How to Use ChatGPT for Competitor Analysis: A Guide to Use Cases and Prompting

Key takeaways

You can use ChatGPT for competitor analysis, leveraging artificial intelligence to gain essential insights to optimize your brand strategy. 

• ChatGPT offers free and paid versions, with a mid-range plan that provides access to expanded deep research and advanced reasoning models for an additional monthly cost [1].

• Review the results to ensure you understand the information, ask follow-up questions to gain clarity or go deeper, and verify data to ensure the results are accurate.

• You can use various prompts to instruct ChatGPT and guide it to provide the information you want. 

Learn how to use ChatGPT for competitor analysis, including details about where the technology excels and when you might need to use more traditional methods. Then, consider enrolling in the Google Prompting Essential Specialization. This four-course series takes an average of four hours to complete, all at your own pace. It offers an opportunity to learn how to write prompts that help you analyze data and build skills, including complex problem-solving, AI enablement, machine learning, and prompt patterns. 

Using ChatGPT for competitor analysis

Before you begin, it’s helpful to think of ChatGPT as a resource to help you conduct your competitor analysis while also remembering that it can provide misleading or downright wrong answers. That’s why, when you are preparing to use it for anything, including a competitor analysis, you should approach it as a starting point or a rough draft, not a complete report. 

After all, the goal of completing a competitor analysis is to get the data you need to make key decisions. The results also empower you with the information you need to leverage opportunities you might otherwise miss, and mitigate potential risks you could fall prey to without a thorough understanding of how your competitors and the industry at large behave. For example, market dynamics, including trends and shifts in consumers' preferences, require businesses to adapt or potentially undermine their position in the market. However, if the data you receive is skewed, incorrect, or derived from outdated sources, it can derail your strategy altogether. 

To ensure you balance the convenience and ease of leveraging ChatGPT for competitor analysis with the need for accurate, up-to-date information, it’s essential to follow best practices. To that end, consider how you set ChatGPT up before you start and how to overcome potential challenges. 

Setting up ChatGPT for competitor analysis

Working with ChatGPT on anything often feels a lot like having a conversation. However, if you’re new to it, you’ll need to do a few things to prepare before jumping in, starting with signing up for an account. With both free and paid versions available, ChatGPT offers accessibility to everyone, whether you’re an entrepreneur preparing to launch a start-up or an enterprise getting ready to launch a new product. When deciding between the two, it’s worth noting that paid versions, starting at $8 per month [1], are often better-suited for research-intensive applications.

Once you create your account, preparing ChatGPT for competitor analysis requires specifying the type of analysis you want to perform and your preferred format for the results. The more clarity you provide ChatGPT regarding your goals and purpose, the more the results will align with your objectives. Before beginning, gather several prompts that you can use to build upon as you go. 

Getting started with ChatGPT for competitor analysis

After opening ChatGPT and gathering some of the prompts you want to begin with, the process of using this large language model (LLM) for competitor analysis is fairly simple and straightforward. Start by defining your purpose. For example, you might want to analyze how each competitor’s strategies differ from your own, or you might want to begin by analyzing customer sentiment for your company or product versus the competition. Specificity is the key to crafting effective prompts, which will help ChatGPT deliver the insights and information that align with your objectives.

An example might look something like this: 

1. Ask ChatGPT to identify your competitors. 

2. Define the goal(s) of the analysis, which could include analyzing marketing strategies, price points, product fit in the market, customer sentiment, or a combination of actions. 

3. Upload data, if using it. For example, you could upload snapshots of customer reviews of your company for ChatGPT to analyze against your competitors’ reviews for a review analysis.

4. Prompt ChatGPT to analyze your company’s strengths and weaknesses against your competitors. Use prompts with the level of specificity needed to direct ChatGPT. 

5. Review and verify the results and ask follow-up questions to clarify points or gain more insights. 

6. Turn those insights into an action plan. For example, where your competitors fall short could be a prime area for your company to innovate. 

How to use ChatGPT for competitor analysis: Template for getting started

Specificity and clarity regarding your objectives can help improve your results. As you begin, the following prompt template can help set ChatGPT up to identify your primary competitors. 

Broad: I am a [job title (i.e., owner, marketing executive, etc.)] at [company name], preparing to do a competitor analysis. Give me a list of my main direct and indirect competitors. Include the company’s size, geographic presence, and primary business details. 

