Competitive testing is the process of conducting research to evaluate the usability and learnability of your competitors' products.
Competitive testing is Day 15 of 100 Days of UX, an exploratory effort to survey the 100 methods of design outlined in Martin and Hannington's Universal Methods of Design. For 100 consecutive days, I learn one new method a day and write about it.
Competitive testing can reveal market opportunities, gaps in competitors' offerings, pricing strategies, among many other things. Competitive Usability Testing, which is focused on usability can help the team evaluate future features, examine similar features, and discover better ways to do things.
It can be quite tedious though, especially if there are many competitors and the breadth of their offerings is large.
In conducting a competitive usability testing session with users: