How to do competitor analysis for your business

Published Friday 15 May 2026

Table of contents

• What is competitor analysis?
• Why do competitor analysis?
• How to do competitor analysis: 8 steps
• What to analyse about your competitors
• Identify competitor strengths and weaknesses
• Competitor analysis frameworks and tools
• Keep an eye on emerging competitors
• Strengthen your competitive edge with Xero
• FAQs on competitor analysis

Key takeaways

• Competitor analysis helps you make smarter decisions. By studying what other businesses in your market are doing, you can refine your pricing, improve your positioning, and spot opportunities your rivals have missed.
• There are three types of competitors to track. Direct competitors sell similar products to the same audience, indirect competitors solve the same problem differently, and replacement competitors offer alternatives your customers might choose instead.
• Structured frameworks keep your analysis focused. Tools like SWOT analysis and Porter's Five Forces give you a repeatable way to assess competitors without getting overwhelmed by data.
• Competitor analysis isn't a one-off task. Markets shift, new businesses enter your space, and customer expectations change, so reviewing your competitors regularly keeps your strategy up to date.

Here's how to research your competitors and use those insights to grow your business.

What is competitor analysis?

Competitor analysis is the process of identifying businesses that compete with yours and evaluating their strengths, weaknesses, strategies, and market position. It gives you a clearer picture of where you stand and where you can improve.

You don't need a large budget or a dedicated research team to do it. Much of the information you need is freely available online, from competitor websites and social media profiles to customer reviews and pricing pages.

Competitor analysis sits alongside market research as a core part of your business planning. Where market research looks at your customers and broader industry trends, competitor analysis zooms in on the specific businesses vying for the same audience.

Why do competitor analysis?

Knowing what your competitors are up to helps you make better choices across your business. Here are some of the main benefits:

• Informed pricing. You can set prices that reflect the value you offer while staying competitive in your market. A clear view of competitor pricing helps you develop a solid pricing strategy.
• Stronger positioning. When you understand how competitors present themselves, you can sharpen your own unique selling point and stand out more clearly.
• Gap identification. Competitor analysis reveals gaps in the market, whether that's an underserved customer need, a missing product feature, or a channel no one else is using.
• Reduced risk. Learning from competitors' mistakes and successes helps you avoid costly missteps and make more confident decisions.
• Better marketing. Studying competitors' campaigns and messaging shows you what resonates with your shared audience, so you can refine your own approach.

The following steps walk you through how to carry out a thorough competitor analysis for your business.

How to do competitor analysis: 8 steps

A structured approach makes competitor analysis manageable, even if you're doing it for the first time. Follow these eight steps to build a clear picture of your competitive landscape.

1. Identify your competitors

Start by listing the businesses that compete with yours. There are three types to consider:

• Direct competitors: businesses offering similar products or services to the same audience
• Indirect competitors: businesses solving the same problem in a different way
• Replacement competitors: alternatives your customers might choose instead of your product or service entirely

Search engines, industry directories, and social media are good starting points. Ask your customers who else they considered before choosing you.

2. Create a competitor matrix or spreadsheet

Organise your findings in a simple spreadsheet. List your competitors in rows and use columns for the categories you want to compare, such as pricing, products, target audience, marketing channels, and online reviews.

A competitor matrix keeps everything in one place and makes it easier to spot patterns as you gather more information.

3. Gather information about your competitors

Visit competitor websites, read their blog content, and follow their social media accounts. Look at their product descriptions, pricing pages, and customer testimonials.

Public records, press releases, and industry reports can also provide useful insights. The goal is to collect enough detail to understand how each competitor operates.

4. Analyse your competitors' value propositions

A value proposition is the main reason a customer chooses one business over another. Review each competitor's website and marketing materials to understand what promise they're making.

Ask yourself: what specific benefit are they highlighting? How do they frame their solution compared to alternatives? Identifying these patterns helps you refine your own messaging.

5. Review pricing and marketing strategies

Look at how competitors price their products or services. Note whether they use discounts, bundles, free trials, or tiered pricing. Compare this to the value they deliver.

Then examine their marketing approach. Which channels do they use most? What kind of content do they publish? How do they communicate with their audience?

6. Check online reviews and customer feedback

Online reviews reveal what customers genuinely think about a business. Check platforms like Google, Trustpilot, and social media for honest feedback on your competitors.

Pay attention to recurring themes. If multiple customers praise a competitor for fast delivery, that's a strength worth noting. If they consistently complain about poor support, that's a gap you could fill.

7. Analyse what you've learned

Once you've gathered your data, look for patterns. Which competitors are growing? Which ones are losing ground? Where are the overlaps and differences between their strategies and yours?

Rank your competitors from most to least threatening based on their market share, growth trajectory, and how closely they overlap with your offering.

8. Apply insights to your business strategy

Turn your findings into action. If you've identified a gap no competitor is filling, consider whether it's an opportunity for you. If a rival is outperforming you in a specific area, work out what you can do differently.

Update your business plan to reflect what you've learned. Competitor analysis should feed directly into your pricing, marketing, product development, and customer service decisions.

The next section covers each area of competitor analysis in more detail.

What to analyse about your competitors

Knowing which areas to focus on helps you get the most from your analysis. Here are the key categories to examine.

Products and services

Look at your competitors' full range of products or services. Note the features they offer, how they package them, and what makes each offering distinct.

Consider whether they cater to a specific market niche or serve a broader audience. This helps you understand where your own products sit in relation to theirs.

Pricing

Compare pricing models across your competitors. Some may compete on price, while others focus on premium positioning. Understanding these approaches helps you set prices that reflect your value.

