Competitor analysis: how to do it for your business

Published Tuesday 6 October 2026

Table of contents

• What is competitor analysis?
• Benefits of a competitive strategy
• Who are your competitors?
• How to do a competitor analysis in 8 steps
• What to ask when doing competitor analysis
• Identify competitor strengths and weaknesses
• Competitor metrics to track
• Free and low-cost competitor analysis tools for NZ businesses
• What are your advantages?
• Will more competitors emerge?
• How to use your competitor analysis insights
• Track and improve your competitive position
• Turn competitor insights into better decisions with Xero
• FAQs on competitor analysis

Key takeaways

• Competitor analysis compares your business with direct and indirect rivals so you can spot gaps and stand out
• Work through eight steps, starting with one clear goal and finishing with one or two changes you can test
• Google Alerts, Google Trends, the Meta Ad Library and the NZ Companies Register let you research competitors for free
• Compare what you learn with your own gross profit and net profit, and review your analysis at least once a year

What is competitor analysis?

Competitor analysis is researching the businesses that compete for your customers to see what they do well and where they fall short. You compare their products, prices, locations and marketing with yours to find ways to improve and stand out.

Picture a Wellington plumber checking the call-out fees and Google ratings of four other local plumbers. In an afternoon, they learn what customers expect to pay and where faster, friendlier service could win more jobs.

Competitor analysis is one part of wider market research, which also looks at your customers and the size of your market.

Benefits of a competitive strategy

Competitor analysis shows you what already works in your market, so you can base decisions on evidence. Your competitors have already tested prices, products and promotions on the customers you want.

Think of them as mentors you don’t have to pay. Studying them helps you:

• learn which small business marketing tactics bring in customers in your area
• sidestep the mistakes they’ve already made and skip costly trial and error
• spot where you already outperform them and turn it into a selling point
• find specific parts of your operations to strengthen

What you learn shapes your competitive strategy. A separate document is optional, but set out how you’ll compete in your business plan.

Who are your competitors?

Your competitors are any businesses chasing the same customers, spending or time as you. They fall into two groups:

• direct competitors, which sell similar products or services to the same customers
• indirect competitors, which sell something different that meets the same need or wins the same spending

For example, a neighbourhood café competes directly with the other cafés on its street. It competes indirectly with supermarket coffee pods and the coffee machine in the office down the road.

Think broadly when you list competitors. Anyone who takes your customers’ time or money is competition.

How to do a competitor analysis in 8 steps

A clear process keeps your research focused and manageable. Work through these eight steps in order, then repeat the cycle as your market changes.

1. Set one clear goal for your research. For example, check whether your prices are right or find out why a rival is winning customers.
2. Identify three to five direct competitors, plus at least one indirect competitor. Start with the businesses your customers mention or compare you with.
3. Choose what to compare, for example the four Ps: product, price, place and promotion. A short list keeps the job manageable.
4. Gather information from websites, reviews, social media and ads, or buy from competitors as a customer. The free tools listed below make this faster.
5. Record your findings in a spreadsheet so you can compare competitors side by side. Date each entry to track changes over time.
6. Run a strengths, weaknesses, opportunities and threats (SWOT) analysis for your business. It shows how you stack up against what you’ve found.
7. Find gaps, such as customer groups or trading hours that competitors serve poorly. Note complaints that come up again and again in their reviews.
8. Act on one or two findings, then check results. A CPA Australia case study found weekends generated 36 per cent of sales, making weekend rosters a priority.

What to ask when doing competitor analysis

Good questions move from the big picture down to the detail. Work through these four groups for each competitor you analyse.

Market landscape questions

Start with the shape of your market as a whole.

• Who are the main players in your market?
• How is market share split between them?

Positioning and brand questions

Next, look at how each competitor presents itself.

• How do customers see each competitor?
• Is each one known for premium quality or low prices?

Product and service questions

Then look closely at what each competitor sells.

• What experience do they give customers?
• How do their products look and work?
• What do they charge, and how do customers buy?

Performance questions

Finally, check how well each competitor delivers.

• What do their reviews and ratings say?
• How do they deliver their products or services?

For each answer, ask yourself how your business could do it differently or better.

Identify competitor strengths and weaknesses

Strengths and weaknesses show you which competitors pose the biggest threat and where the market has gaps. Focus on the rivals closest to you, such as those in your region or chasing your exact customers.

Common competitor strengths

Watch for advantages like these, which can take time to match.

• Wide distribution across several locations or sales channels
• Strong brand recognition and customer trust
• Long-standing relationships with suppliers and buyers
• Lower costs that let them undercut on price

Common competitor weaknesses

Weak spots are where you can win customers. Look out for:

• a brand that feels tired or old-fashioned
• poor reviews or cheap-looking products
• slow or unhelpful service, which often traces back to how the business runs
• customer groups or needs that nobody serves well

Use what you find to decide where you can compete and what makes your business different.

Competitor metrics to track

Tracking a few measurable signals turns a one-off review into an early warning of change. Check these metrics for each main competitor every few months.

