A Comprehensive Guide to Competitor Analysis For Startups

Learning how to conduct a competitive analysis is your first step in understanding their strategies and positioning. They’re innovating, fine-tuning, and possibly even targeting your future customers as we speak. This is why competitor analysis isn’t just a nice-to-have – it’s essential to your startup’s survival and growth.

By understanding what others in your space are doing – how they’re succeeding, where they’re falling short, and where they’re headed – you gain a powerful toolkit. You’re no longer just guessing or hoping your product will resonate. You’re positioning yourself with insight, strategically building on what’s already out there, and – crucially – finding ways to stand out in a noisy market.

It’s not about obsessing over your rivals, but about using the information available to outmanoeuvre them. Mastering how to conduct a competitive analysis empowers you to not just observe your competitors but to anticipate their moves, helping you stay one step ahead in the marketplace.

What is competitor analysis?

Competitor analysis is the practice of identifying, studying, and interpreting the activities and strategies of other businesses within your market. It’s the process of systematically gathering information about competitors – understanding their strengths, weaknesses, market positioning, and tactics. By doing this, startups can unearth vital insights that shape their own business strategies. In essence, it’s about understanding who you’re up against and using that knowledge to position yourself more effectively.

For startups, competitor analysis is particularly vital because it offers a clearer view of the battlefield. When you’re new to the scene, it’s easy to be consumed by your own vision – believing that you’ve created the perfect product or service. However, the harsh reality is that your competitors are thinking the exact same thing. They too are innovating, strategising, and evolving. Without understanding their movements, you’re operating in the dark. And no one wants to navigate a business blindly.

DOWNLOAD: Competitor Analysis Business Plan Template

Why competitor analysis is essential for startups

At its core, competitor analysis enables startups to make smarter, more informed decisions. Whether you’re fine-tuning your product, deciding on a price point, or figuring out the best way to reach your audience, understanding your competition gives you the edge.

Product development

Take product development, for example. Analysing your competitors can reveal what customers expect, which features are valued, and which areas your rivals are neglecting. This is where the real opportunity lies – not in copying your competitors but in spotting the gaps they’ve missed. If you can develop a product that not only matches but exceeds market expectations, you’re immediately ahead of the game.

Pricing

Pricing is another area where competitor insights are invaluable. Are your competitors going premium, with high-end prices? Or are they racing to the bottom, offering lower-cost alternatives? Knowing where you sit in this spectrum helps you carve out your niche, ensuring you don’t price yourself out of the market or undervalue your offering. And it’s not just about numbers – it’s about perception. A high price can signify exclusivity, while a low price might suggest value for money. Equally, without the right differentiation against your competitors (see below) a high price could be seen as overly expensive, while a low price could seem cheap and untrustworthy. Getting the right balance is key.

READ: The Pitfalls of Undercutting in Your Startup Pricing Strategy

Marketing strategy

Marketing strategy is another area where competitor analysis plays an important role. How are they engaging with customers? Are they relying heavily on digital ads, or is social media their playground? By understanding what works for your competitors, you can refine your own approach – whether that means tapping into new marketing channels or doubling down on the ones where they’ve already proven success.

However, this doesn’t mean you should just mimic what others are doing. If your competitor is dominating a particular marketing space, sometimes the smartest move is to find a completely different route. Be where they aren’t.

READ: An Introduction to the Marketing Mindset

Differentiation

Differentiation is arguably the most important outcome of competitor analysis. In a crowded market, it’s not enough to be good – you need to be different. By analysing your competitors, you can spot trends, see where everyone is heading, and intentionally steer your startup in a different direction. This doesn’t mean rejecting what works – it means standing out in ways that are meaningful and relevant to your target audience. Investors, in particular, are always on the lookout for startups that not only understand their competitors but also have a clear, distinct identity in the marketplace.

Without competitor analysis, you’re simply guessing. And in the fast-paced world of startups, guesswork isn’t enough. Competitor analysis isn’t a one-off task but an ongoing process, constantly evolving as your rivals grow, adapt, or fade away.

Types of competitors

In any market, your competition can take many forms. It’s not just the businesses offering a similar product that you need to watch – it’s those you might not even consider your rivals at first glance. To develop a complete picture, it’s vital to understand the different types of competitors that could influence your success, both now and in the future.

Direct competitors

These are the businesses that offer almost exactly what you do, to the same target audience. If you’re a startup selling sustainable, eco-friendly trainers, your direct competitors are the other brands doing just that. They share your vision, aim at the same demographic, and often have overlapping marketing messages. The challenge here is standing out when you’re offering the same core product or service.

