Guide
Understand your competition
Learn how to research and analyse your competitors to identify market opportunities, set competitive prices, and position your business effectively.
Understanding your competition is one of the most valuable exercises you can do when planning a business. Competitor analysis reveals what's already working in your market, helps you identify gaps and opportunities, and prevents you from making mistakes others have already made.
Too many businesses skip this step, assuming their idea is unique or that competitors are irrelevant. In reality, competition validates that a market exists and provides a roadmap of what works and what doesn't.
This guide shows you how to systematically research and analyse competitors using free tools, interpret what you find, and use that intelligence to position your business effectively.
Why competitor analysis matters
Before you invest time and money in your business, understanding the competitive landscape answers critical questions:
- Is there room in the market? If the market is saturated with established players, can you realistically gain market share?
- What's the realistic pricing? Competitor pricing reveals what customers are willing to pay and what margins are possible.
- What do customers value? Reviews and feedback about competitors show what customers love and what frustrates them.
- What's the cost of entry? Observing competitor operations reveals the investment needed in premises, equipment, staff, and marketing.
- How can you differentiate? Understanding competitor strengths and weaknesses helps you identify how to stand out.
Identifying your competitors
Start by identifying two types of competitors - direct and indirect. Both compete for your target customers' attention and money.
How to find competitors
Use multiple methods to build a comprehensive competitor list:
- Google searches: Search for your product/service + location. Look at both organic results and paid ads. Check "People also searched for" suggestions.
- Local directories: Yell, Thomson Local, Google Maps, industry-specific directories, and local chamber of commerce listings.
- Trade shows and events: Visit industry exhibitions to see who's exhibiting and what they're promoting.
- Social media: Search relevant hashtags, join industry groups, follow competitor accounts and see who else your target customers follow.
- Customer recommendations: Ask people in your target market what options they currently use or have considered.
- Trade associations: Many publish member directories that function as competitor lists.
Aim for 5-10 key competitors for detailed analysis, but maintain awareness of the wider competitive landscape.
What to research about each competitor
Once you've identified your main competitors, gather detailed intelligence across several dimensions:
Products and services
- Full range of what they offer
- Features, specifications, quality levels
- Product variations and customization options
- Delivery methods and options
- Returns and guarantees
Pricing and value proposition
- Price lists (base prices and premium options)
- Discounts, promotions, seasonal offers
- Payment terms and financing options
- Value-added services included
- How they justify their pricing (quality, speed, expertise, etc.)
Target customers
- Who they market to (demographics, business types)
- Customer segments they prioritize
- Geographic reach (local, regional, national, international)
- Market share and customer base size (if available)
Marketing and brand
- Website quality and user experience
- Social media presence and engagement levels
- Marketing messages and positioning
- Advertising channels (online, print, radio, outdoor)
- Content marketing (blogs, guides, videos)
- Brand identity and tone
Operations and capabilities
- Premises (location, size, presentation)
- Staff numbers and visible expertise
- Opening hours and availability
- Technology and systems used
- Supply chain and partnerships
Free research tools and sources
You don't need to spend thousands on market research reports. These free or low-cost tools provide substantial competitive intelligence:
Companies House - Financial analysis
For UK limited companies, Companies House (www.gov.uk/get-information-about-a-company) provides free access to:
- Basic company information: Registration date, registered address, directors, shareholders (free)
- Full annual accounts: Turnover, profit/loss, assets, liabilities (free to view and download online)
- Filing history: Shows if they're filing on time (indicates organization) or late (possible financial stress)
What to look for:
- Revenue growth trends over 3-5 years
- Profit margins (net profit ÷ turnover × 100)
- Balance sheet health (assets vs liabilities)
- How long they've been trading (indicates market viability)
- Any significant changes in directors or structure
Limitation: Sole traders and partnerships don't file public accounts. You'll need to estimate their size through other means (staff numbers, premises, market presence).
British Library Business & IP Centre (BIPC)
Access £5 million+ worth of market research databases completely free with library membership:
- Mintel: Detailed market reports including market size, competitor analysis, and consumer trends
- Euromonitor: Global market intelligence and industry analysis
- MarketLine: Company profiles and industry reports
- Fame: Financial data on UK companies with more detail than Companies House
Available at British Library (London) and partner libraries in major cities. You can also access some resources remotely. Book a free session with a business librarian who will guide your research.
