Learn how to gain a competitive advantage by benchmarking against competitors. Discover key strategies, metrics, and tools to drive business growth.
Competitor benchmarking is a method of comparing your business’s performance with that of your rivals to identify strengths and gaps. It can help clarify which competitors to monitor and what metrics matter most, while cutting through the clutter of inconsistent data. Many business owners feel unsure about where to begin, which figures to track, and how to turn raw data into well-informed decisions. This guide shows you how to set up the process in clear, manageable steps that work for any business size or industry. You'll learn how to steer clear of common mistakes and focus on the insights that truly count.
Read on to discover the process that will help you get started with effective competitor benchmarking, which you can learn more about in our detailed guide on how to do benchmarking.
Choosing the right competitors for your benchmarking analysis
Who should you actually be comparing yourself against? This question stumps many CPG professionals at the start of their benchmarking journey. Selecting the wrong competitors can lead to misguided strategies and wasted resources.
The most effective competitor benchmarking begins with categorizing your competition into three distinct groups:
- Direct competitors - Brands offering similar products at comparable price points to the same target audience
- Indirect competitors - Companies solving the same consumer problem with different product approaches
- Aspirational competitors - Industry leaders whose position you aim to achieve in the future
For CPG companies, your competitive set should include 3-5 direct competitors, 2-3 indirect competitors, and 1-2 aspirational brands. This balanced approach provides comprehensive insights without creating data overload. For more detailed examples of how companies benchmark their competitors, visit our product benchmarking examples page.
When selecting specific competitors, consider these criteria:
- Similar market positioning and price points
- Comparable product attributes and benefits
- Shared target demographic
- Similar distribution channels
- Comparable company size and resources (for direct competitors)
A common mistake is focusing exclusively on market leaders. While valuable, this approach misses opportunities to learn from companies at your current growth stage facing similar challenges.
For example, a natural snack brand might benchmark against:
- Direct: Other natural snack brands with similar ingredients and price points
- Indirect: Conventional snack brands and alternative healthy snack options
- Aspirational: Category-leading brands with the market position they hope to achieve
Remember that your competitive set will evolve as your company grows and market conditions change. The competitors you benchmark against today may not be relevant in two years.
Gathering accurate and reliable data about your competitors
How can you truly know what your competitors are doing when so much happens behind closed doors? This challenge represents the most significant hurdle in effective benchmarking, but several proven methods can help you build a comprehensive competitive intelligence system.
Start by establishing what data points matter most for your specific benchmarking goals. For CPG companies, these typically include:
- Product portfolio details and innovation pipeline
- Pricing strategies across channels
- Distribution footprint and channel strategy
- Marketing messaging and campaign approaches
- Consumer sentiment and satisfaction metrics
- Sales performance and market share
- Ingredient sourcing and sustainability practices
The most reliable competitive data comes from combining multiple sources:
Publicly available information:
- Company websites, annual reports, and investor presentations
- Industry reports and market research publications
- Patent filings and trademark registrations
- Press releases and media coverage
- Social media accounts and content
Retail audits and store checks:
- Regular in-store visits to document product placement, pricing, and promotions
- Shelf space allocation and position analysis
- New product introductions and packaging changes
- Special displays and retail partnerships
Digital analysis:
- E-commerce presence across platforms
- Website traffic and engagement metrics using tools like SimilarWeb
- Social media performance metrics
- Online review analysis for sentiment trends
- Email marketing frequency and messaging through subscribing to newsletters
Consumer research:
- Surveys comparing your products against competitors
- Focus groups discussing competitive products
- Sensory testing of competitive products
- Purchase behavior analysis
When gathering competitive data, maintain ethical standards by using only publicly available information or properly licensed third-party data. Document your sources and establish a consistent methodology for collection to ensure data comparability over time.
For more information on the tools available for benchmarking analysis, visit our benchmarking analysis tools page.
How often should you conduct competitor benchmarking?
Is your competitive intelligence already outdated? In today's fast-moving CPG landscape, the timing of your benchmarking efforts can be as important as the methodology itself.
There's no one-size-fits-all answer to benchmarking frequency, but a tiered approach based on data type and market conditions provides the most practical framework:
Continuous monitoring (weekly or monthly):
- Pricing changes across retail and e-commerce channels
- Promotional activities and trade spending
- Social media content and engagement metrics
- Consumer reviews and sentiment
- New product launches or line extensions
Quarterly analysis:
- Market share and sales performance
- Distribution gains or losses
- Marketing campaign effectiveness
- Shelf positioning and retail presence
- Website and digital performance metrics
Annual deep dives:
- Complete competitive landscape assessment
- Long-term strategic positioning
- Innovation pipeline and R&D focus
- Supply chain and operational capabilities
- Organizational structure and talent strategy
Your benchmarking cadence should also adapt to specific market triggers:
- Accelerate when a major competitor launches a new product
- Increase frequency in highly volatile categories with rapid innovation
- Conduct special analyses when entering new geographic markets
- Perform additional benchmarking before major internal launches or campaigns
For resource-constrained teams, focus your most frequent benchmarking efforts on your top 2-3 direct competitors, while monitoring others on a quarterly or annual basis.
The most successful CPG companies integrate competitive benchmarking into their regular business rhythms rather than treating it as a standalone initiative. This might mean incorporating competitive updates into monthly business reviews or creating standardized competitive intelligence reports that feed into quarterly planning processes.
Remember that benchmarking is most valuable when it's timely enough to influence decisions but thorough enough to provide meaningful insights. Finding this balance requires an approach tailored to your specific category dynamics and organizational needs.
For more insights on product benchmarking, visit our product benchmarking page.
Final Thoughts
Competitor benchmarking isn't just a one-time exercise—it's a strategic approach to understanding your market landscape. By systematically analyzing competitors, you create a dynamic roadmap for continuous improvement. Think of it like a professional athlete studying their opponents' techniques: each observation provides an opportunity to refine your own performance.
The key is to approach benchmarking with curiosity and precision. Your goal isn't to copy competitors, but to understand the nuanced dynamics of your industry. Successful benchmarking requires a balanced blend of quantitative data and qualitative insights, creating a comprehensive view of your competitive environment.
At Highlight, we've seen how thoughtful competitive analysis can reveal unexpected opportunities. Whether you're a startup or an established brand, the insights gained from rigorous benchmarking can illuminate paths to differentiation and strategic growth. Remember, your competitors are constantly evolving—and so should your approach to understanding them.
Enhancing Benchmarking with Consumer Insights
At Highlight, we understand that direct consumer feedback is a vital data point in your benchmarking strategy. Our product testing software streamlines the process—delivering reliable insights in about three weeks rather than the months traditional methods require—and ensures nearly all data is robust (with only 1-2% discarded as junk, compared to the average 30%). These high-quality insights, drawn from a carefully vetted community and achieving 90%+ completion rates, empower you to make confident, informed decisions that keep you ahead of the competition.
Learn more about how Highlight can support your benchmarking efforts by visiting our concept testing page. Highlight’s Benchmark Builder solution guides partners through systematic benchmarking that will yield actionable insights. For additional resources on benchmarking, explore our guides on comparison testing and new product development process. Discover how to identify white space opportunities and understand product perception in the market.