How can small businesses conduct a competitive analysis?

Competitive analysis is a process of identifying and evaluating your rivals in the market, their strengths, weaknesses, opportunities, and threats. It can help you understand your competitive advantage, improve your products or services, and develop effective marketing strategies. In this article, you will learn how to conduct a competitive analysis for your small business in six steps.

1 Identify your competitors

The first step is to identify who your competitors are, both direct and indirect. Direct competitors are those who offer similar products or services to your target market, while indirect competitors are those who offer different but related or substitute products or services. You can use various sources to find your competitors, such as online directories, search engines, social media, industry associations, customer reviews, and referrals.

Add your perspective

Georgia Gibson

Building the future of free time | Co-Founder @ .tbc + the youni app | Sigma² | TEDx Speaker | Anthropy Emerging Leader | H&G 25 Rising Star Creative Talents
Report contribution
Best way to do this is find out which companies you are jealous of in your area. Jealousy is blocked desire and actually means you are inspired by them, can learn a lot from them but must distinguish yourself from them!

Like
Karen Shore, MPH, DrPH (c)

Founder and Principal, Upstream Strategies LLC
Report contribution
I pay a lot of attention to who else is bidding on the projects we are bidding on. And when we are on a team with other teaming partners/subcontractors, who are they? Why were they engaged and is this something we should be offering (or a service or expertise we should be selling better)?

Like

2 Analyze their products or services

The next step is to analyze your competitors' products or services, and compare them with yours. You can look at various aspects, such as features, benefits, quality, pricing, availability, delivery, customer service, warranties, and guarantees. You can also try to buy or use their products or services yourself, or ask your customers for feedback. The goal is to identify what makes their products or services unique, valuable, or appealing to customers, and what are their gaps or weaknesses.

Add your perspective

Georgia Gibson

Building the future of free time | Co-Founder @ .tbc + the youni app | Sigma² | TEDx Speaker | Anthropy Emerging Leader | H&G 25 Rising Star Creative Talents
Report contribution
First use their product as a user, not as a competitor. Enjoy the process, try and be unbiased and notice if anything catches your eye. Then dive in with a critical eye.

Like

3 Evaluate their marketing strategies

The third step is to evaluate your competitors' marketing strategies, and how they communicate with their target audience. You can look at various channels, such as websites, blogs, newsletters, social media, ads, brochures, events, and promotions. You can also monitor their online presence, reputation, and engagement. The goal is to identify what makes their marketing strategies effective, innovative, or persuasive, and what are their flaws or limitations.

Add your perspective

Georgia Gibson

Building the future of free time | Co-Founder @ .tbc + the youni app | Sigma² | TEDx Speaker | Anthropy Emerging Leader | H&G 25 Rising Star Creative Talents
Report contribution
I wouldn't spend disproportionate amounts of time on their marketing strategies because then you could be overly creatively influenced. You need your marketing to be different so look at different businesses doing things you can copy and do as new in your area!!

Like

4 Assess their strengths and weaknesses

The fourth step is to assess your competitors' strengths and weaknesses, and how they affect their performance and position in the market. You can use various tools, such as SWOT analysis, Porter's five forces analysis, or benchmarking, to evaluate their internal and external factors. The goal is to identify what makes them successful, profitable, or competitive, and what are their challenges, risks, or vulnerabilities.

Add your perspective

5 Identify their opportunities and threats

The fifth step is to identify your competitors' opportunities and threats, and how they affect their future prospects and plans. You can use various sources, such as industry reports, market trends, customer surveys, or news articles, to analyze their potential or existing changes in the market environment. The goal is to identify what makes them grow, adapt, or innovate, and what are their obstacles, barriers, or crises.

Add your perspective

6 Define your competitive advantage

The final step is to define your competitive advantage, and how you can differentiate yourself from your competitors. You can use various methods, such as value proposition, unique selling proposition, or positioning statement, to articulate your value proposition to your customers. The goal is to identify what makes your products or services superior, distinctive, or desirable, and how you can communicate it effectively to your target market.

Add your perspective

Georgia Gibson

Building the future of free time | Co-Founder @ .tbc + the youni app | Sigma² | TEDx Speaker | Anthropy Emerging Leader | H&G 25 Rising Star Creative Talents
Report contribution
When defining your competitive advantage it cannot be that you just do what they do, but better. You have to do something new that changes the game for the user so as to really motivate them to change their behaviour and adopt your product.

Like

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

How can small businesses conduct a competitive analysis?

1

2

3

4

5

6

7

1 Identify your competitors

2 Analyze their products or services

3 Evaluate their marketing strategies

4 Assess their strengths and weaknesses

5 Identify their opportunities and threats

6 Define your competitive advantage

7 Here’s what else to consider

Small Business

Rate this article

Thanks for your feedback

More articles on Small Business

More relevant reading

How can small businesses conduct a competitive analysis?

1

2

3

4

5

6

7

1 Identify your competitors

2 Analyze their products or services

3 Evaluate their marketing strategies

4 Assess their strengths and weaknesses

5 Identify their opportunities and threats

6 Define your competitive advantage

7 Here’s what else to consider

Small Business

Rate this article

Thanks for your feedback

Explore Other Skills