If you’re a business owner or an employee who cares about your organization, you probably fret about “the other guys” a lot, doing your own type of competitive analysis or research when you have the opportunity. There’s such fierce and constantly evolving competition in business; it’s a wonder any of us are able to sleep with all the worrying we need to do.
But here's the thing: competition is good for business—and maybe we've been looking at it the wrong way.
We’re all consumers, right? And as consumers, we expect great products and exceptional customer service from our favorite businesses. We want new and better phones every couple of months. We hope the next restaurant we eat at has the best food we’ve ever tasted. We believe our latest pair of shoes should be more comfortable and last longer than our old ones. And let’s be honest, when something goes wrong, we expect businesses to go above and beyond to make things right.
If anything, it’s consumers who drive this intense competition—businesses are simply reacting and trying to keep up with our demands.
When you switch back to the business perspective, it becomes obvious: competition is a good thing. It forces you to deliver more for the client or consumer and keeps you diligent in providing the experiences you promise. Rather than losing sleep, you should look at competition as a way to continually improve and expand on your business. As long as you keep that fire to do better burning strong, there won’t be time to worry.
What is Competition in Business?
Competition in business is the push and pull between companies offering similar products or services, all aiming to win the attention, trust, and dollars of the same customers. It’s what happens when businesses work to provide better value, whether that’s through price, quality, service, or innovation, so customers choose them over someone else.
It’s not just about beating others; it’s about staying sharp. When your competitor launches something new or improves their service, it forces you to step back and ask, “Are we doing enough?” That constant pressure keeps businesses moving forward instead of getting comfortable.
Competition isn’t a threat; it’s part of the game. And if you're paying attention, it can teach you a lot about what your customers want and how you can serve them better.
How to Manage Competition in Business
You don’t manage competition by obsessing over it. You manage it by focusing on your own house—making sure what you offer is solid, consistent, and worth paying for.
Here’s how seasoned businesses handle it:
1. Know Who You’re Really Competing With
It’s not always the company that sells the same thing. Sometimes, your competition is “doing nothing” or “sticking with what they’ve always used.” Get clear on what your customer’s actual options are—including the option to ignore you.
2. Double Down on What You Do Well
Stop chasing every trend. Instead, lean into what your customers already count on you for. Get better at that. Make it tighter, faster, easier, or more useful. That’s how you stay relevant.
3. Listen to Your Customers More Than Your Competitors
They’ll tell you what needs fixing and what they wish someone would do better. That’s gold. Your competitor might just be guessing.
4. Adjust Without Copying
If a competitor does something smart, learn from it—but don’t try to be them. Copycats always look like they’re playing catch-up. Take what works, make it yours, and move on.
5. Keep Your Team Focused
Internally, don’t let your people waste energy watching the competition’s every move. Keep them focused on serving your customers and improving what’s in front of them.
Managing competition is less about outshining someone else and more about staying useful, trusted, and top of mind. Do that consistently, and the rest takes care of itself.
Why is Competition in Business Important?
Because without it, most businesses would get lazy.
Competition keeps everyone honest. It forces companies to earn their spot, not just show up and expect loyalty. When there’s another option on the table, you have to prove—again and again—why you’re the better choice.
It pushes you to improve your product. It sharpens your service. It makes sure your pricing makes sense. And it keeps you listening, because the moment you stop, someone else will step in and do it better.
More importantly, it benefits the customer. They get more value, more choice, and better treatment. And if you’re paying attention, you benefit too. Because competition exposes gaps—your weaknesses, their strengths, and where the opportunity really is.
Bottom line: competition isn’t a nuisance. It’s what keeps good businesses from becoming irrelevant ones.
3 Main Types of Competition
1. Direct Competition
These are the businesses offering pretty much the same thing you do, to the same people.
Same category, same target, often similar pricing.
Example:
Two pizza joints in the same neighborhood. Both sell pies; both want the same hungry customers on a Friday night.
This is the kind of competition everyone watches. But it’s not the only one you should care about.
2. Indirect Competition
These businesses solve the same problem but in a different way.
Example:
A meal kit service vs. that same pizza joint.
They’re not both selling pizza, but they’re both after the “I don’t want to cook tonight” crowd.
Ignore this group, and you’ll miss why some customers didn’t even consider you in the first place.