Office for National Statistics (ONS)
Free official statistics help you understand market context:
- Business demography: How many businesses in your sector, survival rates, regional distribution
- Economic trends: Consumer spending patterns, employment levels, sector growth
- Industry-specific data: Sector size, output, productivity benchmarks
Visit www.ons.gov.uk and search for your industry sector.
Online reputation and review monitoring
Customer reviews reveal what competitors do well and where they fall short:
- Google Reviews: Overall satisfaction and common complaints
- Trustpilot: Detailed customer experiences and response patterns
- Facebook Reviews: Social proof and engagement levels
- Industry-specific platforms: TripAdvisor (hospitality), Checkatrade (trades), Yelp (services)
What to analyse:
- Average ratings and number of reviews (indicates customer base size)
- Common themes in positive reviews (what customers value)
- Recurring complaints (opportunities for you to do better)
- How competitors respond to negative reviews (indicates customer service quality)
- Review velocity (how frequently new reviews appear)
Retail competitor research
For retail businesses, visit competitor stores as a mystery shopper. Assess:
- Store location, layout, and presentation
- Product range, quality, and pricing
- Customer service and staff knowledge
- Point of sale displays and promotions
- Checkout experience and payment options
- Packaging and branding
Take note of customer traffic - visit at different times to understand busy periods and typical customer volumes.
Hospitality competitor research
For restaurants, cafes, pubs, and hotels, review sites are particularly important. Analyse competitor reviews on:
- TripAdvisor - overall experience, food quality, service
- Google Reviews - local customer sentiment
- OpenTable - reservation experience and dining trends
- Social media - visual presentation and customer engagement
Visit competitors during different service periods. Note menu pricing, portion sizes, service speed, ambiance, and how busy they are. Check if they adapt offerings for dietary requirements.
Analysing competitor pricing and positioning
Understanding how competitors price and position themselves is critical for your own strategy.
Pricing analysis
Create a pricing matrix comparing competitors across product/service categories:
- Entry-level pricing: Cheapest option to acquire customer
- Mid-range pricing: Most popular or recommended option
- Premium pricing: Highest quality or most comprehensive offering
- Additional fees: Delivery, installation, support, customization
Calculate the pricing range:
- What's the lowest price in the market? (Sets customer expectations)
- What's the average price? (Indicates realistic pricing)
- What's the premium price? (Shows maximum willingness to pay)
- Where are you positioned? (Budget, mid-market, or premium)
Market positioning analysis
Map competitors on a positioning grid:
- Price vs Quality: Budget/High-quality, Premium/Low-quality (gaps indicate opportunities)
- Specialist vs Generalist: Narrow niche focus vs broad market appeal
- Traditional vs Innovative: Established methods vs new approaches
- Local vs National: Community-focused vs scale operations
Look for underserved positions - market spaces where customer needs exist but competitors haven't focused.
Example positioning gaps:
- High quality but affordable (if all premium options are expensive)
- Specialized expertise in one aspect (if competitors are generalists)
- Superior customer service (if competitors are efficient but impersonal)
- Convenience or speed (if competitors are high quality but slow)
- Ethical or sustainable (if competitors don't emphasize values)
Using findings to position your business
Once you've gathered competitive intelligence, translate it into strategic decisions for your business.
Identify your competitive advantage
Based on competitor analysis, determine what will make you different and better:
- Cost advantage: Can you operate more efficiently and offer lower prices? (Be honest - established competitors often have better economies of scale)
- Differentiation: What unique features, quality, or service can you offer? (Must be something customers value and competitors can't easily copy)
- Niche focus: Can you serve a specific customer segment better than generalist competitors? (Often the best strategy for new businesses)
- Innovation: New technology, business model, or approach that changes customer experience? (High risk but high reward if successful)
Define your positioning statement
Create a clear positioning statement following this format:
"For [target customer], who [customer need], [your business] is a [category] that [key benefit]. Unlike [competitor], we [unique differentiator]."
Example: "For small London restaurants who need reliable, affordable equipment maintenance, QuickFix Commercial is a specialist catering equipment service that provides same-day emergency repairs with transparent pricing. Unlike national maintenance contracts with 48-hour response times, we guarantee engineers on-site within 4 hours for breakdowns."
This statement should guide all your marketing, pricing, and service decisions.
Set your pricing strategy
Use competitor pricing intelligence to set your own prices:
- Match pricing: Appropriate if you're offering comparable quality and want to compete on other factors (service, convenience, brand)
- Price below: Only if you have genuine cost advantages. Avoid unsustainable underpricing that leads to business failure
- Price above: If you're offering superior quality, expertise, or service. You must clearly communicate why you're worth the premium
- Value-based pricing: Price based on value to customer rather than cost-plus. Requires strong differentiation and clear ROI for customers
Remember to factor in your cost structure, desired profit margins, and VAT (if registered) when finalizing prices.
Learn from competitor strengths
You don't need to reinvent everything. Adopt proven practices from successful competitors:
- Marketing channels that generate customer enquiries
- Product features that customers consistently praise
- Service standards that differentiate them from others
- Pricing structures that customers respond to
- Operational efficiencies that keep costs down
Don't copy directly - adapt their successful strategies to fit your positioning and capabilities.
Exploit competitor weaknesses
Common complaints in competitor reviews become your opportunities:
- "Poor communication" → Position yourself as responsive and transparent
- "Hidden fees" → Offer clear, upfront pricing
- "Limited options" → Provide more choice or customization
- "Slow delivery" → Compete on speed and reliability
- "Impersonal service" → Build personal relationships and expertise
Build your marketing messages around solving the problems customers have with existing competitors.
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Create a competitor tracking spreadsheet
Build a comprehensive comparison table listing 5-10 key competitors against these criteria: company name, location, years trading, products/services offered, pricing, target market, unique selling points, strengths, weaknesses, marketing channels, and online reputation rating. Update this quarterly to track competitor changes and new entrants.
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Conduct mystery shopping exercises
Experience your competitors as a customer. For retail/hospitality, visit physical locations. For services, request quotes or consultations. For online businesses, navigate their websites and checkout processes. Document the customer journey, service quality, product presentation, and pain points. This reveals the real customer experience beyond marketing claims.
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Monitor competitor marketing and content
Set up Google Alerts for competitor company names and key industry terms. Follow their social media accounts. Subscribe to their email newsletters. Track their advertising (search ads, social ads, local advertising). Note which messages resonate and which campaigns generate engagement. This informs your own marketing strategy and timing.
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Map your competitive positioning
Create a visual positioning map plotting competitors on price vs quality axes (or other relevant dimensions for your industry). Identify underserved quadrants where customer needs exist but competitors haven't focused. This visual overview makes it easier to communicate your differentiation to customers and investors.
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Calculate realistic market share targets
If you can estimate total market size (from ONS data or industry reports) and competitor revenues (from Companies House accounts), calculate existing market share distribution. Set realistic targets for your market share in years 1, 2, and 3. This grounds your revenue projections in market reality rather than wishful thinking.
Common competitor analysis mistakes
- Underestimating competitors: Assuming they're incompetent or that customers stay with them out of habit. Successful competitors are doing something right - understand what.
- Obsessing over competitors: Spending more time watching competitors than talking to customers. Competitor analysis informs strategy but customer needs should drive decisions.
- Copying competitors exactly: If you're identical to competitors, customers have no reason to switch. You must differentiate.
- Ignoring indirect competitors: Alternative solutions compete for the same customer budget even if they're different products/services.
- One-time analysis: Markets evolve. Competitors launch new offerings, change pricing, or go out of business. Review competitor landscape quarterly.
- Competing on price alone: Unless you have a sustainable cost advantage, price wars erode everyone's margins. Compete on value, not just price.
Next steps after competitor analysis
Once you've completed your competitor research:
- Document findings in your business plan: Include competitor analysis in the market analysis section with evidence supporting your positioning strategy
- Refine your value proposition: Ensure your offering addresses gaps or weaknesses in competitor offerings
- Adjust financial projections: Use competitor pricing to validate your revenue assumptions and competitor financials (from Companies House) to benchmark realistic profit margins
- Plan your marketing differentiation: Develop messages that clearly communicate why customers should choose you over established competitors
- Validate with customers: Test your differentiation strategy with target customers to ensure it resonates and addresses real needs
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