In some ways, direct competitors are the easiest to spot, but they’re also the ones you need to monitor most closely. Why? Because they’re your immediate threat. They’ll likely be targeting the same customers, bidding on the same Google keywords, and fighting for the same mindshare. When they change tactics – whether it’s launching a new product or cutting prices – this could directly impact your position in the market. Being aware of their movements and responding swiftly is key.

Indirect competitors

Now, indirect competitors are more subtle. They’re not offering the same product or service as you, but they’re addressing the same customer need in a different way. Imagine you run a coworking space. Your direct competitors would be other coworking spaces. But your indirect competitors could include coffee shops with free Wi-Fi or even virtual workspace platforms. They’re not doing exactly what you’re doing, but they’re providing an alternative solution to the problem you’re solving.

Startups often overlook indirect competitors, but ignoring them can be a costly mistake. Sometimes, the competition isn’t about who has the best version of your product – it’s about who provides the most convenient or cost-effective solution to the customer’s problem. Indirect competitors can swoop in from a completely different angle, capturing a portion of the market you thought was securely yours.

Future competitors

Today’s minor players can be tomorrow’s heavyweights. Future competitors are those you might not yet consider a threat but could emerge as serious rivals down the line. They could be new startups still in the early stages, or established businesses from other industries that decide to pivot into your space. For example, think about how large tech companies like Amazon and Google have gradually expanded into areas that were previously dominated by smaller, niche players.

For startups, future competitors can be the hardest to predict, but they’re often the most dangerous. They have the potential to disrupt the market in ways that are difficult to foresee, especially if they’re coming from an industry with more resources or a radically different business model. Staying ahead of these emerging threats means keeping an eye on industry trends, monitoring new technologies, and thinking about how the competitive landscape might evolve over the next few years.

Non-market competition

Finally, there’s competition that doesn’t come from other businesses at all. Sometimes, the biggest threat to your startup isn’t another company, but broader changes in technology, behaviour, or culture. These are the forces that could make your product irrelevant, even if it’s the best on the market right now.

Take the rise of streaming services like Netflix or Spotify. They didn’t just compete with traditional media companies – they redefined how people consume entertainment, shifting behaviour away from DVDs and CDs entirely. Similarly, if you’re a rideshare company, you’re not just competing with taxis – you’re also up against changes in consumer behaviour, like the growing trend towards cycling, or even the development of autonomous vehicles.

Non-market competition can also come from technological advancements that solve the same problem in a completely different way. For example, if you’re producing high-end cameras, smartphone technology that delivers increasingly better photo quality can significantly shrink your customer base.

Recognising non-market competition requires thinking more broadly. It’s not just about who’s offering something similar to you today; it’s about understanding what could render your product unnecessary tomorrow. Being aware of these forces can help you future-proof your business, ensuring you stay relevant in a rapidly changing world.

A step-by-step guide to conducting competitor analysis

1. Identify your competitors

Start by identifying your direct competitors – those offering similar products or services. Use Google Search, Perplexity AI, industry directories, and social media to uncover companies operating in your space. For indirect competitors, look for businesses solving the same problem in different ways. Don’t forget future competitors: emerging startups or companies expanding into your market. Monitoring industry trends and new technologies can help you spot these early.

TOP TIP

Rather than searching for terms related to your product like ‘money management apps’, when searching for indirect competitors you might start searching for terms that relate to the questions your target market might have, such as ‘How can I better manage my money?’ – those publishing articles on this topic (if not a direct competitor) are likely to be an indirect competitor, or even a future competitor starting to position their brand ready for a new product launch.

2. Collect key data on competitors

• Product/service offerings: Understand what they sell and how they differentiate. What unique features or benefits do they offer?
• Market positioning: Are they targeting the luxury market, or are they a budget option? How are they perceived by customers?
• Target audience: Who are they trying to reach? Are there overlooked segments you could focus on?
• Pricing strategies: What is their pricing model – subscription-based, freemium, or one-off? How does this compare with your pricing approach?
• Marketing and sales strategies: Review their marketing efforts. Which channels are they using – social media, SEO, paid ads? What works for them?
• Strengths and weaknesses: Conduct a SWOT analysis to map out each competitor’s strengths, weaknesses, opportunities, and threats. Find out more below.

3. Analyse competitor performance

• Revenue models and profitability: Examine how they make money. What are their revenue streams? Can you estimate profitability based on available data?
• Customer reviews and feedback: Look at reviews on their website or third-party platforms. What are customers praising or criticising? Use this feedback to improve your own offering.
• Growth trajectory: If historical data is available, analyse their growth over time. Are they scaling quickly, or plateauing? This can offer insights into where they’re heading – and what opportunities or risks they face.

