You need to conduct a competitive analysis as a part of your market research. Only then can you develop an effective marketing strategy to steer the ship in the right direction.
A competitor is any company that solves the same problem as you in your target market.
For example, Pepsi and Coke are competitors because they sell the same thing to the same market. However, not every similar business is a direct competitor, which is a common mistake people make.
Take restaurants and cafes, for example. Both of them are places to eat, but they don’t compete with each other. Restaurants are for meals, whereas cafes are for light bites or refreshments. It’s a similar story for freelance vs. enterprise solutions. The products might be similar, but the same solutions don’t appeal to both demographics.
Now that you understand that, your first step is to find 3-5 relevant competitors (anything more would be overkill).
Here are three ways to do it:
a) Look at keyword overlap
Everyone should know at least one competitor, and you can use that information to find others. Just plug your competitor’s domain into Ahrefs’ Site Explorer and check the Competing Domains report. It shows other websites that rank for many of the same keywords as your known competitor.
For example, if you work for ConvertKit, you might look for sites that compete with MailChimp.
Just keep in mind that not all of those domains will be your business competitors. Some websites might monetize the same traffic with affiliate marketing or ads.
If you don’t use Ahrefs, try searching Google for related:competitor.com.
This search operator finds sites related to a given domain. It works well, but the downside is that it usually only finds a handful of related sites. In this case, MailChimp, Aweber, Campaign Monitor, and three others.
For the rest of this article, I’ll use Mailchimp as an example of a competitor because it’s likely a brand you already know.
b) Look who’s advertising
Looking for businesses that bid on industry keywords can be a little more reliable than looking at organic traffic overlap. That’s because it tends to surface direct competitors rather than blogs or other sites with different business models.
For example, look at the ads for “email marketing software.”
Both of these advertisers are direct competitors to ConvertKit or MailChimp because they sell email marketing software.
If you want to scale up this approach, use the Ads History report in Ahrefs’ Keywords Explorer to see historical search ads data for relevant keywords. For example, we see that 307 domains have historically paid for ads on keywords like “email marketing app” and “email marketing software.”
c) Look at category listings
Whatever you sell or do, you can bet there’s a website that curates companies that do the same.
Got a software product? Check companies listed in categories on G2 or alternatives.
Own a local business? Check Yelp and its alternatives.
Selling ketchup? There’s a listing for that as well.
This method is fast and straightforward. However, companies listed in a relevant category won’t always be your competitors. You never know how the companies got listed.
Knowing how a competitor was established and the story behind their growth puts things in context. It’s good to know what you’re up against in terms of size, backing, and finance.
Check for the following data:
- Year founded
- Are there any venture capital investors?
- Which companies did they acquire?
- Number of employees
- Number of customers
- Revenue
You’ll find answers to the first three data points on company overview websites like Crunchbase or Yahoo Finance. The latter also provides income statements of publicly traded companies where you can find last year’s revenue.
If the competitor is a private company, you can still find the information. Just Google it. C-level interviews often contain information about revenue, along with insights into their strategy, challenges, most valuable segments, and much more.
Lastly, you can find the number of people they employ on LinkedIn.
All of this tells you what you’re up against in terms of resources and how much of your target market the competitor owns.
Mailchimp is clearly a long-established industry giant:
But that doesn’t mean you can’t compete with them.
Understanding what your competitors offer and how the market reacts is essential to create a competitive advantage. Of course, this doesn’t mean you should copy anything from them. Your product development should be guided by what the market demands.
This is what you need to know here:
Features and solutions
Try your competitors’ products for yourself and note down their features. There’s no right or wrong way to approach this. Listing all the features and solutions of Mailchimp would take a whole spreadsheet on its own, so it’s better to write down a high-level overview.
Pricing
In most cases, this will be easy to fill out. See what the products are selling for and note if there are any discounts.
In the case of some B2B niches, you won’t find a public pricing page as they often rely on custom quotes. You’ll have to do some ghost shopping for multiple use cases and ask their current or former customers.
Customer reviews
Being a marketer makes you skeptical about any reviews you read online. Review generation activities are highly biased, but hey, this is also marketing.
For that reason, you’ll want to check reviews that are in the middle. Five-star reviews can often be encouraged by the company, and angry customers mostly write one-star reviews in the heat of the moment. For that reason, it pays to look mainly at 2-4 star reviews for a clearer idea of what people think about your competitors’ product(s) or service(s).
Review platforms offer all sorts of handy filters on top of the review score. This is what the filter options look like on G2:
Strengths and weaknesses
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Now that you’ve completed the product overview, it’s time to sum it up. Write down a few strengths and weaknesses based on the product information you’ve gathered so far.
This is what I’ve got for Mailchimp:
| Strengths | It’s likely capable of anything you’d want from such product. |
| Weaknesses | More expensive than alternatives, likely too overwhelming for a beginner. |
Remember the example of cafes vs. restaurants? Even though both sell food and drinks, they don’t compete with one another because their targeting and positioning is different.
This is an important point. You need to know who your competitors are selling to (target segment) and how they want people to perceive their product and brand (positioning). Only then will you be equipped to position yourself to reach and attract the target segment you’re most interested in.
How do you do this?
The first stop is your competitor’s homepage:
Just from glancing at MailChimp’s homepage, we know that they provide marketing tools to SMBs. That’s their main segment.
To dig deeper, you can read interviews with their C-suite where they often mention who they cater to. Product and pricing pages can also help, as some companies name their pricing tiers after target segments.
Ads also offer useful insights. They don’t have room for fluff, which makes them a great place to learn about a company’s positioning. To get started, look at their search ads. You can do that by clicking on the Ads report under Paid search tab in Site Explorer.
Mass marketing channels like TV ads and billboards are yet another source of insights as their main job is to make the viewer aware of the brand and associate it with certain assets. In the digital world, your second best source is Facebook Ads.
You can see the Facebook ads that any company is running when you visit their page. Just scroll to Page Transparency and click “See All”:
Then click “Go to Ad Library”:
Finally, select a country or apply even more filters to go through their ad variations.
Having gone through the steps above for MailChimp, it’s clear that SMBs are their primary target segment. What’s also interesting is that they’re now positioning themselves as an all-in-one marketing solution—not just an email marketing app. That provides a leverage for my imaginary company.