Types of Competitor Analysis Frameworks for Startups

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For any new startup, one of the most important strategic activities is conducting a competitive analysis. Analyzing key competitors can help startups identify opportunities, benchmark their own performance, set realistic goals, and gain a competitive edge. While large enterprises often have complex frameworks for analyzing the competition, early-stage startups can get by with more streamlined approaches.

If you’re not sure how to begin developing a competitive analysis for your startup, this guide shows you the types of competitive analysis frameworks for startups as well as how the competitive analysis frameworks differ.

What Is a Competitive Analysis Framework?

A competitive analysis framework, or competitor analysis framework, is a process companies use to learn about and compare themselves to other companies that sell similar products or services. To do a competitive analysis, a company first identifies who its main competitors are. Then, they look at things like the competitors’ prices, product features, marketing strategies, and customer service. 

The goal is to find their own strengths and weaknesses compared to the competition so they can decide their pricing strategy, make product improvements, create advertising, and better attract customers. Doing a competitor analysis helps companies conduct market analysis to better understand their industry and make smart business decisions.

7 Types of Competitor Analysis Frameworks

Competitive analysis frameworks provide a valuable look at your startup’s competitive landscape, market trends, and external factors that may impact your business. From SWOT analysis to growth-share matrix, these competitor analysis frameworks work to both provide insight into your startup as well as compare it to competitors to help you make valuable decisions for your startup.

SWOT Analysis

SWOT (strengths, weaknesses, opportunities, and threats) is a widely used competitor analysis framework. This framework places information into the following categories:

  • Strengths such as a competitive advantage, value proposition, or staff. Anything that poses an internal benefit that can help your startup reach success. 
  • Weaknesses such as outdated technology, limited budget, or lack of product market fit. Anything that poses an internal disadvantage to your startup. 
  • Opportunities or where the startup could improve in order to address and overcome their weaknesses. 
  • Threats may be anything that challenges the success of your startup, including economic downturns, competitors, or government regulations. 

What Is This Framework Best Used For? 

SWOT analysis is a great tool for identifying your startup’s strengths and weaknesses as well as finding solutions to improve them. This is a valuable competitor analysis framework to utilize before deciding on new strategies or sweeping changes within your company, as it does a good job of addressing what your startup is doing well and where it needs to improve.

Growth-Share Matrix

The growth-share matrix is a tool composed of four sectors by Boston Consulting Group (BCG) used to help companies to prioritize their investments in products and services. The growth-share matrix separates information into four categories: 

  • Pets, products your company has a low market share in that also have a low growth rate. These are products that should typically be repositioned or sold. 
  • Cash Cows, alternatively, are products with a low growth rate but that your company has a high market share. These are sustainable investments wherein cash flow can be used to invest in higher-growth products. 
  • Stars include high-growth investments with a moderate or high market share. These commonly bring in a fair amount of cash flow and often transition into ‘cash cows.’ 
  • Question Marks are also high-growth investments, however, they have low market share, which typically means they need to be monitored and evaluated regularly. 

What Is This Framework Best Used For? 

Growth-share matrix is a framework best used by companies with extensive product portfolios when prioritizing and reassessing company investments. This framework is a helpful tool for the evaluation of your startup’s investments to monitor or increase cash flow. 

Strategic Group Analysis

Strategic group analysis consolidates all competitors into groups by their marketing strategies or similarities in their business models. Organizing competitors using strategic group analysis looks different for every company, however, you can generally follow these steps:

  1. Make a list of your direct competitors 
  2. Find defining factors such as pricing structure, size of staff, product features, or target market. 
  3. Organize competitors into categories of similarity and defining characteristics
  4. Analyze the information to determine market share, potential threats, and areas your startup may be able to compete in

What is this framework best used for? 

Strategic group analysis is best used to map out the competitors you have, their marketing strategies, target audience, and your own competitive advantage. This is best used to gauge your market and the number of competitors, their market standing, any potential threats, and potential market gaps your company could fill. 

Porter’s Five Forces

Developed by Harvard Business School professor Michael Porter, Porter’s Five Forces is a competitive analysis framework measuring the impact of five forces on a company. These forces include: 

  • Industry competition, including how many competitors you have and their ability to negatively impact your company. 
  • Potential of new entrants into the industry, meaning new competitors that make waves in the market. 
  • Supplier power to increase costs of inputs. 
  • Customer power to lower price points through demand. 
  • Threat of substitute products or services that may take the place of your startup’s offering. 

What Is This Framework Best Used For? 

Porter’s Five Forces is best used to assess existing and potential external threats to your company. Since this framework amasses the entire industry your startup is in, it can give you helpful insight into the competitive landscape as well as the potential challenges direct and indirect competitors could pose. 

Customer Journey Analysis

Your customer’s experience with your brand is integral to its success. A customer journey map will help you assess how your brand is received from start to finish, as well as the methods and avenues customers are using to discover your brand. 

This involves tracking the customer journey from the point of discovery, such as social media, email marketing, or search engines. Then, they track their journey until they convert. This gives you valuable insights into whether you are deploying effective marketing strategies, the stickiness of your brand, and the value proposition perceived by your customers. 

What Is This Framework Best Used For? 

The customer journey analysis is a great way to improve your customer experience from end to end. However, it also serves as an effective method to compare your processes and their efficacy to your competitors to discover ways to improve and where your startup is excelling in comparison. 

PEST Analysis

PEST (political, economical, social, and technological) analysis dictates the amount of external factors that could pose a threat to your business. These include: 

  • Political factors such as governmental regulation or policy changes. 
  • Economical shifts such as downturns, inflation, or changes in interest or exchange rates. 
  • Social impact such as population growth or shrinkage, generational shifts, job market trends, or socio-cultural changes. 
  • Technological considerations such as tech innovations impacting your industry or being used by competitors. 

What Is This Framework Best Used For? 

It is always important to consider the shifts in purchasing power by external forces. PEST analysis factors in external shifts that could either positively or negatively impact your startup making it a helpful tool in identifying the need for adaptation to a changing market including your marketing or pricing strategies.

Business Model Canvas

Business model canvas is one of the more well-known competitive analysis frameworks. This gives an overview of your business model and can be used to compare others. Here’s what is included in this competitive analysis:

  • Revenue streams
  • Customer relationships
  • Customer segments
  • Marketing channels
  • Value propositions
  • Key brand activities
  • Cost structure
  • Brand resources
  • Brand partnerships

What Is This Framework Best Used For? 

Business model canvas is best used for generating a holistic overview of your business strategy in an effort to compare it to your competitors. Since this competitive analysis framework is thorough in the categories of information gathered, it may not provide a niched, in-depth market analysis but it can provide a comprehensive overview.

7 Ps of Marketing

The 7 Ps of marketing break down a brand’s marketing strategy into seven groups to assess how a business is selling its products. The 7 Ps include: 

  • Product 
  • Price 
  • Promotion
  • Place
  • People 
  • Physical evidence 
  • Process

What Is This Framework Best Used For? 

While this framework is commonly used to assess a startup’s own marketing strategies, it can be used for competitive analysis as well. The 7 Ps of marketing is an excellent tool to understand your marketing strategy or assess and gather information about competitors’ marketing and brand strategies.