Competitor analysis helps you define what makes your business different, better, or more relevant than the others in your space. You’re not marketing in a vacuum; you’re marketing in a crowded room, and knowing who else is in that room helps you position your brand in a way that stands out from the noise.
But before you can analyse your competitors, you need to identify who they actually are.
Direct vs indirect competitors
Identifying your competitors is more nuanced than just looking for businesses with identical offerings; competition exists on multiple levels.
A direct competitor is a company that your ideal customer would directly compare to you when making purchase decisions, meaning it offers the same product or service, targets the same audience, and operates in the same geographic or digital space as you. For example, two estate agents operating in the same city, or two SaaS project management tools aimed at marketing teams.
An indirect competitor is a company that solves the same problem as you, just in a different way. For example, a gym isn’t just competing with other gyms in the area; it’s also competing with home workout apps, YouTube fitness trainers, at-home fitness equipment, and independent fitness communities or classes. All of these solve variations of the same problem, and are therefore all competing for the same customers’ time and attention.
Analysing indirect competitors can reveal new strategies and opportunities that direct competitors haven’t yet leveraged, but they can also highlight emerging threats. For example, traditional taxis may not have originally identified Uber as a competitor before ridesharing apps became prominent in their space.
It’s a competition for attention, not just sales
Your competitors aren’t just other businesses selling products or services; they may also be content creators, influencers, thought leaders, and industry publications. The competition is for trust and attention first, revenue second.
For example, a financial advisor should consider other relevant financial advisors and wealth management firms as its competitors. But, it may also be competing with finance influencers on TikTok and YouTube, budgeting apps, and financial publications that position themselves as trusted authorities. While these sources may not be directly trying to steal your customers, they are competing for the time and attention of your audience: if someone regularly consumes free personal finance content from an influencer, they may be less inclined to hire an advisor, or if they trust a budgeting app to manage their money, they’re less likely to seek professional guidance.
Who shows up when your customers search?
The most practical step in identifying competitors is to act as your ideal customer would. A simple Google search for your products or services, without using your brand name or internal jargon, will reveal the businesses competing for the search traffic that you want. It can also be helpful to check Google’s ‘People also search for’ section, as this can highlight alternative solutions or adjacent services to your own. Browsing industry-specific directories, review sites, and marketplaces is another great way of uncovering competitors, and businesses that operate within a defined geographic area, like restaurants and retail storefronts, should check Google Maps to find local competitors.
When a competitor is not really a competitor
Some companies may seem like competitors on the surface, but actually aren’t. You need to be honest and realistic about where your business stands in the wider market. Comparing yourself to a brand that isn’t truly comparable can do more harm than good, making you feel like you’re failing when actually you’re just comparing apples to oranges.
For example, a high-end organic market and a discount supermarket both sell groceries, but they occupy such different positions that they rarely compete directly for the same customer. If you’re a tech start-up with a minimal budget, big SaaS companies may technically be your competitors, but they’re operating with significantly more resources and existing brand recognition that you simply can’t compete with at your size.
Leveraging your competitors
Once you’ve properly identified your competitors, you can begin to analyse what they’re doing and what opportunities they’re missing.
And if you need help with that next step, why not enlist the help of a friendly agency?