A marketing competitor analysis is the process of researching your competition to learn their best practices and marketing strategies, along with their strengths and weaknesses, and use them to your advantage. The goal is to learn from their mistakes and use the tactics that have worked for them to improve your own market standing.
But is marketing competitor analysis really that important? In this guide, we explore what this process is, why it’s so important, and how to do a competitive analysis for digital marketing.
Table of Contents
- What Is Marketing Competitor Analysis?
- Why Analyzing Competitor's Marketing Is Important?
- What Elements Should a Marketing Competitors Analysis Include?
- How To Do a Competitive Analysis in Marketing?
- What Is PEST Analysis in Competitor Analysis in Marketing?
- Takeaways on Marketing Competitor Analysis
- Marketing Competitor Analysis FAQs
What Is Marketing Competitor Analysis?
A marketing competitor analysis (or competitive analysis) is the process of identifying the competitors in your niche or industry and discovering their different marketing strategies. Businesses can use this data to identify their strengths and weaknesses compared to their competitors.
You can conduct competitive analysis on a higher and broader level or by delving into one aspect of a competitor's business. This process is not the same for everyone, which is why you should know how to customize it to meet your organization's goals and objectives.
Why Analyzing Competitor's Marketing Is Important?
Did you know there were over 430,000 business applications in the U.S. in April 2024 alone? With this number, it’s clear the market competition is growing. To maintain a competitive edge and stay ahead of emerging digital marketing trends, conducting an advertising competitive analysis is indispensable.
Bryan Philips, Head of Marketing at In Motion Marketing, explains: "When performing a competitor analysis, analyze their SEO strategies, social media presence, content marketing efforts, and online customer engagement. By comprehensively evaluating these areas, you can identify gaps in competitors' strategies and capitalize on them to gain a competitive edge."
The top 5 advantages a marketing competitor analysis brings businesses are:
- Determining your brand’s positioning: By studying and analyzing how your competitors are perceived in the market, you can also determine your brand's positioning. Being aware of your company's positioning and strengths further helps you identify the image of the product or service you want your target audience to have in mind.
- Pinpointing weaknesses: Knowing your business's weaknesses is equally important to help it grow. By understanding where you fall short of your customer's expectations, you can identify areas that require more time and resources. You can do that by asking potential customers why and how your product stands out or fails to deliver compared to your competitors.
- Gaining market insight: By analyzing the competition, you get insights into how the market is doing. Viewing the general picture may help you figure out where you fit in the industry and what you should do to improve your position.
- Identifying customer needs: When doing a digital marketing competitor analysis, businesses can pinpoint which customer demands are not satisfied. For example, if there’s a demand for a product or service but nobody offers it, you can capitalize on this opportunity and use it as your entrance into the market.
- Information-driven decision-making: Having key pieces of information about the industry and your competitors allows you to make well-informed decisions. You limit the risk of making rash choices; instead, with the info from the analysis, you can make strategic decisions and good investments.
What Elements Should a Marketing Competitors Analysis Include?
A competitor analysis should always be tailored to a business’s needs. However, there are certain elements every advertising competitive analysis should have. Those are:
- Social media analysis – Always include social media searches in your digital marketing competitor analysis. This will tell you which platforms your competition uses, what type of advertisements they do, and where they get the most traffic from. A good example of this is Wendy’s. It uses a social media listening tool to see what the competition is marketing and how they can use it to their advantage. That way, they can post content directly comparing themselves to their competition, like this:
- Keyword research – Check what keywords your competition ranks for. If they use an overly saturated keyword, try to search for a related long-tail keyword that will target the same audience but has less competition.
- Content check – See what topics from the competition align with your brand and consider how you can use them. You should also check any FAQs or other content that will help your brand improve. For instance, if they don’t provide a certain answer to a question, you can deliver more value than your competitors by exploring it.
- Interlinking opportunities – Don't forget to check any external or backlinks your competitors have. By doing so, you gain insight into their site’s authority, identify the types of websites that link to them, and in turn, discover potential link-building opportunities.
How To Do a Competitive Analysis in Marketing?
Choosing which aspects to focus on in your marketing competitor analysis can take time and effort. To help you out, we've outlined well-defined steps for conducting competitive research in marketing:
- Identify the Competitors
- Create a Competitor Matrix
- Gather Detailed Information
- Profile the Target Customers of Your Competitors
- Emphasize the 4 P’s
- Analyze Your Strengths and Weaknesses as Well as Your Competitor
1. Identify the Competitors
The first step is to list your potential competitors; consider where your customers turn to if they don't buy from you. Start by searching the product name or category on search engines and exploring the results. You can also conduct customer surveys for this purpose.
Once you've made a list, include as many diverse sets of companies as possible to clearly assess what the market looks like. Your competitors may fall into the following three categories:
- Direct Competitors – They sell a similar product or service to your target audience. They come first to your mind when you think about competition.
- Indirect Competitors – They sell a different product/service in the same category and target the same audience.
- Replacement Competitors – They exist outside your product category but cater to a similar customer need. They are the hardest to identify.
While conducting a competitive analysis, you should focus on direct and indirect competitors who could threaten your business prospects and less on replacement competitors.
2. Create a Competitor Matrix
Before moving on to the analysis, spend some time organizing. A competitor matrix or grid is a table to help you compile your research, making it easier to compare the findings and spot the dominant trends.
