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7 steps to master competitor analysis for business strategy

A robust competitor analysis is an essential component of any strategy analysis.

There is a wealth of easily accessible information available on the Internet. And so it has never been easier to compile a successful competitor analysis.

However, without a plan, that wealth of information can seem like a fire hose. It can flood you with information. This can make it difficult to see the forest for the trees.

And competitors are continually changing and evolving. So competitor analysis must be an ongoing programme, rather than a one-off exercise.

This article outlines a simple plan to help focus and sustain your competitor analysis effort.

1. Identify your competitors 

This may seem almost too obvious to mention. But depending on your industry, it can be quite difficult to identify exactly who your competitors are.

Your competitors are anyone your customers could turn to, other than your business, to solve the problem or fill the need you aim to solve or fill for them.

(Note: Some writers sometimes distinguish between direct competitors and indirect substitutes. But for the purposes of this article, we consider these to be the same.)

In fast-moving industries, it is easy to be caught unawares by the entry and sudden growth of a competitor before you were even fully aware of their presence.

Industries with rapidly changing consumer preferences may be particularly susceptible to substitution. For example, competition for a local restaurant might not come only from other restaurants, but also from a local grocery store stocking ready meals.

Knowing your local market well may no longer be enough. The Internet can make it easier for competitors to come at you from almost anywhere in the world.

One way to identify competitors is to talk to people. Your staff/colleagues may have worked at your competitors or know people who do. Your customers and suppliers may also do business with your competitors. Or they may have been marketed or pitched to by them.

These conversations can be in the form of formal research or just casual conversation.

Trade bodies, shows and publications, where available, are another source of valuable intel.

2. Segment your competitors

Once you've identified your competitors (and possible substitutes) you may find you end up with quite a long list. If your list is too long, and you try to analyse them all, you may find that you are unable to do justice to any of them.

The solution is to segment them. There are two different ways you can approach this.

  1. Divide your competitors into different groups which behave similarly. Then you can simply monitor one or two competitors within each group and extrapolate your analysis to the group at large.

    There is clearly an inherent risk here. So it is important to confirm your groupings from time to time.

  2. Divide your competitors into high, medium and low groups depending on how much of a competitive threat they represent. You would then do a more thorough analysis of the first group and a more cursory analysis of the third group.

    Part of your analysis of all three groups will, of course, be to confirm that they are still in the right group and to move them if necessary.

    Avoid the temptation to put all of them in the high group. That rather defeats the purpose. Try and force yourself towards 1:2:3 splits.

3. Know what's important to your customers

Once you know who your competitors are, what are you actually looking for? Studying any competitor without a clear plan of what you're are looking for is inefficient. It could take much longer than needed. And you could still miss something important.

The trick is to focus on what's important to your customers. More specifically, what criteria do they use when choosing between you and your competitors. This could be based on price, convenience, product or service features, image, reliability, etc. Most often, it is on the ability to solve a problem they have.

Once you've identified these competitive factors, you need to be particularly alert to any changes your competitors make or signals of future changes they give off. This will enable you to plan your strategy accordingly.

One way to find out what your industries competitive factors are is to just ask your customers. Remember to ask both:

  • people who are already your customers, and
  • people who you would like as customers but don't do business with you yet (prospects and targets).

However, customers don't always know what they want. It is usually better to ask them what problems they experience and want to solve. (See Everybody Lies: The evolution of market research.)

It is also important to sense check what they tell you against your own trend analysis. (See also How to do a PEST analysis.)

4. Tap in

Once you have your plan in place, you're ready to start gathering data. Staff, customers, suppliers trade bodies, shows and publications are again all invaluable sources of information. Competitive intelligence gathering is a never-ending activity.

There are many information services that you can tap into also. Some of these can be quite pricey. However, simple Google Alerts are often as much as you need.

To set up a Google Alert, simply Google the name of your competitor, click on "News" at the top of the search results, scroll to the bottom of the list of resulting news stories and click on "Create alert". Remember to check the options to ensure you're getting exactly what you want. Et voila, you have competitive intelligence in your inbox on a regular basis. You should have at least one Google Alert for each of your competitors. 

5. Visualise

Once you're collecting high quality and relevant competitor intelligence its helpful to find a way to summarise and visualise the results.

The Strategy Canvas provides a neat way of mapping your own business relative to your competitors according to competitive factors you've identified. See: How to draw a Strategy Canvas in 4 steps.

It does require you to score each competitor on each competitive factor. The actual numbers of the scores are not important, they're just a way of comparing one competitor against another (or against your own business). So you have to use your best judgement.

Particularly if you're working in a team environment, forcing yourself to score each competitor against each competitive factor is a great way to focus debate and avoid a pointless talking shop.

6. Tool Up

You can, of course, complete the entire exercise on the back of a paper napkin (or using MS Word, Powerpoint or Excel). You can even find templates for doing this on the Internet.

However, if you've invested all this time an effort in competitor analysis, it makes sense to use a more appropriate tool to help you manage it. is an online tool designed to help you collect and process your competitor analysis, including drawing a Strategy Canvas. (It includes many other tools as well. Covering the entire strategy development and execution cycle. But we'll leave those for another day).

It's a collaborative environment as well. So you can work with your team. All of your insight and discussion is captured in one place. So you'll never have to scour through old documents and emails to put it all back together again. There is also a handy 'bookmarklet' tool which allows you to pull any information from anywhere on the internet into your analysis with a single click of a button.

Go ahead and give it a try!

7. Act

Of course, no amount of competitor analysis will make any difference unless you act on it!

There are a number of ways of using competitive analysis in your strategy: you can:

  • mimic (fastest follower),
  • differentiate,
  • under-cut,
  • exclude (using exclusivity agreements or patent protection),
  • collaborate with (subject to anti-trust / competition laws) or
  • out-manoeuvre your competitors in a variety of ways.

You can also build competitor analysis into game theory analysis. This will help you to understand how competitors may respond to significant strategic moves you're planning before deciding how best to proceed.


Competitor analysis can seem like a daunting task. Fortunately, there are now many sources of readily available information, as well as tools, such as, to help you do it. The most important success criterion is to approach it in a planned and structured manner.

If you need any help getting your competitor analysis programme up and running, please contact me to discuss how I can help.

photo credit: ISST London via photopin (license)

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