4 Important Components to a Competitor Analysis Framework (2024)

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Cipher’s competitive intelligence analysts have spent countless hours walking business leaders through the CI process. Once the appropriate competitor data is collected, it’s time to conduct your competitor analysis from which you will build your organizational strategies. Because analyzing competitors is a core function of CI, we want to provide you with a detailed understanding on how this is best accomplished.

What is a competitor analysis framework?

A competitor analysis framework is a repeatable method by which you can compare your business to its competitors. A frameworkoffsets the risks associated with ad hoc activities and creates a repeatable system with predictable results. Additionally, a good competitor analysis framework will reduce the risk of missing key ideas or tasks.

There are four key components to a solid competitor analysis framework:

1. Porter’s Five Forces
2. SWOT Analysis
3. Business Models
4. Customer Journey Mapping

Read Now: What is a Competitor Analysis and How to Do It

Read more about the four classic core components any competitor analysis should consider.

Porter’s Five Forces

In 1979, Harvard Business School professor Michael Porter identified five competitive forces that determine the profitability of a company. All of them directly relate to measuring the competitive potential of a business in its market. While the data you need and your success metrics will be unique to your situation, the forces themselves are applicable to any industry, anywhere in the world.

The forces are:

1. Competitive Rivalry: how many rivals does your business have and how do their goods and services compare with your own?
2. Supplier Power: identifying potential suppliers, uniqueness of goods or services, comparing price points/cheaper alternatives.
3. Buyer Power: can buyers impact price/drive price down? Cost per customer, customer count, average purchase, the strength of buyer power.
4. Threat of Substitution: can customers easily find an alternative to you? How accessible are substitutions?
5. Threat of New Entry: especially key for CI data, you need to know how easy it is for new players to enter your market and what can/will happen when they do.

As you can see, each of these five forces is relevant to competitor analysis. Figuring out where your relevant data resides, harvesting it and analyzing it is an important part of how you choose to approach the market.

SWOT Analysis

SWOT analyses are performed by many departments and are commonly used to when making key business decisions. When part of competitive intelligence activities, SWOT analysis can be directed inward (to look at your own company) or outward (conducted on competitors). Either way, you will use the same four elements, a SWOT analysis measures:

1. Strengths: what is the company doing well? What advantages are enjoyed over competitors? All resources, manpower, assets and more.
2. Weaknesses: what is the company doing poorly? What do they lack or where are they being outranked/outpaced in the market? What are the limits on resources?
3. Opportunities: where can/will/should growth occur? Where is there a need, platform or lack that can represent an opportunity for growth?
4. Threats: what new competitors or threats are coming onto the marketplace? Are any regulations, laws or standards changing? What threatens the business?

The SWOT analysis has been the gold standard in business consulting since the 1960s. When included in your competitor analysis framework, it has the potential to yield extraordinary insights into how you can better compete against your rivals.

Business Models

Mapping business models (we like the business model canvas), designing new business models and managing business models are three of the most important strategic activities you’ll undertake. Much of this has been digitized, using tools like Strategyzer. When modeling, CI data can inform this visualization process, taking competitors into account as it outlines a core strategy for increasing your revenue.

There are several types of traditional business models and they will vary widely between different industries. B2B, B2C, C2B, C2C are the four business model types for commerce businesses, for instance. All business models are informed by pricing and costs, both of which are part of competitor analysis. How similar products or services are priced in the market is an essential piece of information that will inform your corporate strategy.

Business models have wider application, beyond CI, and are often subjected to testing cycles. However, they are used in a broader way, what leaders know about competitors is at the heart of a business model that works.

Customer Journey Mapping

Customer-centricity is becoming one of the most important initiatives for most companies in today’s very digital and competitive world. Because of the internet, buyers are better informed and have access to more options than ever. How you treat your customers will have a direct impact on your bottom line.

A customer’s buying experience with any brand should be well thought out. In the age of cell phone cameras, the damage a poor customer experience will have on your business is well documented. Positive customer experiences are often the spark to “going viral” and can set you apart from the competition. Overseeing each step of the journey is accomplished by mapping exercises.

Journey mapping can become quite complex, identifying layers and various contingencies. I suggest you begin with these four basic activities:

• Identify the stages a customer takes. An example would be awareness, consideration, acquisition, service, loyalty. Stages become the topmost layer on a customer journey, from which all of the other elements are categorized.
• Identify the actions a customer takes through their journey. This can be illustrative: “wants to buy our product,” “finds the website,” “makes purchase/checks out,” “receives package,” “receives delivery confirmation email,” “gets rating request,” “posts review.” These steps are the actions the customer takes.
• Identify the touchpoints. Through each stage and step, there will be various touchpoints, these are interactions between the buyer and seller. For instance, posting ads or writing new website pages; the buyer requesting a demo, managing purchases and getting feedback, etc.
• Assign touchpoints to departments. The final item is to assign responsibility for each touchpoint to the group/team best suited to assist the customer at that point of their journey. The more specific you are in the earlier activities, the easier it will be to make assignments.

There are several ways to visually chart this, which can be an engaging and shareable way to communicate to every person at every department what a customer can and should experience as they move from prospects to purchasers.

Trying to understand the customer journey for your competitors can provide incredible insight into why prospective customers may choose them over you.

Defining a market, knowing your relative performance on the competitive landscape and driving healthy, repeatable customer experiences are all vital elements of competitor analysis. The last important part of a competitor analysis framework is the messaging around the good or service itself. What you sell and how much it costs are matched in importance by how you sell.

Marketing is an inescapable part of competitor analysis. Value propositions are the articulation of what sets your good or service apart, why someone should do business with you. A value proposition is a coherent statement telling buyers what makes your product different from other options and why you will deliver more value to your buyer.’ A well written value proposition will:

• Identify all the benefits your product/good offers
• Explain why these benefits are valuable to your buyer
• Describe your buyer’s pain or problem
• Connect your offering’s value to the removal of the problem
• Position your offering as the preferred solution

Having a clear value proposition is not enough, you must also understand how your value proposition stacks up against competitors’ value propositions. This key exercise will pay significant dividends. We like to use the value proposition designer to complete this particular exercise.

Download the Template: Competitor Analysis Template

Final Thoughts

Using tried and true frameworks for executing competitor analysis is helpful in giving you a place to begin, but ultimately the success of your efforts will depend on the accuracy of the data you collect and the ability of analysts to glean insights from that data.