A competitive landscape analysis is one of the most common concepts used when trying to know more about your competitors. So, what is it? How can you perform it effectively? Let’s explore.
Imagine you are trying to reach point B from A. You should draw a line between both points to explore the terrain and decide how to get there.
So, a bunch of questions need answers before you can begin your journey: how far do you have to go to reach B? What hazards should you look out for? Where can you stop? Is there any rest houses or fuel stations along the way?
Exploring the landscape before taking off will increase the chances of having a successful journey.
This also applies to the business world. However, as an entrepreneur or marketer, it’s all about the industry or market landscape.
Without a doubt, a business owner will encounter competitors along the way. They can slow down any progress. For example, you might think of an idea, then you discover someone has already made it. Or someone might copy your product with more sophisticated features that will leave your company abandoned by former customers.
That’s why it’s essential to know your competitors position and where they stand.
Furthermore, a competitive landscape analysis provides the data necessary to overcome competitors and reach your ultimate destination.
That’s what we will explain in this article. You will learn more about a competitive landscape analysis and discuss the framework of some common competitive landscape analyses.
We have also highlighted some techniques that demonstrate how to do a landscape analysis.
What is a Competitive Landscape Analysis?
A competitive landscape analysis describes a structured way of identifying, understanding and analysing competitors. In this process, you need to perform detailed research and investigate how your rivals conduct marketing, sales, product development, and other significant operations.
This analysis allows you to create counter-strategies and develop plans based on accurate and reliable sources instead of going with your gut or guessing why you’re struggling or underperforming.
So, a competitive landscape analysis covers five top topics:
- Who are your company’s competitors?
- What are the products and services your competitor offer?
- What are your competitors’ strengths and weaknesses?
- What are the strategies your competitors are using to attain their objectives?
- What is the overall market sentiment?
This analysis can add much value to any business, from the smallest startup challengers to the most significant industry’s reigning titans, simply because learning what the competition is doing will grow your bottom line. In addition, it’s a great way to step inside a market professionally and efficiently.
Why Should You Consider Doing a Competitive Landscape Analysis?
A competitive landscape analysis is a perfect approach to setting the direction for where your business will go in the future. In short, it lays out a strategy for the next steps.
By conducting a methodical survey of the activities of your competitors, you will learn more about your customers, potential customers and how you can better beat your competitors by using the perfect strategy to reach your customers.
Also, studying the competition helps you better understand your unique value proposition (UVP). Understanding this allows you to focus on the unique qualities and extraordinary characteristics that will make your business stand out.
In the end, you will be able to do better or differently than the competition and increase your market share.
Even though it might be your first time knowing about a competitive landscape analysis, successful businesses already use it to take advantage of its value.
Around 90% of Fortune 500 companies get involved in competitive analysis. In addition, 69% of companies developing competitive intelligence operations have recorded positive results from implementing this approach.
Why do so many companies utilise Competitive Landscape Analysis?
Because the competitive landscape helps you see beyond today and spot opportunities that lie ahead. You will learn to listen to customers to launch exact needs before anyone else.
However, it’s not about deciding to invest in competitive landscape analysis. First, you need to build a solid plan using the right tools. After that, any business can start reaping the rewards of competitive pricing analysis.
So let’s see how to get started.
How to Do a Competitive Landscape Analysis? 5 Frameworks to Get Started
There are many templates out there when building your competitive analysis, and there is no short answer if you’re still wondering about the best way to create your own.
However, we highly recommend using a framework to cut the hassle of dealing with so much information.
Different frameworks will yield additional insights about your competition. So, start navigating your purpose to use the right one for your advantage.
Here are 5 key common frameworks for the competitive landscape and some ideas on what insights you will generate from each.
One of the most common analyses is studying your or your competitor’s strengths and weakness. It’s a process of examining your business against your rivals using a 2X2 grid.
Each quadrant of the SWOT analysis grid represents a letter from SWOT, and each letter is an acronym of facets of your business.
So you can analyse your business Strengths, Weaknesses, Opportunities, and Threats and what relates to your competitors.
If you can not find specific information, you can go back to research to bring out more data.
