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Whether when starting a business, launching new products or services, or entering new markets, competitive analyses are an essential and, nowadays, integral part of business decision-making.
Easy and quick to conduct, they have a significant impact. The analysis of the data collected has a tremendous influence on strategic approaches to business development. It provides targeted answers to questions regarding scope for action, market potential, niches, and opportunities.
Such analyses are particularly essential for startups: Many fail due to immature business models or products that miss the mark in the market . With just a few targeted surveys, founders can minimize these risks and make informed decisions.
But regular competitive analyses also offer many, often previously unknown, benefits for established companies of any size and in any industry: After all, the competition never sleeps and is constantly trying to strengthen its market position through new ideas and strategies.
Therefore, leverage the potential of continuous competitive analysis to better assess your company’s future prospects and market potential and make strategic decisions with even greater precision.
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A competitive analysis is a strategic approach to examining the target market as well as current and potential competitors with regard to their market shares, behavior, and range of products and services.
This analysis serves as a basis for business decisions and provides valuable insights into various aspects of the market.
For example, it can reveal how competitive the target market is, the prospects of entering a new market or launching a new product, and what competitors’ marketing and sales strategies look like.
Through a comprehensive competitive analysis, companies can better understand their competitors’ strengths and weaknesses, identify market opportunities and risks, and make informed decisions to improve their competitive position.
It helps define strategic objectives, capitalize on market opportunities, and gain competitive advantages. Competitive analysis is therefore an indispensable tool for companies seeking to secure long-term success and remain competitive in a dynamic market environment.
Quite simply, competitive analysis consists of competitor analysis and market analysis.
Competitor analysis involves an in-depth examination of competitors, gathering and analyzing comprehensive information about their market position, sales channels, service offerings, pricing, and other relevant aspects.
This comparison makes it possible to identify competitors’ strengths and weaknesses and draw insights for your own strategy.
By closely monitoring competitors, you can identify competitive advantages and strengthen your market position.
On the other hand, market analysis is essential for gaining a comprehensive understanding of the target market or the market in which a company operates.
This involves analyzing market development, market share, market potential, as well as the needs and preferences of target audiences.
By collecting and evaluating specific figures, data, and facts, companies can make informed decisions about how to position products and services optimally in the market and identify the opportunities available to the business.
Combining these two analyses—competitor analysis and market analysis—makes it possible to obtain a complete picture of the competitive landscape and market conditions.
On this basis, companies can make strategic decisions grounded in reliable insights and a clear competitive strategy.
A comprehensive competitive analysis is therefore essential for securing long-term success and strengthening competitiveness.
The difference between competitive analysis and an analysis of the competitive situation lies mainly in the perspective and focus of each analysis.
Competitive Analysis:
Analysis of the Competitive Situation:
Summary
The objectives of a competitive analysis are diverse and aim to develop a better understanding of the market, competitors, and a company’s own market position.
Here is an overview of the key objectives:
Objective 1: Position Your Employer Brand
A competitive analysis should reveal the environment in which a company operates.
By identifying relevant competitors, their strengths and weaknesses, and their market position, the company gains a comprehensive overview of the competitive landscape.
Objective 2: Identify Opportunities and Risks
Analyzing competitors makes it possible to identify potential market opportunities and risks early.
For example, recognizing competitors’ weaknesses can be used to develop competitive advantages, while risks such as increasing price pressure or new competitors can be anticipated and planned for.
Objective 3: Benchmark Your Own Performance
Competitive analysis makes it possible to evaluate your own performance against the best companies in the industry.
This allows companies to identify where they stand compared with competitors and where there is potential for improvement.
Objective 4: Develop and Adapt Strategy
The results of a competitive analysis often form the basis for strategic decisions.
If a company sees that a competitor is succeeding with a new product, this can provide impetus for its own product development.
Pricing, sales strategy, and marketing activities can also be adapted to market conditions and the competitive environment.
Objective 5: Identify Market Gaps
A thorough competitive analysis helps identify unserved market segments or niches.
These gaps can point a company toward new growth opportunities and offer a path to differentiation.
Objective 6: Better Understand Customer Needs and Behavior
Analyzing competitors provides insights into customer wants and needs, as successful competitors often already have a deep understanding of these aspects.
By observing what works well for competitors, a company can adapt its own offering accordingly or develop new solutions.
Objective 7: Identify Innovations and Market Trends
A competitive analysis can provide indications of current or future trends.
For example, if many competitors increasingly focus on digital solutions, this may indicate that the market is moving in that direction.
This allows companies to identify trends early and respond accordingly.
Objective 8: Improve Competitiveness
Ultimately, competitive analysis aims to strengthen a company’s own competitiveness.
Knowledge of competitors’ activities and successes enables the company to take targeted action to position itself more effectively in the market and build a sustainable competitive advantage.
Objective 9: Reduce Uncertainty in Business Decisions
By gaining a better understanding of the market and competitors through competitive analysis, companies can reduce uncertainty and make more informed decisions.
In general, there are two types of competitive analysis.
The first is strategic competitive analysis, which focuses on a thorough examination of an industry and its market leaders.