3. Replacement Competition
This one’s sneaky. It’s not another product or service—it’s a different choice entirely that replaces the need for yours.
Example:
A fitness app replacing a personal trainer.
A YouTube tutorial replacing a paid course.
It’s not just other businesses stealing attention. It’s technology, habits, and even customer behavior shifting in ways that make what you offer seem unnecessary.
Rules of a Competitive Analysis for Success
Here are some rules for analyzing the competition:
Rule 1 of Competitive Analysis: Observe But Don’t Get Distracted
Not worrying—or worse, obsessing—about your competitors’ activity is easier said than done. But remember, your business is still your business. Just because your closest competitor unveils a new product doesn’t mean you need to release a new offering. What if the competitor’s product launch is a complete failure? Activity doesn’t necessarily mean progress, and unless you’ve bugged your competitor’s office, you won’t know with certainty what goes on behind closed doors.
The keys to observing your competitors in a healthy manner include using the intelligence you gather to make smart decisions for your own business and not getting frustrated by what you see. At the end of the day, the most beneficial aspect of observing your competitors is using it as a springboard for creativity within your marketing campaigns.
Rule 2 of Competitive Analysis: Stay The Course of Your Vision
If you process the information the wrong way, analyzing your competitors can be a crippling experience. When you start to question your own activity and wonder whether you should do something just because your competitors did, you need to step away from the data!
Never lose sight of the mission, values, and vision you had for your business. Copying a competitor’s strategy because you observe it’s working is missing the point! You started a business for a reason, and if you stray from what you set out to do, you’ll regret it. And as we mentioned, you don’t have all the relevant information; your competitor might have different goals for their business, which means copying them won’t help you achieve your version of success.
The correct way to take advantage of a competitor analysis is to use it as fuel for productivity and service improvements and to enhance your marketing strategy and unique selling proposition.
Rule 3 of Competitive Analysis: Focus on the Competitor Data Worth Knowing
Despite the danger of getting frustrated or losing sight of your vision, there are some competitor metrics that are definitely worth knowing. For example, keeping tabs on keyword ranking trends would allow you to optimize your site for a particular keyword a competitor is ranking well for. You might not be able to usurp them as the number one search result, but if you can get on the first page, you’ll steal some of their traffic.
Here Are Some Other Areas Where It’s Worth Analyzing Your Competitors:
Link Profile: If your competitors are getting high-quality links (think big industry websites and publications), then they are probably outranking you in search results. Mine your competitors’ link profiles for link-building ideas and methods.
Content Freshness: In addition to quality, great content is also relevant, timely, and fresh. Look at what your competitors are doing to keep their content fresh, and do them one better by creating evergreen content whenever possible.
Social Reputation and Activity: This one is easy and likely occurs naturally if you are active with your own social presence. Either way, it’s important to know how your competitors are viewed by their social media audience.
Conversion: In the battle for web attention, conversion is critical. It’ll be difficult to get a competitor’s hard conversion data, but you can certainly go through your conversion funnel yourself to see how and where they lead their potential customers to a purchase.
Remarketing and Display: simply going to your competitor's site and then monitoring whether their ads are following you around the Internet should tell you all you need to know about their remarketing and display advertising efforts. If none of your competitors are doing these kinds of ads yet, it could be a huge competitive edge for you!
Website: another easy one, but going to and using your competitor’s site is a great way to learn about their customers’ digital experience. If you know all about what your potential customers experience on a competitor’s site, you can ensure the experience you deliver is better.
That’s it; there’s nothing to it! Okay, that’s a lie. It’s a lot of work, but at least you know why it’s worth the trouble—and how to avoid common pitfalls. With your newfound understanding of how a competitive analysis can improve your business, we recommend you do a full analysis once every year and a benchmarking test every quarter.
Want to Get Ahead of the Competition?
If you want practical strategies to help you think more clearly, act more confidently, and compete more effectively, make sure to check out our new book, Digital Minds: 12 Things Every Business Needs to Know About Digital Marketing, for more helpful information on a wide range of marketing topics.
And if you’d rather not do it alone? WSI is here to help. From competitive analysis to digital strategy, we can help you turn industry pressure into business advantage. Speak to an expert today and learn why competition is good for business.