Tools and resources for competitor analysis

SWOT analysis

A SWOT analysis is a straightforward framework to assess a competitor’s Strengths, Weaknesses, Opportunities, and Threats. Start by identifying their strengths – what they do well, from product quality to customer loyalty. Then look at weaknesses: what are they struggling with? Opportunities involve identifying gaps in the market they haven’t yet exploited, while threats are external factors like market shifts or new entrants that could undermine their position. By applying this to each competitor, you can gain a comprehensive understanding of where they stand and how you can position your startup in relation to them.

Porter’s Five Forces

Porter’s Five Forces is a strategic tool for assessing the competitive forces that shape your industry. It covers:

• Rivalry among existing competitors: How intense is the competition? Is it dominated by a few big players, or are there many small competitors?
• Threat of new entrants: How easy is it for new companies to enter your market?
• Bargaining power of suppliers: Are your suppliers in a strong position to influence prices or terms?
• Bargaining power of buyers: How much power do customers have over pricing or product choices?
• Threat of substitute products or services: Are there alternative solutions that could replace your product entirely?

By using this framework, you can better understand the competitive pressures that could impact your business.

Popular competitor analysis tools

There are several powerful tools available to help you gather insights on competitors:

• SEMrush: Ideal for tracking competitors’ online marketing strategies, including SEO, paid search, and backlinks.
• Ahrefs: A comprehensive tool for analysing competitor websites, keywords, and backlinks.
• SimilarWeb: Provides traffic data, engagement metrics, and audience insights for competitor websites.
• Owler: A tool that offers business insights, including competitor performance, funding data, and company news.
• SpyFu: Focuses on uncovering competitors’ SEO and PPC strategies, offering detailed keyword analysis and ranking insights.
• BuzzSumo: Useful for tracking competitors’ content performance. It identifies popular content based on engagement, shares, and backlinks, helping you analyse their content marketing strategies.
• Majestic: A tool that specialises in backlink analysis, allowing you to see how competitors build authority and where their links are coming from.
• Crayon: Monitors your competitors’ digital footprints across websites, social media, and other online channels, offering real-time updates on their marketing and product changes.
• SocialBlade: Provides analytics and insights into competitors’ social media performance, tracking follower growth, engagement, and content trends across platforms like YouTube, Instagram, and Twitter.
• Competitors App: Offers automatic alerts when competitors update their websites, pricing, marketing campaigns, or content strategies, helping you stay on top of their moves.
• Klear: Primarily for influencer marketing, it helps analyse which influencers your competitors are working with and the impact of those collaborations.
• AdBeat: Focuses on advertising strategies, revealing where and how much your competitors are spending on ads, and what formats they’re using.
• Winmo: Provides sales leads and competitor intelligence by tracking marketing campaigns and company spend on advertising.
• Quantcast: Offers insights into audience demographics and behaviour to help you understand your competitors’ audiences and tailor your messaging accordingly.

How to use competitor analysis to your advantage

Finding gaps and opportunities

Competitor analysis can help you identify gaps in the market – areas where customer needs aren’t being fully addressed. Look for underserved demographics or unmet demands that competitors are missing. These gaps can be the foundation for new product features or services that set your startup apart.

Improving your unique value proposition (UVP)

By studying your competitors, you can refine your unique value proposition. What makes your product or service different? If a competitor is excelling in one area, focus on another where you can stand out. Use competitor weaknesses as an opportunity to highlight your own strengths, ensuring that your offering is distinctive and compelling.

Shaping your go-to-market strategy

Competitor analysis directly informs your go-to-market strategy. By understanding your competitors’ pricing models, marketing tactics, and customer engagement strategies, you can make smarter decisions about how to position your product. If competitors are competing on price, perhaps you can differentiate with premium features or superior customer service. If their marketing is focused on one channel, such as paid ads, consider exploring organic content strategies or influencer partnerships.

Pitching to investors

Investors want to know you understand your market – inside and out. Incorporating competitor analysis into your investor decks shows that you’ve done your homework. It demonstrates that you not only know who your competitors are, but also where you stand in comparison. Highlight how your knowledge of competitors shapes your strategy, where you see opportunities, and how your startup will succeed in a competitive landscape. A well-rounded analysis gives investors confidence that you have a solid plan for growth, not just a great idea.

And don’t forget that here at Robot Mascot, we’re experts in helping businesses develop their pitch decks and other investment assets to secure investment.