Techcrunch has an interesting profile of some new services that can help you track your competition (assuming you and your competition operate mostly online.)
What strikes me about these services is that while they might seem very tempting to use, they will actually just distract you from making your business better. I find that it is very difficult to innovate on your products and services if you spend all your time focusing on your competitors. If you focus on your competition, it blinds you from innovating in your own business. Focusing on your competition will push you quickly into second, third or fourth place since all you will end up doing is copying what they do - all you will be doing is chasing the true innovators.
At Palo Alto Software, whenever anyone asks us how we compare to our competition, we have a simple answer: We don't know. What we do tell our potential customers is what we know - why we think our products are great, what features and benefits our products have, and how our products will help our customers succeed in business.
Joel Spolsky of Joel on Software fame has a similar response when people ask him to compare his FogBugz product to the open source alternative Bugzilla: "I don't know. I don't use Bugzilla but I can tell you what's great about FogBugz." (I'm paraphrasing since I can't remember exactly where Joel published this.)
The point is that truly great products, services and companies are built by focusing on how to better serve customers and how to innovate. Good companies are not built by chasing the competition.