How to run a competitor analysis.
“You can't look at the competition and say you're going to do it better. You have to look at the competition and say you're going to do it differently.”
- Steve Jobs, Apple founder
A competitor analysis is the process of researching, identifying and communicating your differentiating features as a business compared to other market players.
The analysis is a critical component of your business strategy, and informs every aspect of fundraising, marketing, product development, and more.
We created a PowerPoint template to drive your competitor analysis:
In this newsletter, we’ll share two examples of how well-known companies leveraged this competitor analysis template. Next, we will share three strategies to help you use this template effectively.
Competitor Analysis Examples
While our template looks like a simple 2 x 2 grid, it’s used by many successful, global companies to conduct their competitor analysis.
How can such a simple template be sufficient for a competitor analysis? The reality is it’s incredibly hard to capture market share; it takes an incredible amount of focus as a company to compete on any one dimension. Committing to being the market leader in two dimensions is an excellent starting point.
Take a look at the competitor analyses for Airbnb and LinkedIn below. These are real life examples from the companies’ early days, pulled from investor pitch decks.
Airbnb competitor analysis example:
LinkedIn competitor analysis example:
3 Strategies To Leverage The Competitor Analysis Template
Here are three strategies to leverage this template:
1. Think critically about your market.
When you only have two dimensions to convey your market advantage, the X- and Y-axis need to represent the biggest and most compelling opportunities for your business.
The process of picking your dimensions involves several research method:
User / customers interviews: Ideally, you are building in a space where you have existing relationships.
Expert calls: You can source experts via your own contacts or expert networks like GLG, Tegus, etc.
Market reports: There’s a wide plethora of research available via reports from investment banks, consulting shops, investment firms, etc.
News articles
Go wide to build a comprehensive understanding around market dimensions that matter.
2. Nail your dimension.
It’s a natural gut reaction to claim you will compete on price as your area of differentiation. However, in many cases, you will want to seriously consider other dimensions.
Your stakeholders, particularly investors, may worry about your margins and profits if your main business strategy is to undercut competitors on price.
There are some businesses where price is truly the market differentiator. One example is Italic.
Italic’s stake in the ground is “luxury for less,” They are committed to backing up this strategy for the long haul. To compete on price, Italic has built up an entire product development process and supplier network.
Before settling on price, consider these dimensions:
Customer segmentation: Are you opening the market to a new segment? For example, are you expanding the customer base from enterprises to small businesses? In the LinkedIn example above, the company expanded the social media market from a consumer audience to a professional one.
Product features: Does your product have a unique and differentiated component? In the Airbnb example, a key product differentiator (at the time) was an end-end online experience.
Business model: Do you introduce a new business model? For example, will you be the first subscription business in your category?
3. Know when to expand your analysis.
A mature business may outgrow a simple 2x2 analysis. In that case, we recommend this template:
This template allows for more nuances, both via the wider set of dimensions and the use of Harvey Balls.
If you enjoyed these templates, check out some of our other ones:
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