analysis of their product later. Next, look at companies with products or services that could be used as substitutes for yours (e.g. using a cell phone as a music player and PDA).  Analysis of a wider range of competitors may open the doors for your later innovation and expansion.

Gathering Information on Your Competitors

The most common method for organizing this information is called the SWOT analysis or SWOT matrix. It is a simple chart used to evaluate strengths, weaknesses, opportunities, and threats involved in your business or project. A SWOT analysis will help you determine who is successful or unsuccessful and why, and then allows you to compare yourself to them. This information helps your team develop the market strategies that will give you a competitive advantage where there are opportunities, something which places your product or service above the rest. It also prepares you to defend yourself against potential threats.

SWOT Matrix

Identifying Strengths

  • What is their market share?  If they have a unique niche, notice it.
  • How does their product compare to yours?
  • How do their target buyers perceive their market?  Look at your competition’s promotion strategies and note how they are received in the market.
  • What is your competitor’s financial strength and how do they use it in the market?
  • What is your competitor’s ability for innovation and how fast can they do it?  If they have developed new products, what are they?  How long did it take them to do it?  If you can determine a direction they are taking, what might that be and what does it mean for the future market?
  • What are their specific internal strengths?  Are they in their personnel, their technology, their service, or delivery method?

Identifying Competitor Weakness

  • What target markets are they missing?
  • What are their customer complaints?
  • Do they use the best media to market themselves?
  • Is there an area of weakness in your competitor which you can exploit in your marketing?
  • Where do you have the competitive advantage?


The information for this element of your SWOT comes from your Industry analysis. As we already said, a good marketing strategist should be able to identify and anticipate new trends in the market, and hopefully, trends that your competitors are missing and therefore not pursuing.

Identify any new areas of growth. Are there markets which are either underserved or missed entirely?

Identify any niche market that may need your product or service.

Does your geographic location offer future areas of growth? Are the demographics shifting?

Based on your competitor’s weakness, what new technology, service, or product could you develop that would fulfill an unmet or unrecognized customer need?

If delivery time is a factor, what can you do to shorten it?

What are the ways you can cut your costs?


Again, your Industry analysis will inform this section. Threats can come in the form of competition trying to drive you out of the market (e.g. extreme cost cutting), governmental mandates, or a declining market. Some questions to consider:

Is there room for another company to enter your industry?

Is there customer demand for a new industry to enter yours? (Think about how phone companies entered the internet service provider market.)

Is the geographic area or market in which you compete already or becoming saturated?

How will the economy or government changes effect the future sales of your company?

What are the demographic shifts in the customers that could impact your company negatively?

Analyzing Your Competition

Competitor Profile

You need a complete competitor profile in order to accurately determine the information for your SWOT chart. Your initial check on your competitors will include:

  • Company background.
  • The state of their finances.
  • A full description of their products.
  • Competitors’ marketplace strategy.
  • The first two elements you will find in public records.  The following two are detailed below:

Competitor Product Survey

What is the breadth and depth of your competitors’ product lines?  Take care to notice everything about their products. What are the essential features?  Check out its shape, design, color, and style, for example does it have a retro or space-age, modern feel to it?

Become familiar with the functionality of each product. Gather information on its performance, reliability, durability, and ease of use. If the product has a shelf-life, what is it?  If it’s food, then how does it taste? What is its texture?

If service is a part of the product, find out everything you can about that service, such as required maintenance, installation, technical assistance, and repair service. What is their response time? How friendly is their help line?

What is the availability of the product? Familiarize yourself with the product’s distribution channels, its price, and delivery time if that’s applicable.

Next look at the distribution of the product.  What is the channel coverage and quality?  What is the strength of channel relationships?  What is their ability to service those channels?

How do these products look from the user’s or customer’s point of view?  According to Nancy A. Shenker, president of ONSwitch Marketing, you should sign up for your competition’s mailing lists. This way, you have a stream of information coming right to you. You can not only see their marketing strategy at work, but you can also get insight into what they have in mind for the future.

Marketplace Strategy

How do your competitors actually compete in the market?  Where, how, and why are they positioned the way they are? In their article on Competitive Analysis, Czepiel and Kerin point to three elements you should explore in determining your competition’s marketplace strategy: scope, posture, and goals.


What is the range of products offered and who buys them?  This will comprise two different analyses. One is a static analysis, which tells you where your competitor currently stands in the market. The next is a dynamic analysis, in which you try to determine where your competitors might go in the future. Here you will look at what moves they have made in the past and under what circumstances they made those moves.


This is a statement about how your competitors differentiate themselves in the market. How do they attempt to make themselves stand out from their competitors? Go to your product research for this information. Get a feel for how each feature of the product interrelates and how the product as a whole appears to the customer.


To determine a competitor’s specific goal in a given move, you have to ask yourself, “Why is the competitor making that particular move, in a specific point in time?” Do not be short-sighted. Profit is not the only win in the game of marketing. For example, in the Handbook of Marketing Strategy, Klein points out that Apple’s ultimate goal in their product development was the integration of data, voice, and video, something which resulted in profit.

Analyzing Your SWOT Data

Now, you must ask yourself, “How does this information affect my company and how do I develop an effective market strategy?”

Plug your data into a SWOT Matrix.  Couple your Opportunities with Strengths, Threats with Strengths, Opportunities with Weaknesses, and Threats with Weaknesses. Use this comparative data to generate your strategic alternatives. For example, if you see an opportunity where you have weakness, then you know exactly what you must do to correct the problem. Use your strengths to take advantage of opportunities or to avoid threats. If you have a weakness where there is a threat, you may want to consider a defensive strategy.