Note any promotions, loyalty programmes, or payment options they offer. These details influence how customers perceive value.

Marketing and messaging

Study how competitors communicate with their audience. Look at their websites, social media, email campaigns, and advertising.

What tone do they use? What benefits do they lead with? How often do they post or send emails? This gives you a benchmark for your own marketing efforts.

Customer experience

Evaluate how competitors interact with customers from first contact to after-sale support. Visit their website as a potential customer and note the experience.

Consider factors like website usability, response times, return policies, and follow-up communication. Strong customer experience is often a key differentiator for small businesses.

Online presence

Review each competitor's website, search engine visibility, and social media following. A strong online presence often signals an effective marketing strategy and an engaged customer base.

Check which search terms they rank for and which social platforms they're most active on. This can reveal opportunities for your own online strategy.

Value proposition

Dig deeper into each competitor's core promise. What do they claim to do better than everyone else? How do they back up that claim?

A strong value proposition usually focuses on a specific customer pain point. If your competitors are all targeting the same angle, there may be room for you to differentiate.

Online reviews and reputation

Customer reviews are a goldmine of insight. They highlight what a business does well and where it falls short, straight from the people who matter most.

Look for patterns across review platforms. Consistently high ratings in one area suggest a genuine strength. Repeated complaints point to a weakness you can turn into your advantage.

With a clear view of your competitors' strengths and weaknesses, you can start to pinpoint where your business has the edge.

Identify competitor strengths and weaknesses

Once you've gathered your research, organise it into a clear picture of each competitor's strengths and weaknesses. This helps you see where you have an advantage and where you need to improve.

A simple way to do this is with a SWOT analysis, which maps out strengths, weaknesses, opportunities, and threats for each competitor. You can also apply SWOT to your own business alongside the analysis for a side-by-side view.

Focus on areas that matter most to your customers. A competitor might have a slick website but slow delivery times. Another might offer lower prices but fewer features. These details help you position your business more effectively.

Competitor analysis frameworks can help you structure this thinking even further.

Competitor analysis frameworks and tools

Using a framework gives your analysis structure and makes it easier to compare findings across competitors. Here are three widely used approaches.

SWOT analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. Create a SWOT grid for each major competitor and one for your own business. This side-by-side view makes it straightforward to identify where you can gain ground.

You can use the same SWOT framework covered earlier to map out each competitor's position alongside your own.

Porter's Five Forces

This framework examines five factors that shape competition in your industry: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products, and the intensity of rivalry among existing competitors.

It's particularly useful when you want to understand the broader competitive dynamics of your market, not just individual rivals.

Benchmarking

Benchmarking involves measuring your business performance against your competitors on specific metrics. These might include pricing, customer satisfaction scores, delivery times, or social media engagement.

Pick the metrics that matter most for your industry and track them over time. This turns competitor analysis from a one-off exercise into an ongoing practice.

Free tools you can use

You don't need expensive software to run a solid competitor analysis. Several free tools can help:

• Google Search and Google Alerts: monitor competitor activity and track mentions
• Social media platforms: review competitor content, engagement levels, and follower growth
• Review sites: read customer feedback on platforms like Google Reviews and Trustpilot
• Companies House: check publicly filed financial information for UK-registered businesses

Markets don't stand still, and neither should your competitor analysis. Keep an eye on what's changing around you.

Keep an eye on emerging competitors

New competitors can appear quickly, especially in industries with low barriers to entry. A startup with a fresh approach or a business from a different sector moving into your space can shift the landscape overnight.

Set up Google Alerts for your industry keywords so you're notified when new players enter the market. Follow industry publications and attend networking events to stay informed.

Regularly revisiting your competitor analysis helps you catch these shifts early. Aim to review your competitive landscape at least every quarter, or whenever something significant changes in your market.

Staying ahead of emerging competitors means you can adapt your strategy before their impact is felt, rather than reacting after the fact.

Strengthen your competitive edge with Xero

Competitor analysis gives you the insights you need to position your business with confidence. By understanding what's working for others in your market, you can make sharper decisions about pricing, marketing, and where to invest your time.

Pair those insights with clear financial data, and you're in a strong position to grow. Xero's accounting software helps you track your business revenue, monitor cash flow, and stay on top of your numbers so you can act on what your competitor analysis reveals. Get one month free.

FAQs on competitor analysis

Here are answers to frequently asked questions about competitor analysis.

What is competitor analysis?

Competitor analysis is the process of researching and evaluating businesses that compete with yours. It covers their products, pricing, marketing, and customer experience to help you find ways to differentiate and improve.

How do you do a competitor analysis step by step?

Start by identifying your direct, indirect, and replacement competitors. Then create a spreadsheet to organise your findings, gather data from public sources, and analyse patterns in pricing, value propositions, and customer feedback. Apply the insights to refine your own strategy.

What are the 4 Ps of competitor analysis?

The 4 Ps refer to product, price, place, and promotion. Reviewing these four elements for each competitor gives you a rounded view of how they go to market and where your offering differs.

What's the difference between direct and indirect competitors?

Direct competitors sell similar products or services to the same target audience. Indirect competitors solve the same customer problem but with a different type of product or approach. Both are worth tracking, as customers often consider each.

What tools can I use for competitor analysis?

Free tools include Google Search, Google Alerts, social media platforms, and review sites like Trustpilot. For UK businesses, Companies House provides publicly filed financial data. A simple spreadsheet is often enough to organise your findings.

How often should I review competitors?

Review your competitors at least once a quarter. If your industry moves quickly or a new competitor enters the market, increase the frequency. Regular reviews stop your strategy from going stale and help you spot opportunities early.