Why Do You Need Competitive Analysis?

Whether you're starting a business, building a product, or running a business unit, understanding your competitors is fundamental. But traditional competitive analysis often means: scouring competitor websites, mining app store reviews, searching industry reports, organizing Excel spreadsheets... the whole process can take days.

AI tools have completely changed this. You just need to tell AI what you want to analyze and which dimensions to focus on, and it can help you put together a well-structured competitive comparison report in minutes. All you need to do is review the content and fill in the details.

This guide walks you through a four-step process to complete a professional competitive analysis, requiring zero prior experience.

What Do You Need?

An AI chat tool: ChatGPT, Claude, DeepSeek, or any similar tool
A clear analysis goal: What do you want to learn? Product features? Pricing? User reviews?
A competitor list: Identify 2-5 competitors you want to compare
5-15 minutes: That's really all it takes

Step 1: Define Your Analysis Goals and Scope

Before you start, think through three key questions:

Question 1: Why am I doing this analysis?

Different purposes determine the depth and direction of your analysis:

Product planning: Focus on competitor features and user experience
Pricing decisions: Compare competitor pricing models and billing structures
Market entry: Need a comprehensive view of industry landscape and competition
Fundraising: Need to demonstrate market opportunity and differentiation

Question 2: Who are my competitors?

Competitors come in three types — aim to cover all of them:

Direct competitors: Products doing the same thing as you
Indirect competitors: Solving the same need differently
Potential competitors: Big players who might enter your space

Question 3: Which dimensions should I analyze?

You don't need to cover everything. Choose 3-5 core dimensions based on your purpose:

Product features and technical architecture
Pricing strategy and payment models
User scale and growth trends
User reviews and reputation
Marketing channels and customer acquisition

Step 2: Give AI Your Analysis Instructions

This is the most critical step. You need to clearly communicate your analysis requirements to AI.

Advanced Tip: Ask in Multiple Steps

If your analysis is complex, have multiple conversations with AI, going deeper each time:

Round 1: Have AI outline the industry landscape and key players
Round 2: Deep-dive analysis of each competitor individually
Round 3: Have AI do a cross-comparison to find differentiation opportunities
Round 4: Based on the analysis, have AI provide actionable recommendations

Step 3: Supplement with Real Data

AI's knowledge has a cutoff date. You'll need to supplement with real data for time-sensitive information.

Which Data Needs Manual Verification?

Latest pricing: Competitors may adjust pricing at any time
User metrics: Downloads, MAU from app stores or third-party platforms
Recent developments: Latest updates, funding, partnerships
Real user reviews: Latest comments from app stores and social media

Step 4: Output the Analysis Report

Once the data analysis is complete, have AI organize it into a structured report.

Format 1: Comparison Table

Best for intuitive side-by-side comparison across key dimensions.

Format 2: SWOT Analysis

Best for comprehensive assessment of your product and each competitor.

Format 3: Strategy Recommendations

Best for decision support with specific action recommendations and priorities.

Practical Use Cases

Case 1: Market Research Before Starting a Business

Have AI analyze main players and market share in your target industry
Compare positioning and core features across platforms
Find market gaps and differentiation opportunities
Assess entry barriers and required resources

Case 2: Product Feature Planning

Have AI list competitors' core feature sets
Compare implementation approaches and user feedback
Identify common vs. differentiating features
Recommend which to adopt and which to differentiate

Case 3: Pricing Strategy Development

Have AI compare pricing systems and billing models
Analyze market acceptance at each price tier
Find pricing gaps in the market
Recommend your pricing strategy with reasoning

FAQ

Is AI-provided information accurate?

Most information from AI is accurate, but there may be timeliness issues. Use AI output as a starting point and verify key data yourself.

How many competitors should I analyze?

3-5 is ideal. Too few lacks comparative value; too many makes the analysis unwieldy.

What if I have no industry experience?

That's exactly where AI shines. Mention you're a beginner and have AI explain the industry background first.

Summary

Competitive analysis is no longer a time-consuming professional task. With AI tools, you can complete a well-structured, comprehensive analysis report in a short time. The keys are: clear goals, precise prompts, supplementary data, and structured output.

Tech Blog

Popular Tags

AI-Powered Competitive Analysis: Quickly Understand Your Industry and Competitors