It considers various factors, including the overall market landscape, competitors’ positioning, and their strengths and weaknesses.
This analysis gives companies a comprehensive insight into the competitive framework in which they operate and helps them develop long-term strategies to position themselves successfully and gain competitive advantages.
The second is operational competitive analysis, which focuses on specific aspects of competition, such as product comparisons based on qualitative and quantitative criteria, or monitoring competitors’ marketing and sales activities.
This type of analysis is intended to support short-term decisions and enables companies to respond quickly to changes in the market environment and improve their competitive position.
Both types of competitive analysis are highly important for companies because they help them make informed decisions, gain competitive advantages, and secure long-term success.
By conducting both strategic and operational analyses and integrating the resulting insights into their business strategy, companies can strengthen their competitiveness and achieve long-term success.
The structure of a competitive analysis can vary depending on its objective and scope, but it generally follows a clear, systematic process.
Here is a basic structure that is frequently used:
Step 1: Objectives and Context
Step 2: Market Overview
Step 3: Identify Competitors
Step 4: Analyze Competitors
Step 5: Customer Analysis
Step 6: Opportunities and Risks
Step 7: Conclusions and Recommendations for Action
Step 8: Monitoring and Follow-Up
A competitive analysis is a strategic tool for assessing and analyzing a company’s competitive landscape.
It helps to understand competitors’ strengths and weaknesses, identify market opportunities, and improve your own market position.
Here are some of the most common methods used to conduct a competitive analysis:
Method 1: Porter’s Five Forces
Developed by Michael Porter, this model is one of the best-known frameworks for competitive analysis.
It identifies five forces that determine the level of competition and profitability in a market:
The model helps to understand market structure and analyze a market’s attractiveness and risks.
Method 2: SWOT Analysis
SWOT analysis is a simple but effective model for assessing a company’s strengths, weaknesses, opportunities, and threats in comparison with competitors.
SWOT analysis makes it possible to derive strategic actions that leverage strengths, reduce weaknesses, seize opportunities, and address threats.
Method 3: Benchmarking
Benchmarking compares a company’s processes, products, or services with those of its strongest competitors.
The goal is to identify performance gaps and derive industry best practices.
There are different types of benchmarking:
Method 4: PESTEL Analysis
PESTEL analysis examines a company’s macro-environment and helps analyze external influencing factors.
The acronym stands for:
This analysis is often used to complement competitive analysis in order to better understand external influences on the company and its competitors.
Method 5: Customer Analysis
Customer analysis involves the examination of customer needs and preferences as well as their purchasing behavior.
The focus is on gaining a better understanding of the target audience and determining how it perceives competitors’ products or services.
Customer analysis can be supported through surveys, interviews, and market research.
Method 6: Product Analysis
Product analysis examines competitors’ product portfolios.
It analyzes aspects such as quality, price, design, features, and customer benefits of competing products.
The goal is to identify competitors’ unique selling propositions (USPs).
Method 7: Market Analysis and Market Segmentation
A market analysis looks at the overall market situation, demand development, and market trends.
Market segmentation helps divide the market into smaller segments and analyze them specifically.
This helps identify which segments are well served by competitors and where further potential exists.
Method 8: Strategy Profiling
This involves analyzing which strategies competitors use, such as cost leadership, differentiation, or focus strategy.
Understanding competitors’ strategic direction helps develop an own strategy that can create a competitive advantage.
Method 9: Competitor Analysis
This method analyzes each major competitor in detail.
Key factors include competitors’ market position, strategic objectives, strengths and weaknesses, as well as marketing and sales strategies.
Competitor analysis helps identify gaps in competitors’ strategies and develop potential competitive advantages of your own.
Method 10: Financial Analysis
Financial analysis examines competitors’ financial metrics, where available, to assess their financial strength.
Important metrics include revenue, profit, market capitalization, liquidity, and debt ratio.
This provides insights into competitors’ financial stability and potential ability to invest.
Method 11: Trend Analysis
A trend analysis examines market and technology trends that may influence competition.
This method helps identify new developments early and respond more effectively to innovation or market changes.
This question cannot be answered in general terms, as the selection of relevant metrics depends heavily on the specific objective of the competitive analysis.
A clear definition of your objectives is therefore the first and most important step in the analysis process.
Before starting a competitive analysis, you should carefully consider which questions you want to answer.
For example, do you want to better understand your company’s market position in order to derive growth strategies? Or is your focus on reviewing and adapting your pricing strategy to become more attractive in the competitive landscape?
You may also want to identify new sales channels or assess how potential barriers to market entry could affect your business.
Each of these objectives requires different priorities in data collection and analysis.
Once your objective has been established, you can determine which metrics and comparison criteria are critical for your analysis.
This not only makes it easier to collect relevant data systematically, but also ensures that your analysis results are practical and targeted.
For example, depending on the objective, the following categories of information may be relevant:
Strategic Information:
Operational Information:
Information on Business Performance:
Competitive analyses are simple and quick to implement and can be carried out in just a few steps.
Below, we have outlined and explained six steps for creating your competitive analysis:
Step 1: Define the Objective
Before starting a competitive analysis, first ask yourself what your objective is.
