What is competitive analysis and how to do one

competition analysis

When you have a business, it is normal for you to be aware of the competition. However, although this is something that is always done before setting up the company, From time to time it is good to carry out a competitive analysis.

But do you know how to make one? What do you have to pay attention to? And how important is it? All of that is what we are going to talk to you about below.

What is a competitive analysis

two men betting fists

If you are starting your business now and looking at the sector in which you are going to operate, one of the steps you have to thoroughly review is your competition. And for this the best thing is to carry out a competition analysis. But what is it?

It is a tool that serves to analyze the strengths, weaknesses, opportunities and threats that these companies have. Or what is the same, a full-fledged SWOT analysis.

Of course, at the level of skills it cannot be done in depth, because we do not have all the data we need, but it does allow us to get an idea to know what others do, where they fail and what you could improve.

Let's give you an example to make it easier for you to understand. Imagine that you have an eCommerce for sneakers in mind. You will have many competitors so you choose those who are best positioned now. The first step is to know what the strengths of these companies are, that is, what things they do well.

Once you have them, you have to be critical: are there negative opinions about those companies? What type? What do they say? That would be the company's weaknesses. And for you they can become opportunities to stand out.

As for threats and opportunities, in most cases they will be the same, because here you do not have internal information.

Why do a competitive analysis

light bulb science

Now that you know a little better what a competitive analysis is, it's time to explain the importance of this. And there are some advantages that other types of analysis or research would not give you:

  • You may have an idea to create a strategy or improve the one you are following at that moment. For example, if you have realized that your competition makes a mistake and you can correct it, doing so by modifying your strategy can make you look like a better option for customers.
  • It helps you know how to outperform your competitors. Related to the above, by knowing where they fail, you can turn that into your strength and opportunities to excel.
  • It helps you know who your direct competitors are and know your target audience. A very important topic and one that not many pay attention to. But knowing who you have to address the messages will be much more effective.
  • It helps to know if they are competitors with a good level of customer commitment or not. Because, if not, you know that if you do things better they can be loyal to you.

How to do a competitor analysis

checkmate chess

Have you convinced yourself that a competitor analysis is a good thing? But you don't know how to do it? No problem, here we tell you the steps you should take.

Determine your competitors

To carry out a competitor analysis you need, of course, competitors. Now, we recommend that you Divide them into two large groups:

  • The direct ones, which are those who sell the same thing as you.
  • The indirect ones, which are those that sell something similar, but not the same.

For example, if your store sells organic shampoos, an indirect competitor would be a store selling organic shampoos but in pill form, because you sell them in liquid form. And a direct one, since those who sell the same product as you.

To find competitors you have the Internet, social networks or even tools like Ahrefs or Semrush that will analyze the sites and give you data about your competition.

Once you have the list (you can take a maximum of 10, so it doesn't get too heavy) it's time for the next step.

Strengths weaknesses…

make a table for all the competition and establish from them all the information you know. That is to say.

  • Target audiences. The people it addresses. As detailed as possible: whether they are men or women, single or married, with or without children, age, level, job...
  • What is the brand or company like? That is, what type of message does it provide, if it is serious, if it is informative, mocking, critical...
  • That sells. The product itself, to know if it is the same as what you sell or similar.
  • Strengths. What you are good at.
  • Weaknesses. The criticism you receive.
  • Marketing strategies you follow. Advertising, content, social media strategy…
  • Opportunities. Where it can be improved.
  • Threats. Which can put the company at risk.

This is the most complicated and complex thing, because you are going to have to go very deep into business and think as if you were your competition. But it will be worth putting yourself in their shoes and looking for all the information because it will be very valuable for your strategy.

In the case of opportunities and threats, as we told you before, it is normal that it turns out the same in all or almost all of them, because they are more internal parts that will not be easy to investigate, but even so, do not forget to review them.

Establish conclusions for your strategy

Once you have analyzed everything, the last step will be make a conclusion from everything you have seen and how you can apply that information that you have obtained to your own strategy to differentiate yourself from your competition.

Although you may not see it a priori, in reality this information gives you a lot of value for your own strategy because with it you will be able to establish a strategy that is based on what the client is looking for and how to improve customer service so that they choose you. you against competitors.

Is the analysis of the competition clear to you now?

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