Knowing your competitors is crucial for anticipating market trends and developing new products that meet unmet customer needs. Competitor analysis is one of the most important and complex processes for any company—especially delicate when launching a new product or building a startup.
Understanding what competitors offer, how they offer it, who their customers are, their marketing strategies, and which markets they operate in is a critical factor not just for crafting a business plan, but for building a differentiated and competitive value proposition.
Investors are particularly interested in understanding the market potential of the startup and its competitive landscape—so it’s best to be well prepared.
What is Competitor Analysis?
It is the process of evaluating the companies, products, and marketing strategies of your competitors.
This is a data-driven process—not based on hunches or hearsay, but on carefully collected and analyzed data.
Competitor analysis helps entrepreneurs identify potential advantages and obstacles in a market niche for a particular product or service, and to monitor how competitors use marketing tools such as pricing and distribution.
To be effective, follow these steps:
- Select competitors to analyze
- Define what aspects of their business to study
- Know where to find the data
- Understand how to use that data to improve your business
This analysis is valuable for entrepreneurs, startup founders, product managers, and marketing professionals—whether you’re working on a traditional product or an MVP (minimum viable product), or even just a product idea.
Why Competitor Analysis is Strategic
When done right, it delivers quantitative and qualitative insights to support strategic decisions. It can help:
- Develop or validate your value proposition
- Focus on product features that stand out and are valued by customers
- Improve your product by leveraging competitors’ weaknesses
- Benchmark your growth
- Discover underserved market segments
- Identify new product categories based on unmet customer needs
It’s important to analyze a variety of competitors—large and small, direct and indirect—to gain a comprehensive picture.
- Direct competitors: Offer the same solution to the same target using similar products/services.
- Indirect competitors: Solve the same problem differently (i.e., substitutes).
Search engines (like Google) can help discover overlooked or unknown players by exploring product categories and reviewing top search results and ads.
You can document this analysis in a spreadsheet, using columns for competitor names and rows for key data points such as:
1. Company Information & Financial Metrics
- Description (via website, LinkedIn, Crunchbase)
- Funding received
- Revenue, profits/losses, customer base
(Google Alerts can help find interviews or press releases)
2. Product Details
- Product features (freemium versions, free tools, tech stack)
- Pricing (discounts, enterprise options, white-labeling)
- Advantages (SWOT analysis is helpful here)
- Technology (what tech skills are in their job postings?)
3. Brand Awareness
- Sentiment
- Key topics
- Geographical reach
- Social media presence
4. Marketing Strategy
- SEO (website structure, keywords)
- Social media (channels, posting frequency)
- Email marketing
- Influencers and partners
- Content strategy (blog topics, content types)
- Customer reviews (complaints, praise, feedback)
Next Step: Strategy Canvas
At this stage, you’ll have enough data to build a strategy canvas, as explained in the book Blue Ocean Strategy.
A strategy canvas is a line chart plotting competitors by various business attributes. Here’s a visual example from the Telco market.
You’ll often notice that most competitors follow one or two distinct patterns. These become your main categories of competition. Plot your own product on the same chart to visualize how it stands out (like how Skype shifted focus to chat and video features that others ignored).
Use the Strategy Canvas to Answer Key Questions:
- Which features can be eliminated (too costly or unimportant)?
- Which features should remain but be simplified?
- Which features should be enhanced based on customer demand?
- What new features could you introduce that customers want but competitors don’t offer?
Competitor analysis is a strategic tool that helps you understand your market position and uncover growth opportunities.
Stay focused on your customers and the gaps between demand and current offerings. That’s where new value lies.
