Competitor analysis checklist: how to proceed step by step

Would you like to analyze your competition and consider all the important aspects? This concise, easy-to-understand competitor analysis checklist will guide you through the process step by step:

Step 1: Determine direct competition

• Identify the direct competitors that appeal exactly to your target group in terms of their range of services.

• But also include competitors in this list who charge higher prices or offer slightly different features.

After all, your competitors are also observing the market and may try out a new product portfolio that is suddenly in direct competition with your offering.

• Ideally, sort the identified competitors according to their market share.

It is of course difficult to verify these figures. In any case, you can at least make a rough subdivision (A, B and C).

Step 2: Determine indirect competition

• Indirect competitors cover part of your target group, even if the clientele is not completely congruent.

When investigating, it is necessary to think outside the box, as indirect competition is sometimes difficult to recognize. It makes more sense to start from the customer's needs and not so much from the existing offers.

• Key question: What does my target group want, and who could fulfill this need and how?

In this way, you can also identify potential competitors that are not so obvious.

• Based on this, list companies, products and services that could indirectly compete with you or substitute your offering.

For example, do you offer products that are also available in supermarkets (in a different quality)? Then supermarkets are also indirect competitors.

Step 3: Define comparison criteria

To assess how strong your competitors are and which niches they occupy, you should define various comparison criteria that are particularly relevant to your business model. Possible examples are

• Awareness
• Market share
• Price level
• Quality level
• Design
• Service
• Distribution channels

The more detailed you go into here, the more meaningful the comparison of strengths and weaknesses will be, which takes place in the next step of the analysis.

Step 4: Compare strengths & weaknesses

• Using the defined criteria, you can compare your business as well as your direct and indirect competitors in a competitor analysis matrix. Wherever possible, enter numerical values.

For example, a premium brand could receive a 3 under the price level aspect, while a low-cost brand could receive a 1. So it's not about absolute values, but about ordinally scaled ranks.

• All your competitors have their own special features and strengths, but undoubtedly also their weaknesses.

• The more criteria you have defined in advance, the easier it will be for you to work out the differences and, above all, the weak points of your competitors.

As a strong competitor for many online retail business models, Amazon scores highly with its extremely customer-friendly service and ease of returns, for example. However, its weaknesses are the numerous dubious providers, its rather negative employer profile, its ecological footprint in terms of returns and its increasingly confusing product range. These are starting points for you to positively differentiate yourself from the seemingly overwhelming competition.

Step 5: Develop positioning

• Based on the strengths and weaknesses profile of your competitors, you can now work on your own positioning.

• It is common and to be expected that some criteria cannot be treated separately from one another. For example, a higher level of quality and better service usually inevitably lead to a higher price.

• Your goal should be to develop a unique strengths and weaknesses profile that stands out from as many competitors as possible and is therefore no longer in direct competition with the entire industry.

Such specialized positioning may cost you market share, but it will help to reduce the number of your direct competitors and sharpen your competitive profile.