List all the data points or categories you want to discover. You can start by allotting one row or column to each competitor. As you progress in the analysis, you can always add more categories.
3. Gather Detailed Information
Once you have the list and the matrix ready, it is time to start learning about the competition. Look for the basic info first, and then build your way from there. Your resources should include anything you deem necessary. It can be company websites, social media pages, news, blogs, and articles.
Latoya Robinson, CEO of Top Notch Dezigns, states that one of the most important aspects of competitor analysis is to determine what you wish to investigate: “For example, you may want to get insight into your competition’s pricing, market share, marketing strategies, distribution channels, target audience, after-sales support, and new launches. Doing this enables you to keep track of changes in your industry and make data-driven predictions surrounding demand and supply."
Some of the critical information you should gather includes:
- A company history would include information like founding dates, funding sources, or mergers they might be involved with.
- Location will vary significantly based on your industry. For instance, eCommerce businesses could compete against companies selling their products worldwide.
- Organization size determines how big your competitors are. This will give you an idea of the revenue they generate. Knowing your competitor's size helps you contextualize the other data you collect more innovatively.
4. Profile the Target Customers of Your Competitors
A company exists because of its customers. So, getting an idea of who your competitors target and sell to will offer useful insights about their businesses.
David Ispiryan, Founder and CEO of Effeect and Ranxy, highlights: "Analyzing competitors' strategies for customer engagement and after that conversion reveals their market positioning and customer satisfaction levels. Based on these analyses, businesses can craft their unique value proposition."
To understand a business’s target customer:
- Check their mission statement
- Track who they address and interact with on social media
- Look at their messaging framework
- See if their existing customers are often featured in their content
With this information, you can profile the target audience your competitors are trying to reach with their content, products, and services. They might resemble your target customers, so note every minute aspect and difference.
5. Emphasize the 4 P’s
Now that you've identified the competitors’ target audience, determine how they reach those market segments. This requires a deeper dive into their marketing strategies.
The four Ps of marketing are Product, Price, Promotion, and Place, which cover all the elements when you bring a product into the market. So, while researching, consider the following questions for each of your competitors:
- Product
- What are they selling?
- What features does the product or service have?
- What are the strengths and weaknesses of those products?
- Price
- What is their pricing model? E.g., one-time, subscription-based, etc.
- How much is the cost of the product/service?
- How does their pricing reflect the quality of their product/service?
- Promotion
- What mediums or advertising channels are they choosing to get the word out about their product/service?
- What USPs of their products/services do they highlight?
- What is their brand story?
- Place
- Where do they sell their product?
- Do they sell to customers directly or partner with third-party marketplaces or retailers?
These questions are your starting points and can be expanded based on the industry and purpose of your research.
6. Analyze Your Strengths and Weaknesses as Well as Your Competitor
As the final step of the marketing competitor analysis process, use all the information to consider the strengths and weaknesses of each of your competitors. Ask yourself why some consumers prefer a particular company’s product/service over others. Make a clear note of the conclusions.
Finally, consider your own business’s strengths and weaknesses. Evaluate how your company compares to the competitors you have been researching — knowing what sets you apart and where you can help allows you to strategize the type of digital marketing you need to better serve your target customers.
What Is PEST Analysis in Competitor Analysis in Marketing?
PEST analysis is a crucial but often overlooked area in business. PEST stands for Political, Economic, Social, and Technological factors. It enables a company to know the right ways to react when there is a change in any of these four factors. So, how relevant is it for marketing competitor analysis?
While conducting a competitive analysis, you must consider strengths, weaknesses, opportunities, and threats (SWOT), for which you must assess external factors. This is where the PEST analysis comes into play.
With a PEST analysis, you know how your competitors react when a change occurs. Do they consider it an opportunity or a threat? PEST analysis gives you a clear idea of how your rivals operate under various circumstances.
With the acquired ideas, you can strategize your marketing efforts. There might be a social change that you're better prepared to handle than your competitor, and you can take full opportunity of your strategies and come out stronger than your opposition.
Takeaways on Marketing Competitor Analysis
Completing a marketing competitor analysis is not the end of strategic planning but just the beginning. It is an ongoing process, so you can refer to your research whenever you need to make a significant and informed business decision.
Regardless of the size of your business, keep your competitors in mind and conduct a competitive analysis to set your business up for success. Use the insights discussed here to guide your strategic decision-making and brand mapping.
However, don’t forget that worrying about your competitors is not everything you must focus on. As Larsen Nezirovic, CEO of Deetail, mentions: “It's important to balance competitor analysis with a focus on customer needs, market trends, and internal capabilities. Overemphasis on competitors can lead to reactive strategies rather than innovative and customer-centric approaches.”
Marketing Competitor Analysis FAQs
How often should you do a competitor analysis?
It highly depends on the business itself. A newer entry to the market may need to do more frequent marketing competitor analysis, whereas a business that’s been in the industry for years can afford to take more time.
In general, a digital marketing competitor analysis should be done at least once a year. However, it’s best to do it at least three times (once every quarter) to stay ahead.
What are the 11 main types of competitor analyses?
You can find different types of competitor analysis simply because every company uses a different tactic. However, the 11 main types almost all businesses use are:
- STP model
- SWOT analysis
- PEST analysis
- Perceptual mapping
- Strategic group analysis
- Porter’s Five Forces
- Growth-share matrix
- Business model canvas
- Customer journey mapping
- Competition identification diagram
- The “7Ps of Marketing” Framework
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