What is comparative analysis? (Plus tips for using it)

By Indeed Editorial Team

Published 5 June 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Professionals working in marketing may use various techniques to discover more about their customers and how they can better serve them. A comparative analysis can provide essential information that can benefit a business and its customers. Using data to make comparisons between several choices can help your organisation to provide a more effective service. In this article, we define what a comparative analysis means, explain why it's important and provide tips for using comparative analyses effectively.

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What is a comparative analysis?

Comparative analysis is the process of comparing items to each another and distinguishing their similarities and differences. Conducting comparative analyses helps a business to analyse an idea, theory or question or to discover how to solve a problem. This analysis allows you to better understand the issues and form strategies in response. An organisation might analyse obvious differences and similarities between two variables, such as products, services or processes.

For example, a haulage company that's looking for a new fleet of road freight vehicles may compare two trucks made by different manufacturers. They may assess the two by looking at the fuel costs, emissions and the square feet of storage each provides. Other examples of comparative analyses include:

  • computer systems and their features

  • ingredients in a manufacturing process

  • courier services and their delivery speed

  • accounting strategies and the financial health of a business

  • marketing strategies and best practices in certain sectors

  • emerging opportunities in technology

  • trending social media platforms for different industries

Related: What is quantitative analysis? (With definitions and examples)

Why are comparative analyses important?

By looking at what's available and how it compares, you can make more informed choices about how to proceed with plans and how to introduce new products and services. This type of analysis helps you gain a better understanding of the challenges. It helps you to discover solutions to common problems. Here are some of the primary goals organisations hope to achieve through these types of comparisons:

A frame of reference for data

This type of analysis details how data or processes compare, including their similarities and differences. This can provide the context to analyse the relationships between both data sets. Analysis helps provide in-depth data on the different features of a product and provides historical data to make comparisons for how each feature performs.

For example, a bicycle manufacturer may compare different handlebars to discover which are lighter and more comfortable. They may look at the costs, the environmental impact of different materials, the weight and the ergonomic design of different handlebars. By comparing all of the factors associated with handlebars, an organisation can decide which aspects are more important for their brand. This can help the manufacturer's sales when they market their bikes.

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A narrower focus of research

Effective comparative analyses helps an organisation put together meaningful reasons for conducting the comparison. By using carefully researched data the company can conduct a more thorough analysis to support any claims or arguments that may arise. Narrowing the focus of the research helps provide the evidence to support any policy decisions that an organisation may make following the analysis.

Using the example of the bicycle manufacturer, the company may conduct an analysis of which tyres provide more resistance against punctures when they test them on different road surfaces, for instance. This helps a manufacturer focus on certain points that customers look for when purchasing a new bicycle.

A business case for innovation

Organisations can use these comparisons to develop a business case for changing direction. By assessing and comparing, you can suggest new ideas and innovations. This process helps generate new policies and can lead to more resources to change course.

Related: How to become a market research analyst (including qualifications)

Tips for conducting comparative analyses

To conduct an effective analysis, you may want to follow these tips:

Compile thorough research

Ensure you look at the research available before you start your analysis. By researching what evidence is already out there, you can not only save time, but it helps you present a perspective or an angle that you may not have thought about before. Looking at the research your competitors have already done also helps you decide the parameters for your own study.

Create a list of similarities and differences

To help compare two things, it's useful to create a detailed list of similarities and differences. Look at how a small change to one thing may affect something else. For example, how increasing the number of staff who work on a bank holiday Monday impacts sales, productivity or profits. Comparative analyses can help you identify external causes, such as the economy or new government guidelines.

Highlight the benefits of both sides

Comparative analyses may try to support one product or idea over another, but it's important that the analysis properly looks at both sides equally. The analysis presents the key points of both sides and outlines the claims associated with each. For example, an analysis comparing the advantages and disadvantages of starting a recycling scheme may look at how it can boost your corporate responsibility, help the local community and reduce your environmental impact. But it may also add new costs, be tricky to implement or take up valuable employee time.

Include variables

Thorough comparative analyses are usually more than a simple list of benefits and drawbacks. It may consider variables that affect both sides. These variables might relate to uncontrollable factors, such as how the winter weather affects bicycle tyre grip and controllable variables, such as the tread pattern or tyre pressure.

Conduct regular analyses

As with any business process, taking part in regular analyses can improve your outcomes. Consider the various factors an analysis examines, such as:

  • competitors

  • profitability

  • performance

  • dividends and revenue

  • inventory

  • marketing communications

  • research and development

Because your research can benefit several departments within an organisation, frequent analysis can help you stay up to date in a fast-moving market.

Related: How to write a business case (with benefits and tips)

Comparative analyses vs competitive analyses

The differences between a competitive analysis and a comparative one involve the intentions for implementing this type of research. When you conduct competitive analysis, you identify your competitors, look at their offerings and check for similarities with your services or products. This determines how you can compete against them to build a successful product or service. You might, for example, look at a rival's products, customer reviews, customer service policies or marketing strategy.

Comparative analyses take into account your direct and indirect competitors. This means you can discover more diverse competitors and uncover more detailed information. Examples of comparative analyses include:

  • Pattern analysing: identifying patterns of behaviour or marked trends to enable forecasts

  • Data filtering: analysing group data to identify and reveal data subsets

  • Decision tree: analysing the benefits and drawbacks of a decision through its influences and risks

Advantages and disadvantages of comparative analyses in business

Since this type of analysis deals with facts and a data-led method, it can reduce the number of decisions that a manager may make through emotion or 'gut feeling'. It may lead to more accurate policy changes. It encourages detailed findings through specific research so it can be useful in various processes.

This analysis can require substantial investment to ensure a good range of reliable data. It may be necessary to look at data governance to discover who in the organisation has control over the facts and figures they analyse. Data governance specifies who has control over the flow of information and how you can use it. Comparing and analysing helps you understand how to solve issues your company may face and it can improve performance and profits.

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