Ultimately, the objective determines the focus and the information to be collected for the competitive analysis.
For example, if your objective is to successfully launch a new product, you need to focus on aspects such as the current market situation, target audience needs, competitors’ strategies, and potential market gaps.
A thorough analysis of these factors enables you to assess market-entry opportunities realistically and position your product optimally.
If, on the other hand, your objective is to identify your company’s performance gaps compared with competitors, you need to focus on areas such as product quality, customer service, pricing, and brand image.
A detailed analysis of these factors helps you understand your competitive position and identify opportunities for improvement.
In every case, it is important to define the objective of the competitive analysis clearly so that you can maintain focus and gather the right information for informed decision-making.
By clearly articulating your objectives and aligning the analysis process accordingly, you can ensure that the competitive analysis is effective and delivers tangible results that contribute to achieving your business objectives.
Step 2: Define Comparison Criteria
Once you have defined the objective of your competitive analysis, you must establish the characteristics and criteria for comparison and analysis.
Possible comparison criteria include company data such as company size, revenue figures, or number of locations.
These metrics provide insights into competitors’ financial and structural strength and enable you to assess your market position and identify potential competitive advantages.
In addition, marketing- and sales-related information can also serve as comparison criteria. Examples include sales channels used, sales and advertising activities, or markets served.
By analyzing this information, you can better understand your competitors’ marketing and sales strategies and adapt your own activities accordingly to position yourself successfully in the market.
As mentioned, comparison criteria always depend on the objective and focus of your analysis.
By selecting relevant metrics and information that are closely related to your business objectives and the goal of your competitive analysis, you can ensure that the analysis delivers meaningful results and supports you in achieving your strategic objectives.
Step 3: Identify Competitors
In the next step, identify your competitors.
To do this, compile a list of direct and indirect competitors using sources such as search engines, industry directories, or industry reports.
Direct competitors are companies that offer similar products or services and compete directly with you.
These companies often have a similar target audience and operate in a similar market segment.
Indirect competitors, on the other hand, are companies that may not offer the same products or services as you but still compete for your target audience’s resources.
For example, they may offer alternative solutions to the same problem or address similar needs of the target audience.
Identifying both direct and indirect competitors is important for gaining a comprehensive picture of the competitive environment and identifying potential threats and opportunities.
Compiling a competitor list helps you better understand who your key competitors are and how they position themselves relative to you.
This enables you to gather targeted information about these companies and conduct an informed competitive analysis that helps define your strategic direction and strengthen your competitiveness.
Step 4: Gather Data About Competitors
Once all competitors have been identified and you know the objective of your competitive analysis, the required information and data relevant to your objective should be researched and, where necessary, collected.
Possible sources for researching this information include annual reports, company registers, trade journals, or market research reports.
For collecting data, it is advisable to use the potential of customer surveys.
Their simple design and extensive reach allow you to ask detailed, targeted questions about the information needed for your analysis—from your target audience’s perspective.
Step 5: Evaluate Data and Draw Conclusions
Once you have gathered all information needed for your competitive analysis objective, the next step is evaluation.
For example, a SWOT analysis can be used as a clear table to show your strengths and weaknesses compared with competitors and the opportunities and risks that may develop in your environment or market.
A SWOT analysis considers internal factors, such as your own resources, capabilities, and market position (strengths and weaknesses), as well as external factors such as market trends, customer needs, and the competitive environment (opportunities and risks).
Evaluating the SWOT analysis helps you better understand your market positioning and derive targeted actions to strengthen your market position and gain competitive advantages.
For example, you can use identified strengths to highlight and promote your unique selling propositions, while using recognized weaknesses to initiate improvement measures.
A SWOT analysis therefore provides a structured basis for developing strategic objectives and deriving concrete recommendations for action.
By using the results of your competitive analysis to build on strengths, minimize weaknesses, and focus on existing market opportunities, you can strengthen your market position and secure long-term success.
Step 6: Make Decisions
Once you have completed the competitive analysis, you should, of course, take action.
Otherwise, all the effort will have been in vain. Consider specifically which measures can be derived from your conclusions and implement them.
For example, this may mean expanding or improving your product line to outperform competitors, or adapting your marketing strategy to reach your target audience more effectively.
Optimizing your sales channels or training your staff to provide better customer service can also be important steps toward strengthening your competitive position.
It is important that you not only identify opportunities and challenges, but also respond to them actively.
Set clear objectives, define concrete actions, and create an implementation schedule.
Regular reviews and adjustments are also important to ensure your strategy is effective and you achieve your objectives.
By using the insights from your competitive analysis to take targeted action, you can strengthen your competitive position and secure long-term success in a dynamic market environment.
Benchmarking is an important method within competitive analysis that measures and improves a company’s performance and strategies in comparison with its competitors.
Benchmarking compares specific key performance indicators (KPIs) or processes of a company with the best practices of other companies.
The objective is to identify strengths and weaknesses compared with competitors and uncover opportunities for improvement.
There are different types of benchmarking:
Type 1: Internal Benchmarking
Type 2: Competitive Benchmarking
Type 3: Functional Benchmarking
Type 4: Generic Benchmarking