Product line specific: I am preparing to complete a competitor analysis for [product/service line]. Provide a list of competitors for [company name] within the [industry] and [target market]. Include details about their products/services, pricing, and where and how they sell them.

Common ChatGPT challenges and solutions

ChatGPT presents numerous benefits when used to support your own expertise and efforts. Still, like other AI tools, it can pose several challenges you must remain aware of to ensure you get the best possible results, including hallucinations and biased results.

Hallucinations

Two of the primary concerns regarding ChatGPT’s use both affect its ability to provide accurate information. AI tools, including ChatGPT, sometimes provide you with data that looks legitimate but is inaccurate. This is a phenomenon known as a hallucination. These false statements can appear even when you use simple prompts. OpenAI, the creator of ChatGPT, notes that it tested a chatbot to generate the title of a PhD dissertation. It offered three answers, none of which were correct [2]. 

Possible solutions: Defining your objectives and providing boundaries to ChatGPT as you begin can help mitigate the problem. The ultimate solution, however, is to ensure human oversight over the results. Fact-check information and verify its validity with a thorough review. As a bonus, this provides a key opportunity to integrate human expertise into the mix. 

Bias

Models’ design and the data they train on can lead to another challenge: bias, even small instances of which can create discriminatory outputs. For example, during competitor analysis, bias could lead to less favorable insights into competitors owned by minorities. In addition to the ethical concerns, biased results can skew insights and, ultimately, interfere with the decisions and strategies you implement based on those insights. 

Possible solutions: One effective solution is to review the results and apply human oversight to balance the findings and ensure accuracy. Using high-quality data can also help reduce the risk of biased results.

Outdated or overly high-level insights

AI tools like ChatGPT can lack the in-depth answers you need. Although ChatGPT trains on large data sets, which helps it go deeper into the task, it can still gloss over details and more complex information. Additionally, in some cases, the recency or information cutoff dates of the data ChatGPT trains on may affect its insights, potentially leading to lower-level, outdated results. 

Potential solutions: Human oversight and explicit prompting can improve results and provide more detailed insights. Providing industry and market nuances also helps.

Missing UX details

Some valuable but potentially minor information about your competitors might be overlooked by the LLM. For example, ChatGPT often fails to catch structural updates to websites, which can be critical for usability. 

The UX research and audit firm, Baymard Institute, evaluated ChatGPT-4 and its ability to make actionable UX recommendations. It revealed a significant gap in the technology's ability as compared to human experts, with only 20 percent of its suggestions considered accurate [3].

Potential solutions: Consider combining ChatGPT competitor analysis with human expertise and other tools, such as web monitoring software. Tailoring prompts to provide UX details can also be useful in overcoming this challenge. 

What ChatGPT can do for competitor analysis

ChatGPT can help automate portions of the research gathering process and analyze large amounts of data to streamline the competitor analysis process. It can parse through databases, news articles, and competitors’ websites to give you a wealth of data in minimal time. Not only can the results help you strategize and optimize your content and brand positioning, but they also give you insight into what your target audience may be seeing. 

ChatGPT can help you in various ways during a competitor analysis, including the following:  

• Organize and structure competitive findings: Use prompts that tell ChatGPT exactly how you want the findings structured and organized. For example, you might ask it to “List the top five strengths and weaknesses of my three primary competitors.” Alternatively, you could ask, “Give me a 200-word summary comparing [your company name] to [competitor].”

• Compare product features, pricing, and positioning: Use prompts that direct ChatGPT to compare the products or services, along with price points, unique value propositions, and market position. For example, you might instruct ChatGPT, “Compare the features and pricing strategy of [product A] from [your company name] to [product B] from [competitor]. Include any unique value propositions that may influence each product and both companies’ positioning.”

• Predict market trends: Use prompts to instruct ChatGPT to identify emerging market trends over the next period of time. It uses historical data and predictive analytics to help give you insights into what you may be facing in the near future. For example, you might say, “Based on the past 12 months of performance of [competitors’ names], identify the shifts likely to impact [industry] in the next six months.”

ChatGPT competitor analysis prompts and how to choose them

Think of prompts as the phrases you might use at a party to start conversations. These phrases direct ChatGPT and other AI systems to provide the results you want. You can make them simple or complex, and continue following up after receiving outputs to further refine your results. 

You can choose from several types of prompts, including the following: 

• For quick, general insights: Zero-shot prompts give AI clear instructions.

