How to Conduct Competitor Analysis: A Strategic Framework for Startups
Gaining an understanding of your competitors is crucial for startups looking to enter a crowded market or disrupt an existing space. Comprehensive competitor analysis reveals key opportunities to differentiate, establish competitive advantage, and craft messaging that clearly communicates why customers should choose you over alternatives.
In this post, we’ll explore a structured framework for evaluating competitors, gathering intel, identifying blind spots and assessing your startup’s positioning against top players in the market. Use these tips to conduct rigorous competitor analysis that fuels strategic decisions and propels growth.
Assemble A List of Key Competitors
The first step is identifying who you consider to be your core competitors. These fall into two main buckets:
Direct competitors - Companies with very similar product offerings and target customers. For example, Uber and Lyft directly compete for ridesharing customers.
Indirect competitors - Those with different offerings that satisfy the same core customer need or job to be done. Indirect competitors for Uber could include public transportation, taxis, or car rental agencies.
Cast a wide net when compiling your initial list. You can pare down later. The goal is accounting for all alternatives customers might consider instead of using your product or service.
Evaluate Product/Service Offerings Side-by-Side
Conduct detailed side-by-side evaluations comparing your startup’s product or service to competitors’ offerings. Organize findings into a spreadsheet for easy analysis.
Assess factors like:
- Core features and functionality
- Strengths and weaknesses
- Technology capabilities and architecture
- User experience, interfaces and ease of use
- Complementary offerings
This reveals where you overlap and where there are gaps to either fill or double down on strengths. Identifying unique capabilities that set you apart is especially valuable for positioning. Consider using a spreadsheet to visualize this analysis as a matrix. This can help identify high and low points of coverage at a glance.
Analyze Pricing and Positioning
Pricing and positioning evaluations enable you to determine where competitors sit in the market in relation to one another. This influences everything from your product decisions to marketing messaging.
For pricing, compare on factors like:
- Price points, models and structures
- Discounts, special offers, and incentives
- Payment terms and options
For positioning, assess brand identity and promised value proposition. Rank competitors on spectrums like:
- Quality vs affordability
- Comprehensive functionality vs lightweight
- Established provider vs innovative upstart
Uncover Growth and Marketing Strategies
Research competitors’ key growth channels and marketing strategies. Assess areas like:
- User/customer acquisition tactics
- Sales team/process
- Partnership and channel ecosystem
- Social media and content marketing
- Lifecycle marketing and retention
This reveals potential distribution channels or untapped partnerships to explore. It also helps you counter or one-up competitors by strengthening weak spots in your strategy.
Identify Product Roadmaps and Development
Product roadmap and development intel enables you to anticipate what competitors are building next. You can then preemptively build comparable features or redirect focus on new capabilities they will lack.
Ways to gather intel:
- Product announcements
- Job descriptions referencing new tech
- Following engineering leaders/influencers
- Pitch decks or internal all-hands meetings announcing strategy
Obviously avoid anything illegal or unethical, but creativity can be your friend in gathering publicly available data in unconventional ways.
Uncover Blindspots in Competitor Intelligence
Conducting primary market research identifies potential blindspots where competitors are lacking data themselves. Surveys, focus groups and beta tests with target users reveal pain points competitors may be overlooking.
Blindspot opportunities might include underserved customer segments, emerging use cases, niche feature needs or differences between perceived vs actual needs. Leaning into these can fuel differentiation.
Continuously Re-Evaluate Market Landscape Competitor analysis is an ongoing exercise as the market continually evolves. Revisit your framework quarterly.
New entrants may emerge and existing players may expand offerings. You don’t want to be caught off guard. Ongoing analysis ensures you adapt appropriately as the competitive landscape shifts.
Conducting thorough competitor assessments illuminates key gaps, opportunities and threats needed to hone strategy. Use the structured framework outlined above to steer competitive positioning, product development, pricing and growth decisions for strategic advantage.
Want to read more? Check out this other article in our blog:
The Importance of Market Research for Startups: A Step-by-Step Guide
26th September 2023