How to conduct a competitor analysis

Direct vs indirect competitors

Before you start searching, it helps to know there are two kinds of competitor. Most new business owners only think about the first.

Indirect competitors matter because your customer is comparing you with them, even if you’re not. “Doing it myself” or “doing nothing” is often your biggest competitor of all.

How to do it

The 6 steps

You don’t need expensive tools or an agency for this. Google, Google Maps, social media and review sites will give you most of what you need.

You can’t spot competitors until you know exactly what you’re comparing. Write down, in plain words, what you offer, who it’s for, the problem it solves and the main benefit. If that feels hard, it’s a sign to get specific about your customer first, because they decide who your competitors really are.

Search the way your customer would. Think about the questions they’d type into Google when they have the problem you solve, not the name of your service.

• Search Google and Google Maps for your service plus your area, for example “mobile dog grooming Wellington”.
• Search the problem, not the product, for example “how to stop my dog’s coat matting”. This finds your indirect competitors.
• Check where your customers hang out: local Facebook groups, marketplaces, Instagram and industry directories.

Aim for three to five direct competitors and two or three indirect ones. That’s plenty to learn from.

Go through each competitor’s website as if you were the customer. Make a simple list of the features and benefits you offer, then tick off who else offers each one.

• How easy is it to buy or book? Count the clicks.
• What do they offer that you don’t, and what do you offer that they don’t?
• Is their information actually useful, or just nice to look at?

If you’re the only one offering something that solves a big problem for your customer, that’s your headline. Say it loudly and with confidence.

Look at the words competitors use to describe their business and the problem they solve. Then read their reviews, because that’s where you hear what customers actually value and what frustrates them.

• What tone do they use? Warm, technical, luxury, budget?
• Which benefits do they lead with?
• Do they have reviews and testimonials, and do the reviews back up what the website claims?
• What do unhappy customers complain about? These are gaps you can fill.

If you notice everyone uses the same words (and you do too), that’s a chance to say it differently and get noticed.

Look at their social media following, how often they post and how much engagement they get. Notice whether they show up in local news, podcasts or other websites. This tells you roughly how much reach they have, and gives you ideas for where your own customers are paying attention.

Note what each competitor charges and what’s included. Are they cheaper or more expensive than you? Does their price match the value they describe? Could you bundle things together, or add something small that makes your offer the easy choice?

You don’t have to be the cheapest. You do need to understand where you sit, and be able to explain why you’re worth it.

A simple competitor analysis template

Copy this table into a spreadsheet or notebook and fill in one row per competitor. The first row is an example.

Example figures are for illustration only.

Map your market to find the gap

A perceptual map (also called a positioning map) is a simple chart that shows where each business sits on the two things your customers care about most. It turns your notes into a picture, and makes gaps in the market easy to see.

• Pick two things your customer weighs up when choosing, such as price and convenience.
• Draw a cross with one on each line, from low to high.
• Plot each competitor, then plot yourself.
• Look for empty space. That’s where no one is serving your customer yet.

Example: a mobile dog groomer mapped on price and convenience.

Try a few maps using different pairs, such as quality and speed, or expertise and friendliness. Just remember a map is only as honest as you are. Plot where customers would put you, not where you hope you sit. If you’re not sure, ask a few customers.

How often to do a competitor analysis

Do your first one before you launch or set your prices. After that, revisit it every six months, or whenever a new competitor appears or your sales change. Markets move, and your competitors are probably watching you too.

Common mistakes to avoid

• Only looking at direct competitorsYour customer is also weighing up doing it themselves, or doing nothing.
• Copying instead of learningThe point is to find what makes you different, not to become a cheaper version of someone else.
• Mapping your hopes, not realityPlot where customers would put you, not where you’d like to be.
• Doing it once and forgetting itSet a reminder to check in every six months.