• Pricing, including discounts and delivery fees
• Product or service range, including new launches and discontinued lines
• Customer review ratings and the number of new reviews each month
• Website traffic and where they appear in Google search results
• Social media following and engagement on posts
• Advertising activity, such as how many ads they run and which offers they push
• Delivery times, service levels and job ads, which can signal growth or strain

Competitor numbers mean most when you set them beside your own. If a rival cuts prices by 10 per cent, check your margins before you respond. Matching them could wipe out your profit on each sale.

Your accounting records show your gross profit and cash flow. Use them to test whether a price cut or extra ad spend adds up for your business.

Free and low-cost competitor analysis tools for NZ businesses

You can research competitors well with free tools. Each one below reveals a different part of the picture.

• Google Search and Google Business Profile listings, which show a competitor’s location, opening hours, photos and star rating
• Google Trends, which charts how search interest in a brand or product changes over time and across NZ regions
• Google Alerts, which emails you when new web pages mention a competitor’s name
• The Meta Ad Library, which displays the ads a business is currently running on Facebook and Instagram
• The NZ Companies Register, which lists a company’s directors, shareholders, registered office and incorporation date
• Stats NZ business data, which breaks down business and employee numbers by industry and region
• Review sites such as Google reviews and NoCowboys, which reveal what customers praise and complain about

Pick the tools that match the goal you set in step one, and check them on a regular schedule.

What are your advantages?

Competitive advantages are strengths your competitors can’t easily copy. Knowing yours helps you claim your strongest position and explain it clearly to customers.

Most advantages fall into one of the groups below.

Legal advantages

Legal advantages give you protection others can’t get around. They include:

• patents or licences that give you exclusive rights to make certain products
• exclusive contracts, such as sole distribution rights in your area

Operational advantages

Operational advantages come from how you run your business. They include:

• processes or systems that other businesses don’t know about
• lower costs that let you deliver for less

Strategic advantages

Strategic advantages come from your position in the market. They include:

• a location competitors can’t access
• partnerships or customer loyalty that took years to build

Build these advantages into your marketing plan so every campaign explains why customers should choose you.

Will more competitors emerge?

Thinking about future rivals helps you prepare before they arrive. This matters most in growing industries, where success attracts newcomers.

Use the questions below to judge your level of risk.

Barriers to entry

Start by asking how easy it is for someone new to set up in your market.

• How hard would it be for a newcomer to copy your business model?
• What would it cost them to match what you offer?

Established player risk

Next, consider existing businesses that could move into your patch.

• Could an established business expand into your market easily?
• How quickly could they copy your advantages?

Market attractiveness

Finally, look at what might draw competitors in. The Reserve Bank of New Zealand’s May 2026 Financial Stability Report found that high commodity prices were lifting rural incomes. Strong returns like these can attract new entrants.

• Is your industry growing fast enough to attract new players?
• Are profit margins high enough to tempt competitors?

The harder your business is to copy, the stronger your position.

How to use your competitor analysis insights

Your research pays off when you turn it into specific business decisions. Here are four ways to put it to work.

• Highlight your strengths in your marketing; if competitors lead on price, lead on quality or service
• Improve your products or services to fill the gaps you’ve spotted
• Set your prices using competitor data, so you offer good value and protect your margin
• Target a niche market your competitors overlook and become the go-to business for that group

Track and improve your competitive position

Once you’ve made changes, measure the results to see what’s working. Track your gross profit margin and net profit to check whether your competitive strategy is paying off.

You can also compare specific operational costs with industry benchmarks. In the same CPA Australia case study, a plant nursery’s salary costs were 53.2 per cent of sales. The industry benchmark was 20–25 per cent, which pointed to a clear cost disadvantage.

Turn competitor insights into better decisions with Xero

Competitor analysis shows you where you can win, and your own numbers show whether it’s working. Xero puts your sales and costs in easy-to-read reports, so you can see how each change affects your bottom line.

The better prepared you are, the faster you can respond when a rival makes a move. Choose a plan that suits your business and get one month free.

FAQs on competitor analysis

Here are quick answers to common questions about competitor analysis.

What are the four Ps of competitor analysis?

The four Ps are product, price, place and promotion, the classic marketing mix. Service businesses often add people, process and physical evidence to make seven Ps, which helps you compare things like staff expertise and booking systems.

How often should you do a competitor analysis?

Do a full review once a year and a quick check of prices and reviews every month or quarter. Review sooner if a new competitor opens nearby or a major rival changes its prices.

Is there a competitor analysis template?

A simple spreadsheet works: list competitors in rows and comparison factors, such as the four Ps and review ratings, in columns. Add a SWOT summary underneath so each finding points to an action.

What’s the difference between SWOT and competitor analysis?

Competitor analysis studies other businesses, while a SWOT analysis assesses your own. Strengths and weaknesses are internal to your business, and opportunities and threats come from outside it, which is where your competitor findings fit.

Is competitor analysis legal and ethical?

Yes, when you use public information such as websites, prices, ads, reviews and public records, or buy from a rival as a customer. Stay ethical by being honest about who you are and never asking a rival’s staff or former staff for confidential information.

Can a small business compete with a larger one?

Yes. Smaller businesses can often change prices, products and service faster, and these tactics for taking on large retailers show where to focus.