• For insights that align with your preferred style: Few-shot prompts give ChatGPT a few examples of the tone or structure you want the results to mirror.

• For increased precision: Instructional prompts, which are more detailed than zero-shot, give ChatGPT commands such as “Keep it within 50 words” or “Provide 10 examples of indirect competitors.”

• For more personalized insights: Role-based prompts instruct ChatGPT to assume a particular demographic or viewpoint.

• For tailored results: Contextual prompts provide background information for added clarity. 

In addition to choosing a type of prompt, it’s essential to craft the instructions with as much detail as possible to help reduce the odds of unclear or inaccurate insights. Review a few examples of prompts you might use as a starting point for creating your own. 

Prompts for gathering and organizing competitor information

To assess your own vulnerabilities and identify opportunities in the market, you first need to understand who you're up against. Ask ChatGPT to provide a list of your main competitors and organize it according to the criteria you’re evaluating. 

Example: Identify the primary competitors for [company name] and organize it in descending order according to market share. Include details such as yearly revenue, audience demographics, and geographic presence. 

Prompts for structured analysis 

Once you have a list of competitors, you can choose the analysis framework you want to work within. For example, assessing the competition using a strengths, weaknesses, opportunities, and threats (SWOT) analysis can reveal even more about the dynamics within the competitive landscape. 

Example (strengths): Review [competitor name]’s performance and market position over the past six months. Focusing on their revenue growth, market share, and any recent successes, identify their top X strengths. 

Example (weaknesses): Tell about [company name]’s shortcomings and operational issues over the past 12 months. 

Example (opportunities): Analyze unmet needs and opportunities [company name] did not pursue and identify their missed opportunities. 

Example (threats): Identify external market conditions that impacts [company name] over the past 12 months and how it may have affected their strategy and position.

Prompts for UX competitor analysis

Understanding the gaps in your company’s user experience and how other brands may be filling users’ needs more effectively can help better position your business and products. You might ask ChatGPT to compare your company’s user experience directly to your competitor or analyze what the other companies are getting right and where they fall short. 

Example: Focus on [company name]’s [product name] and analyze the typical user experience, highlighting three areas where [company name] excels and where it falls short. Then, compare it to [your company name]’s [product name]. 

Prompts for turning insights into recommendations

After each answer, it’s critical to review the output and fact-check as needed. Then, ask follow-up questions for clarity and to go deeper into the insights. Finally, take the information and use it to optimize your brand’s strategies.

Example: Based on the analysis of [company name X, Y, Z] and [your company name], provide X recommendations for how [your company name] can optimize its branding message to reach a broader audience.

Read more: How To Write ChatGPT Prompts

When ChatGPT works for competitor analysis and when should you use a different strategy?

ChatGPT can be a helpful tool to identify your competitors and assess their brand positioning, core messaging, and value propositions. The insights can help you see the messaging gaps and other areas you can leverage to differentiate your brand. However, in some circumstances, you might want to choose a different tool or more traditional methods. These scenarios include the following:

• When you need answers based on real-time data, which ChatGPT cannot access

• When data privacy issues could risk regulatory compliance or brand reputation

• When analyzing aspects like competitor intent, which requires a human analyst’s touch

ChatGPT for competitor analysis: 3 use case scenarios

Understanding your competitors is essential to building and maintaining a thriving business, and analyzing those competitors can give you clarity regarding where your brand fits into the market. Beyond just identifying your competitors and assessing how they measure against your company, you can also use ChatGPT and competitor analysis for specific tasks, including the following three use cases. 

New product positioning 

Before launching a new product or service, companies can provide ChatGPT with authoritative sources about the market and target audience and ask for a differentiated way to position that product. The results may also help with gaining a deeper understanding of the dynamics within that product category, opportunities other brands miss, and a unique value proposition to help the product stand out. 

Analyze customer sentiment

Conduct a customer review analysis by uploading screenshots or spreadsheet files to ChatGPT from a review website. Provide reviews for your company and whichever competitors you want to analyze. Provide detailed prompts to compare your company's reviews and those of your competitors. For example, you might ask for an analysis of your reviews versus company X. After the initial response, ask ChatGPT to review the internet for any reputable resources that compare your company to company X and provide a list of those sources. 

Assess product messaging

In a sea of potentially similar products, how can yours stand out? Using ChatGPT to analyze competitors' messaging can provide insights into ways to differentiate and optimize your messaging to attract customers and resonate with your target audience. 

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