Competitive Analysis in Business: Identify and Evaluate Your Rivals

Imagine this: Blockbuster, once a giant in the movie rental industry, dominated the market with its in-store rental model. Meanwhile, Netflix saw a shift in consumer behaviour—people wanted convenience and flexibility. By pivoting to online streaming and subscription services, Netflix addressed this emerging need, gained a competitive edge, and ultimately left Blockbuster in the dust. This rivalry is a perfect example of how competitive analysis isn’t just about knowing what your competitors are doing today—it’s about anticipating where the market is headed and staying ahead of the curve.

In this guide, we’ll dive deep into competitive analysis, how to identify your competitors, and methods for visualising the competitive landscape to uncover opportunities for differentiation.

What Is Competitive Analysis, and Why Does It Matter?

At its core, competitive analysis is the process of understanding who your competitors are, what they’re offering, and how their strategies align with customer needs. But it’s not just about gathering information—it’s about using these insights to sharpen your strategy and make informed decisions.

Done well, competitive analysis helps you:

• Identify market gaps and unmet needs.
• Understand your unique value proposition (UVP).
• Anticipate market trends and changes in customer behaviour.
• Avoid blind spots by keeping an eye on emerging competitors.

Ultimately, competitive analysis positions your business to not just compete—but to lead.

Types of Competitors: Direct and Indirect

Competitors generally fall into two categories: direct and indirect. Direct competitors are the businesses offering similar solutions to the same customers, solving the same problem in much the same way. Think of Coca-Cola and Pepsi or Google Search and Bing Search. These companies are locked in a zero-sum game—when a customer chooses one, they typically don’t choose the other. The competition is straightforward and often comes down to who executes better.

Indirect competitors, on the other hand, approach the same issue from a different angle. Consider how taxis once dominated on-demand transportation. Then ride-hailing apps like Uber and Lyft entered the scene, offering a fresh, more convenient solution to the same problem: getting people from one place to another.

While indirect competitors might not seem like a direct threat at first, they can completely reshape an industry by offering something more innovative or efficient. That’s why it’s just as important to pay attention to them as it is to monitor your direct competitors—they might not be playing the same game, but they can still win over your customers.

Identifying Your Competitors

Finding your direct and indirect competitors isn’t always straightforward. Some competitors, especially startups, might still be flying under the radar without much media attention or visibility. To ensure you’ve identified the majority of your competitors, leverage a mix of methods:

1. Go Over Your Customer Discovery Notes

If you’ve conducted customer interviews, review your notes. Often, interviewees will mention specific companies they currently use to solve their problem. Any company addressing the same problem for the same customer is a competitor.

2. Leverage LinkedIn’s “Similar Pages” Feature

LinkedIn has a “Similar Pages” section on every business page, showing other companies that visitors have viewed. This can be a treasure trove for identifying competitors you might not find through traditional searches.

3. Become a Customer Yourself

Put yourself in your target customer’s shoes. Research the problem as if you’re looking for a solution, and note the companies and products that appear. This hands-on approach often reveals hidden competitors.

4. Use Google and Industry Reports

Search Google with varied keywords related to your industry. Look for industry reports, which typically include detailed maps of startups and established players. Websites like HolonIQ, Crunchbase, and Dealroom.co are particularly useful for identifying early-stage startups in specific industries.

5. Leverage Your Network

Your professional network is an invaluable resource. Ask around—post in Slack channels, consult with your mentors, or reach out to investment committee members to see who else might be working on a similar solution.

How to Conduct a Competitive Analysis

Once you’ve identified your competitors, the next step is to gather information about their offerings, market positioning, and strategies.

For direct competitors, focus on understanding how their products or services compare to yours:

• What features do they offer?
• How do they price their products? 
• What unique selling points (USPs) do they emphasise in their marketing?

Answering these questions will give you a clearer picture of where you stand relative to them.

For indirect competitors, analyse how their solutions address the same problem. For instance, if you run a fitness center, indirect competitors could include home workout apps or equipment retailers. By understanding these alternatives, you can better position your offerings to highlight their unique advantages.

Visualising the Competitive Landscape

Once you’ve gathered information about your competitors, the next step is to organise and analyse that data to uncover market opportunities. A powerful way to do this is by visualising the competitive landscape. Tools like spreadsheets, competition matrices, and positioning maps can help you identify gaps in the market, highlight areas where your solution stands out, and refine your strategic approach.

Tracking Competitors with Spreadsheets

Start by documenting your findings in a clear, structured way. Using tools like Excel or Google Sheets, create a table with columns for key details such as:

• Product features.
• Pricing models.
• Unique selling points (USPs).
• Market share.
• Funding and investors (if applicable).

Platforms like Crunchbase, LinkedIn, and Dealroom.co can provide valuable insights into start-ups and established players. While not all columns will be relevant for every competitor, this approach ensures you have a comprehensive view of the competitive landscape at your fingertips.

Using a Competition Matrix

A competition matrix is a practical tool for comparing competitors side by side. List competitors across the columns and key attributes of their offerings down the rows. 

For example, if you’re analysing meal delivery platforms, you might compare them based on:

• Delivery speed
• Order Tracking
• Rewards
• Preorder
• Tipping

Use checkmarks or notes to indicate where each competitor excels or falls short. This format makes it easy to see patterns and identify areas where your product or service can differentiate itself.

Creating a Positioning Map

Another effective way to visualise the market is through a positioning map. This two-by-two chart helps you plot competitors based on two meaningful attributes. 

For example, a positioning map for social media platforms could compare them based on:

• Intimacy: Are interactions personal or broad?
• Content Type: Is the focus on text or visuals?

To create a positioning map:

1. Identify two attributes that are both relevant to your target customers and distinguish competitors.
2. Plot competitors based on how they perform in these dimensions.
3. Look for open spaces where no competitors are positioned—these could represent market opportunities.

The Role of Geography and Market Dynamics

Geography can play a significant role in shaping competition. Businesses operating in different regions may face entirely different competitors, even if they are in the same industry. For instance, Just Eat Takeaway dominates the meal delivery market in Europe, while Swiggy and Zomato are leaders in India. Although these companies solve the same problem using similar solutions, they cater to entirely different customer bases.

Even if a competitor is not directly relevant to your current market, studying their strategies can provide valuable insights. For example, an innovative marketing campaign used in another region might inspire a similar approach in your market. By broadening your perspective, you can uncover ideas and best practices that strengthen your business.

Common Pitfalls in Competitive Analysis

One of the most common mistakes in competitive analysis is underestimating indirect competitors. Businesses often focus exclusively on their direct competitors, failing to recognise how alternative solutions could disrupt their market. For instance, while traditional bookshops initially viewed other bookshops as their main competition; the rise of e-commerce platforms like Amazon completely transformed the industry.

Another pitfall is relying on outdated or incomplete data. Markets evolve rapidly, and using old information can lead to poor decision-making. To avoid this, businesses should make competitive analysis an ongoing process, regularly updating their insights to reflect current trends.

That’s a Wrap

Competitive analysis is more than just a business exercise—it’s a strategic tool that empowers you to navigate the complexities of your industry. By understanding your competitors and the broader market landscape, you can make smarter decisions, identify growth opportunities, and position your business for sustained success.

Whether you’re a startup looking to carve out a niche or an established company refining your strategy, competitive analysis is an invaluable part of building a resilient and adaptive business.

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