Competitor Analysis: How to Do One in 8 Steps, With a Worked Example

What a competitor analysis gets you

For each rival you compare six things:

• its offer;
• its price;
• how often customers see it;
• what its reviews say;
• how far it overlaps with your offer;
• what risks it poses to you.

You walk away with four outputs, and each feeds a decision. The price band shows what customers already pay nearby, so you can set your price against it. Counted complaints show where rivals fail, so your position can answer a complaint customers actually make. The risk list shows a threat before you sign a lease or buy equipment. The scored grid ranks the rivals, so you know whom to watch first.

Step 1. Write down the decision it must support

Start from the decision and collect only what moves it. Write one yes-or-no question, such as “Should we open in this location at our planned price?” It can also be about the launch price, the position to take, or whether to enter a market at all.

A vague goal like “learn about the market” leaves you with notes and no decision.

You are done once the question is written down with a date to answer it by.

Step 2. List the businesses your customers could pick instead

Search the phrases your customers type, the way they type them, from the area you plan to serve. Read the regular results and the map listings, then check review sites. Google ranks local results in Maps and the local pack mainly on relevance and distance, plus prominence², so a nearby rival with many reviews tends to appear early. Ask people who used other businesses where they went. Put the same questions to an AI assistant and note the names. Check local “best of” lists.

Sort the list by how often each name shows up. Keep the top 10 (an assumption: a working cap that keeps the next steps to one sitting; raise it in a dense market). Add one line for possible entrants, such as a chain opening stores nearby or a mobile service that could add your area.

For a deeper pass, see how to find competitors and review their sites, or run a competitor search.

Done when: every name on your ranked list carries a tag for how directly it competes with you.

Step 3. Measure who customers actually see

Pick 10 to 20 phrases your customers would type (an assumption: a range to choose from, wider for broad services). For each phrase, log every business in the top results and in the map listings. Then compute:

visibility share = a rival’s appearances ÷ all result slots you logged × 100 (the × 100 only converts the result to percent)

The rival with the highest visibility share is the one customers see before they find you. Our idea check reports a visibility share per competitor from search results. Its weighting differs from this hand count, so use your count to rank rivals and do not compare it with the check number for number.

Repeat the exercise with AI assistants. Ask each one the customer questions word for word and log which businesses it names. Keep that log separate from the search count.

Done when: each direct rival has a share, and you know which ones get seen most.

Step 4. Collect prices and offers

For each direct rival, write down the listed price of the service closest to yours. Then answer five questions:

• What does the base price include?
• How good is the result? Look at photos and, if you can, buy the service once.
• How long does it take, and how long is the wait for a slot?
• How do customers book, by phone or online?
• What happens when something goes wrong: a refund, a redo, a named contact?

Note bundles, memberships, first-visit discounts and add-ons as well. Record the price range and the median. Place your planned price against the median and write down why a customer would pay the difference. More in how to set your price.

Done when: you have a price band with its median and your price marked on it.

Step 5. Read the reviews and count complaints by theme

Open the recent negative reviews of each direct rival and tag each complaint to one theme:

• Quality: the result itself.
• Reliability and trust: missed appointments, injuries, broken promises.
• Service and support: rude staff, no reply, hard booking.
• Price: too expensive, surprise charges.

Count the tags per theme. The theme with the highest count is your first opening to test. When the counts are small, treat the top theme as a lead and check it in customer interviews before you build a position on it. The method in detail: finding customer pains in reviews.

Done when: you have a count per theme for each direct rival.

Step 6. Score strengths and weaknesses in one grid

The classic competitor array weights the key success factors so the weights add up to one, rates each competitor on each factor and multiplies each rating by its weight¹. Finish it: add up each rival’s weighted ratings into a total, then read the result.

Give each criterion a weight; by definition the weights together must total 100%. Rate each rival from 1 to 10 on each criterion (our scale; any fixed scale works). A rival’s total is the sum of weight × rating across all criteria.

Read the totals first: the highest total is the rival to beat. Then read the columns. A criterion with a high weight where every rival rates low is the opening. The competitor table template has the grid ready to fill.

Done when: each rival has a total, and you have named one high-weight criterion where all rivals score low.

Step 7. Check the money at the market price

Run your unit economics at the rivals’ median price. Customers compare you with that number, so it is the price you can count on before you prove you deserve more. The formulas:

• LTV = price × purchases per month × lifetime in months × margin
• LTV/CAC = LTV ÷ CAC
• payback in months = CAC ÷ (price × purchases per month × margin)

CAC is what you spend to win one customer. Our worked example uses a price of $44^ex, 0.5 purchases a month^ex, a lifetime of 12 months^ex, a 35% margin^ex and a CAC of $30^ex. That gives an LTV of 44 × 0.5 × 12 × 0.35 = $92.40, rounded^ex, an LTV/CAC of 3.08^ex and a payback of 3.9 months^ex. A commonly cited benchmark for a healthy LTV to CAC ratio is 3:1³.

If the business only works at a price above the median, step 8 has to justify that price. Test your own figures in the unit economics calculator.

Done when: you know LTV/CAC and payback at the median price.

Step 8. Pick your position and list the risks

Build the position from two findings: the most frequent complaint theme and how much you overlap with your closest rival. Overlap is the share of your offer’s items a rival already provides. List what your offer includes, tick what each rival also does, and divide. A high overlap with a well-seen rival is a risk, because that rival can copy your angle fast.

Write the position as one line that names the customer, the result you deliver, and the rival you differ from. Then test it. It has to change what customers do, so that they choose you over rivals or pay more to stay. A line that changes none of these is a slogan.

Pick a direction. Lead on the theme rivals fail, follow on what they all do well, or go where none of them plays. Let counted complaints set the direction and treat rivals’ moves as one input.

Score each risk on probability from 1 to 3 and impact from 1 to 3. Handle any 3/3 risk first. Go further with positioning and your unique offer, business risks before launch and SWOT analysis.

Done when: you have a one-line position with a direction, plus a scored risk list.

Rivals and visibility

The check found 8 direct competitors^ex (example by our method). Five of them are named with a visibility share:

In our example, no named rival sits above 14%. Search attention is spread, so a new salon does not have to unseat a single leader.

Price band

Rivals’ prices run from $22 to $89, with a median of $44, below the planned $60–$90 full groom (example by our method)^ex.

The whole planned range sits above the median, and its upper end sits above the highest rival price.

Complaints by theme

Six complaints in all is a small sample. Quality and reliability lead, and both are leads to verify with dog owners before the salon builds on them.

Money

The check computed unit economics at $44^ex, the same figure as the rivals’ median; the planned $60–$90 was not used (example by our method). At that price LTV/CAC is 3.08^ex and payback is 3.9 months^ex (example by our method). Charging above the median means the salon has to earn the gap on the themes rivals’ customers complain about.

Risks

The check found no demand source for this market^ex (example by our method).

The reading

• Visibility is spread: no named rival above 14% (example by our method)^ex.
• The closest rival overlaps heavily. Happy Tails of Tampa covers about 70% of the idea (example by our method)^ex, and that 3/3 risk comes first.
• Trust and quality complaints are the opening. The price above the median has to be paid for by visible proof on both.
• The next step is a demand test, such as a waitlist page with local ads, because the market has no search-volume data.