COMPETITIVE ANALYSIS
Definition
Competitive analysis is the systematic study of competitors’ prices, product assortments, promotions, and business strategies. It forms the foundation of an informed pricing policy and enables a company to position its offerings in line with the market. It is an ongoing process that combines data collection (web scraping, field surveys) and analysis (benchmarking, segmentation, scoring).
Why it's important
- Maintain price competitiveness: avoiding a price gap on key products prevents a loss of traffic.
- Identify profit margin opportunities: by identifying products where we are cheaper than the competition, we can raise prices without risk.
- Anticipating market disruptions: Continuous analysis identifies new entrants, structural price drops, or changes in product offerings.
A concrete example
A home appliance retailer has implemented a weekly analysis of 12 competitors across 3,000 product SKUs. The study reveals that for 18% of products, its prices are more than 5% higher than the market low, which damages its price image. Conversely, for 22% of products, its prices are more than 5% lower without generating a profit. Rationalization generates a +1.8 percentage point margin increase in the category without any loss in revenue.
How to measure/use it
An effective competitive analysis consists of four steps: 1) defining the scope (relevant competitors, SKUs to track, frequency), 2) collecting data (web scraping, in-store surveys, partners), 3) consolidating and cleaning the data (product matching, promotion management), 4) analyzing and making decisions (positioning by category, by SKU, by competitor). Analytics tools integrate these steps into a standardized workflow.
Common Mistakes
- Comparing non-equivalent products: incorrect product matching skews all conclusions.
- Tracking too many competitors: spreading your analysis across 30 brands dilutes the insights; it’s better to focus on the 5 to 8 that are truly competing.
- Confusing data collection with analysis: simply collecting prices isn’t enough; you also need to put them into context and use them to make decisions.
Learn more
- Research & Data: Price tracking and web scraping to build a reliable competitive database.
- Solutions: Pricing Analytics to automate analysis and generate insights.
- Tip: Operational Pricing to Structure the Governance of Competitive Decisions.
- Resources: Check out our pricing FAQ to create a competitive benchmark.