A competitive analysis is useful when it helps you make a business decision—not just when it fills a spreadsheet. Start by defining the customer, need, market, and decision you are studying; identify the alternatives buyers actually consider; compare them using consistent criteria; then turn the evidence into an action and keep it current.
How to do a competitive analysis
Use this sequence for a small business or early-stage team. Scale the depth to the decision: a pricing question may need a focused comparison of buyer segments, prices, and total costs, while entering a new market may also require evidence about category demand and industry structure. CFA Institute recommends defining industry boundaries and participants before estimating market size, growth, profitability, and market-share trends (CFA Institute).
1. Define the decision and scope
Write down what the analysis should help decide. For example: “Should we change our price, target a different customer segment, add a feature, or invest in a new channel?” Specify the customer and problem, geography, and time horizon. Clear boundaries keep the work relevant when companies span categories or serve different markets.
2. Identify realistic alternatives
Search as a buyer would: use category terms, alternatives searches, marketplaces, and relevant sales or discovery channels. Ask whether someone with the same need and budget could realistically choose each option instead of yours. Include direct competitors with similar solutions, indirect competitors that solve the problem differently, substitutes, and the status quo—such as a manual workaround—when it is a genuine option (U.S. Chamber of Commerce; OpenStax).
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Five to ten direct competitors can be a practical starting shortlist, not a universal requirement. Add or remove candidates based on the market and decision rather than treating a particular count as a target (Shopify; SurveyMonkey).
3. Set comparison criteria before collecting evidence
Use the same rows for each competitor, including your own business. Choose criteria that reflect buyer priorities and the decision at hand; an easy-to-find metric is not automatically an important one.
- Target customer and primary use case
- Main offer, capabilities, and differentiators
- Price, pricing model, discounts, implementation costs, and total cost
- Positioning claims and the proof offered to support them
- Sales and marketing channels
- Customer experience, service, shipping, or onboarding, as relevant
- Recurring themes in reviews and buyer-perceived strengths
- Evidence source, observation date, and confidence
Keep direct observations distinct from interpretation: what a company claims, what evidence supports, and what your team infers are not the same thing. This makes assumptions easier to spot and test (Shopify; SurveyMonkey).
4. Gather public evidence and buyer evidence
Public sources can show how a competitor presents itself and what it makes available. Check product and pricing pages, customer reviews, company announcements, job listings, market reports, and search results. Record when you observed each item because offers and claims can change.
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Then test what buyers believe. Interview or survey current customers and prospects, including people who chose another option. Ask which alternatives they considered, what mattered most, and what influenced their decision. A website reveals a company’s claims; buyer conversations help establish whether those claims resonate. Focus groups or experiencing a competitor’s customer journey can also inform the analysis where appropriate (U.S. Chamber of Commerce; SurveyMonkey).
5. Compare the field and look for patterns
Fill in the matrix consistently, then compare your offer against the same criteria. Look for repeated tradeoffs, not isolated details: for example, a service level that commands a higher price, a common buyer complaint, or a positioning claim used throughout a crowded category. Note where your offer is stronger, weaker, or not meaningfully different.
A missing feature in competitors’ offers or an apparently open position is a hypothesis, not proof that buyers want it. Validate a possible gap with buyer or market evidence before committing resources (OpenStax; Shopify).
6. Choose a framework for the question
Frameworks organize thinking; they do not replace evidence or require a team to complete every model. Choose the lens that fits the decision.
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Best Value
| Framework | Best suited to | What it helps you examine |
|---|---|---|
| Competitive grid | Comparing named alternatives | Consistent evidence and key success factors across competitors (OpenStax). |
| SWOT | Synthesizing the position of your business | Internal strengths and weaknesses alongside external opportunities and threats (OpenStax). |
| Porter’s Five Forces | Understanding industry-level competitive pressure | Rivalry, new entry, substitutes, buyer power, and supplier power. The Institute for Strategy and Competitiveness at Harvard Business School describes the framework as a way to understand the forces at work in an industry and how economic value is divided among industry actors (Harvard Business School). |
| PESTLE | Assessing broader external change | Political, economic, social, technological, legal, and environmental influences on the market (CFA Institute). |
| Positioning map | Visualizing how buyers perceive competitors | Where alternatives sit on two buyer-relevant attributes, such as price and perceived quality. Apparent whitespace still needs demand validation (Shopify). |
7. Turn findings into decisions
For each important finding, record the evidence, what it suggests, how confident you are, and which action it could change. That action might be testing a price, revising a positioning claim, prioritizing a buyer-valued product improvement, or investing in a channel. Label unverified assumptions as questions to test rather than presenting them as facts (U.S. Chamber of Commerce; SurveyMonkey).
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How often should competitive analysis be refreshed?
Keep sources and observation dates with the analysis: competitive analysis is a snapshot, not a permanent description of a market. Set a review cadence that fits the pace of change and the decision, and revisit sooner when a meaningful event—such as a launch, price change, acquisition, or repositioning—could alter the choice. SurveyMonkey recommends an annual full-study refresh with ongoing monitoring and earlier review after such events (SurveyMonkey).
Shopify reports a Crayon 2026 State of Competitive Intelligence finding that 79% of teams sharing competitive intelligence weekly or faster reported revenue impact, compared with 41% of teams sharing it monthly or less often. This is a reported association, not evidence that more frequent sharing caused the difference (Shopify).
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