March 27, 2022 Edwin Kooistra
When we talk about the competitive landscape, we refer to all the options available to a customer instead of your product. These options do not necessarily have to be direct alternates to your product or service or even your direct competitors. They can even be different products or possible solutions to the need that your product was targeting in the first place.
Being aware of the competitive landscape is critical to any business’s success. One needs to know how the competitors in the market are operating and what kind of edge they have over you. Similarly, you also need to know in which areas of product development or service delivery you have the upper hand over your competitors.
What is the Competitive Landscape (Definition)?
The definition of the competitive landscape in literature is a business tool or framework that helps you identify direct and indirect competitors to your product or service. It also enables you to compare yourself against your competitors in vision, mission, values, and core strengths.
Secondly, it helps you identify strengths, weaknesses, opportunities, and threats for yourself and your competitors. This gives you an overall understanding of the industrial and competitive environment and thus is critical in making different business decisions.
Using a competitive landscape is not limited to identifying opportunities, threats, or arenas to grow. It aids you in the identification of your differentiator as well as in the development of competitive advantage. Sometimes businesses believe that offering the best price or the most advanced product is the solution to being number one in the market.
The competitive landscape shows them the accurate picture. Because, after all, the consumer purchase decision is not just based on price or broader features. It’s a combination of complex attributes that work together to determine customer choice.
What Is a Competitive Landscape Analysis?
Competitive landscape analysis or competitive landscape mapping is a focused and structured way to analyze your competitors, get to know them, and research them to enhance your business acumen and industry knowledge.
When talking about a competitive landscape analysis, there are five significant areas on which you must focus. Focusing on these areas helps you in the long run when determining your strategic direction and positioning in relevance to the industry and market. The five focus areas are:
- Your competitors
- Products and services of your competitors
- Their strengths and weaknesses
- Their strategic tactics
- Industry and market dynamics
Steps to perform a Competitive Landscape Analysis
Let’s look at a step-by-step approach to help you conduct a competitive landscape analysis. This competitive landscape template will aid you in structuring out not only your strategic direction but also in identifying your competitive advantage and enhancing it as well.
- Arrange and Focus
- Identifying the Competition
- Analyze their product or service
- Keep an eye on their social media, marketing, and advertising
- Look out for offers and market strategy
- Assess their product offering and pricing strategy
- Where are they positioned?
- Deploy Analysis Tools – PEST, SWOT, BCG
We shall now look at these steps in further detail thoroughly to understand how to conduct a competitive landscape analysis.
1. Arrange and Focus
First and foremost, you need to arrange your data and focus on what you want to achieve from this analysis. Working with raw data can be cumbersome at times. Therefore it needs to be sorted and filtered systematically for ease of use and accuracy of data as well.
2. Identifying the Competition
In the second step, you will first identify all your competitors, whether they are direct or indirect. You also need to identify solution providers that do not necessarily offer the same product or service but cater to the same pain point as you do.
3. Analyze their product or service
Once you have identified all the relevant competition, you need to analyze their products and services. This analysis needs to be done regarding products, service features, customer service, etc. Leave no stone unturned to get into the nitty-gritty of your competitors’ products.
4. Keep an eye on their social media, marketing, and advertising
How a particular brand or business reaches out to its customers leaves a lasting impact and is critical to determining the purchase decision. You need to analyze your competitors’ marketing and advertising techniques, especially social media presence.
It will help you identify how they’re trying to appeal to the customer’s psyche and how well you can counter that with your own content-focused social media marketing strategy.
5. Look out for offers and market strategy.
At this stage, you need to keep a close eye on the kind of offers and go-to-market strategy your competitors are deploying. Offers sometimes our critical in literally stealing customers from you. Therefore, you need to know how the competitors are treading towards market penetration and customer retention.
6. Assess their product offering and pricing strategy
Now you need to understand your competitors’ products and services more rather than in terms of features. You need to combine the product offerings in relevance to the pricing adopted by the competitors and see how their combined initiative is marked against yours and which one is more effective.
7. Where are they positioned?
Just before concluding this analysis with all the steps we have conducted above, you will now be able to position yourself against your competitors on a perceptual map. This is very important for you to do so because this will help you understand where you are in the realm of the industry and the market and where your competitors are.
8. Deploy Analysis Tools – PEST, SWOT, BCG
Lastly, to ensure that all this effort is carried on and is reviewed on a timely basis, you need to deploy set analysis tools such as PEST, SWOT, or BCG. These help you identify different environmental factors that impact the competitive landscape and the strengths and weaknesses. When it comes to BCG, it enables you to determine your star products and your cash cows.
Top Benefits of a Competitive Landscape Analysis
Here are some of the top benefits of conducting a competitive landscape analysis.
- You are aware of all your competitors, whether direct or indirect.
- You now know where you stand in comparison to your competitors.
- You have an excellent base of information to devise your strategic business plan and your sales and marketing strategy.
- It helps you identify the gaps within the market and unserved customer segments that you can focus on.
- It helps determine which products or services to offer and which to retract for your target market.
Competitive Landscape Analysis Example
Let us look at an example of competitive landscape analysis to understand this excellent business tool in action.
It is a social media app that helps you save and arrange the information on the web using pictures and photographs. Below is an example of a competitive landscape analysis conducted for Pinterest and its competitors using different dimensions.
The faculty at Carnegie Mellon University conducted this analysis. This will help Pinterest identify the areas where they need to improve to serve their customers better. Additionally, it also gave an insight into the stronger strengths of the competitors and where Pinterest lags.
Frequently Asked Questions
How Do You Make a Competitive Landscape?
You can make a competitive landscape by following a step-by-step approach. It would be best to start by identifying your competitors, going right down to analyzing their product and service delivery, and then finally mapping yourself against them.
Why Is Competitive Landscape Important?
The competitive landscape is essential because it helps you determine the businesses you’re up against in the market. As a business, you cannot operate in the blind without knowing your competitors or what and how they are offering to the market.
What Are the Two Primary Drivers of The Competitive Landscape?
The two primary drivers of the competitive landscape as per the modern market are technological changes and the globalization of the markets.
What Is Competitive Advantage in Economics?
In economics, competitive advantage refers to the skill or factor that allows a business to deliver better services and thrive better than its competitors.
For any business, it is essential to be aware of its competitive landscape. And to do so, every business should regularly conduct a thorough competitive landscape analysis to understand the current strategic dynamics of the market and develop the future road map.
Working on a competitive landscape analysis might seem to be a daunting task at first, given that you must account for the whole industry and indirect competitors. But with the help of the right consultants and a strong team, you can use this tool to determine your strategic direction and help you in market segmentation.