The process that involves assessing and monitoring competition to design more effective strategies is competitive analysis. This process entails a systematic evaluation of competitors in the market, including their strengths, weaknesses, market positioning, and strategies. By understanding competitors' behaviors and market dynamics, organizations can identify opportunities for differentiation, anticipate competitor actions, and develop strategic responses that enhance their own positioning in the marketplace.
In competitive analysis, businesses collect data on various factors such as pricing structures, marketing tactics, product features, customer feedback, and overall performance. This information helps leaders make informed decisions that can lead to a competitive advantage. The focus on competition makes competitive analysis distinct from other processes such as market analysis, which broadly examines market trends and customer needs without a specific emphasis on rivals.