Competitor analysis: How to assess your rivals and grow your business

Published Monday 13 October 2025

Table of contents

• What is competitor analysis?
• The benefits of a competitive strategy
• Who are your competitors?
• What to ask when doing competitor analysis?
• Identify competitor strengths and weaknesses
• What are your advantages?
• Will more competitors emerge?
• How to use your competitor analysis insights
• Use Xero to track your competitive performance
• FAQs on competitor analysis

Key takeaways

• Identify both direct competitors (offering similar products/services) and indirect competitors (competing for the same customer spending or time) to get a complete picture of your competitive landscape.

• Analyse competitor strengths and weaknesses systematically by examining their distribution power, brand recognition, product quality, and customer experience to find market gaps you can exploit.

• Leverage your unique competitive advantages such as exclusive contracts, proprietary processes, or strategic location benefits in your marketing to clearly differentiate yourself from rivals.

• Apply competitor insights to strengthen your business by highlighting your unique strengths in marketing, improving products based on competitor gaps, adjusting pricing strategically, and focusing on underserved customer niches.

What is competitor analysis?

When you research other businesses in your market, you see what they do well. By comparing their products, prices and marketing, you can spot ways to improve your business and stand out.

Benefits of a competitive strategy

Competitor analysis turns your rivals into virtual mentors by revealing what makes them successful. Your competitors have already solved problems you're facing – they have loyal customers, strong market positions, and profitable operations.

This research helps you:

• Learn from their wins: Discover what marketing strategies and tactics work in your market
• Avoid their mistakes: Identify what hasn't worked so you don't repeat costly errors
• Find your edge: Spot what you're doing better and use it as a competitive advantage
• Improve your business: See specific areas where you can strengthen your operations

Taken together, all of these insights can feed into a competitive strategy. You do not need a formal document. Just make sure you have a clear competitive strategy in your business plan.

Who are your competitors?

Two types of competitors compete for your customers and revenue:

Direct competitors: Businesses offering similar products or services to yoursIndirect competitors: Different businesses competing for the same customer spending

For example, Netflix competes with:

• streaming services like Disney+ and Amazon Prime
• cinemas, cable TV, YouTube, social media and gaming platforms
• Direct competitors: Disney+, Amazon Prime, other streaming services
• Indirect competitors: Cinemas, cable TV, YouTube, social media, gaming

Think broadly when you identify competitors – anyone who takes your customers’ time or money is competition.

What to ask when doing competitor analysis

Competitor research follows a structured approach from broad market overview to specific tactical details.

Market landscape questions

• Who are the major players in your market?
• How is market share divided between them?

Positioning and brand questions:

• How does the market perceive each competitor?
• What's each competitor known for (premium, budget, innovation)?

Product and service questions:

• What experience do they offer customers?
• How do their products look, feel, and function?
• What do they charge and how do customers buy?

Performance questions:

• What reviews and feedback do they receive?
• How do they deliver their products or services?

For each answer, ask: How can my business differentiate itself here?

Identify competitor strengths and weaknesses

Competitor strengths and weaknesses analysis helps you identify your biggest threats and find market gaps you can exploit.

Focus on competitors who pose the greatest challenge – those in your region or who target your exact customer segment.

Common competitor strengths:

• Distribution power: Available in multiple locations and channels
• Brand recognition: Strong awareness and customer trust
• Network effects: Established relationships with suppliers and buyers
• Price advantage: Lower costs that are hard to match

Common competitor weaknesses:

• Brand perception: Seen as boring or outdated
• Product quality: Poor reviews or cheap presentation
• Customer experience: Weak service or support
• Market gaps: Underserved customer segments or needs, which can be critical in tougher markets where growth is significantly lower than the survey average.

Use this analysis to: Identify where you can compete effectively and what makes your business different.

What are your advantages?

Competitive advantages are unique strengths that competitors can't easily copy or replicate. Identifying these helps you understand your strongest market position.

Legal advantages:

• Patents or licences: Exclusive rights to produce certain products
• Exclusive contracts: Sole distribution rights in your area

Operational advantages:

• Proprietary processes: Unique methods or systems others don't know
• Cost advantages: Ability to deliver products or services for less

Strategic advantages:

• Location benefits: Prime positioning competitors can't access
• Relationship advantages: Unique partnerships or customer loyalty

Use these advantages in your marketing to highlight what makes you different and why customers should choose you over competitors.

Will more competitors emerge?

Future competitive threats assessment helps you prepare for new rivals entering your market, especially in growing industries where success can attract competition; for instance, 71% of Malaysian small businesses grew last year, the highest result in over a decade.

Key questions to evaluate threat level

Barrier to entry assessment

• How hard would it be for someone new to copy your business model?
• What would it cost them to match your capabilities?

Established player risk

• Could existing businesses easily expand into your market?
• How quickly could they replicate your competitive advantages?

Market attractiveness factors

• Is your industry growing rapidly (attracting new entrants)?
• Are profit margins high enough to tempt competitors?

If it is hard for others to copy your business, you have a stronger competitive position.

How to use your competitor analysis insights

Use your findings to make decisions that strengthen your business.

• Highlight your strengths in marketing: Use what you've learned to show what makes you different. If your competitors focus on price, you can focus on quality or service.
• Improve your products or services: If you see a gap in a competitor’s offering, use that insight to make yours better.
• : Understanding what competitors charge helps you price your own products competitively, ensuring you offer good value without leaving money on the table.
• Focus on a niche: You might find a group of customers your competitors ignore. This could be your chance to own a part of the market.

Use Xero to track your competitive performance

After you make changes based on your competitor analysis, track your results. Use Xero’s reporting tools to see how your business is performing.

Track key metrics like your gross profit margin and net profit. If your changes work, you’ll see these numbers improve. Use Xero to get clear financial insights and adapt your strategy.

Try Xero for free to get started.

FAQs on competitor analysis

Here are answers to some common questions about competitor analysis.

What are the 4 P's of competitor analysis?

The four Ps are a marketing framework you can use to analyse competitors. They stand for product (what they sell), price (what they charge), place (where they sell), and promotion (how they market their offering).

How often should I do a competitor analysis?

It's a good idea to review your competitors at least once a year. You might do it more often if you're in a fast-moving industry or if a new, significant competitor enters your market.

What's the difference between direct and indirect competitors?

Direct competitors sell similar products or services to the same customers. Indirect competitors offer different solutions that meet the same customer needs or compete for the same spending.

Can a small business compete with a larger one?

Yes. Small businesses can compete by being more agile or by focusing on a niche market. Research shows that small businesses with strong growth are often younger, have fewer than 20 employees, and are led by managers under 40. Your competitor analysis can help you find these opportunities.