A SWOT analysis is great for strategic planning opening up ideas about opportunities you can take advantage of and threats to counteract.
Then you can turn your competitor’s weaknesses into opportunities to seize.
For example, if you conduct a competitor’s SWOT analysis and discover that their shipping can take more time than it should require, then you will write down this in your opportunity quadrant to consider it in the future as a way to gain more market share and enhance your brand proposition.
PEST analysis is a framework for assessing the political, economic, social, and technological factors that might impact a business. So, it mainly helps you investigate external factors you need to be aware of to be competitive in your market.
By understanding factors that might influence a product launch or a new business venture, you can gain insights into your competitor’s strategies and weaknesses.
For example, if you know that a competitor is facing political unrest in their country, you could adjust your marketing strategy accordingly.
So, how can you get this information?
Statistics firms such as Office for National Statistics, watching the news, reading reports or conducting forecasting analyses are great ways to explore the market conditions. This framework can also be expanded into PESTEL, which includes Environmental and Legal factors.
Strategic Group Analysis
A Strategic Group Analysis (SGA) is a tool that can be used to help you utilise the competitive landscape in your industry. You can develop strategies to target each group by identifying the different groups of competitors.
That said, this analysis matches competitors together who have similar business styles or strategies that differ from the rest of the competition group in some way.
So, you will gather all your competitors and organise them into clusters based on specific criteria such as business models or strategies. These clusters will help you illustrate the landscape and understand the relationships between different businesses.
However, there are a few different ways to approach strategic group analysis. One common method is to look at market share. That will give you a perspective of which competitors are the industry leaders and which are lagging behind.
Another way to approach SGA is to look at product offerings. That will help you identify any gaps in the market that you can exploit. For example, if competitors offer a specific product type without many flavours or customisation features, there could be an opportunity for you to fill that void.
Your model should include the following:
- Geographic coverage
- Product diversity
- Distribution channels
- Markets served
- Marketing strategies
- Product quality or pricing
For example, let’s say you have a coffeehouse and need to launch a new drink. You map out cafes based on their menu and explore their perceived quality. After carrying out a Strategic Group Analysis where you group all competitors and plot them onto the framework, you might notice only one cafe offers what you are willing to offer.
That presents an opportunity for you to stand out in this competitive landscape.
Finally, you can also use strategic group analysis to assess how your competitors are positioned relative to each other.
Thus, SGA can help you pinpoint your closest competitors and go through the precise nature of your competition. It will help you do a competitive landscape analysis and examine different strategies to be aware of opportunities or problems.
Growth-Share Matrix (BCG Matrix)
The growth-share matrix is a framework that BCG created in the early 1970s. The portfolio management matrix is used to help organisations decide how to allocate resources among different business units or products. It allows business to sort their product strength into different classifications based on profitability.
The growth-share matrix has four quadrants:
1. Stars: items or products with high market share and growth. If you fall in this part, it indicates you should heavily invest as they can translate into high earning potential.
2. Cash Cows: units or products with high market share but low growth, so you need to invest in this product to take part in this share.
3. Question Marks: business units or items with low market share but high growth. That means you have two options; invest or cut these products. You will decide based on the odds of rising to Star or shrinking to the next phase. How to get this information? From marketing research.
4. Dogs: business units or products with low market share and low growth. You need to decide to either be repositioned or liquidated
Each one is based on a specific combination of market share and growth.
The growth-share matrix can be used for competitor analysis by mapping out each competitor’s quadrant to focus on offerings with the greatest likelihood of success.
It’s a great model to know where to invest in product development, product marketing, and product-line expansion alongside competitor products.
Perceptual mapping is a technique that allows you to map out how consumers perceive your brand concerning your competitors. In other words, how your product is positioned. It’s a powerful tool that can help you understand your brand position and make accurate decisions about your marketing strategy.
To create a perceptual map, you’ll need to gather consumer data about their perceptions of your brand and your competitors. That can be done through interviews, surveys, or focus groups. Once you have this data, you can start plotting your position on the map.
With this framework, you will place brands or products on a grid divided into two criteria presenting the X and Y axis. For example, you can analyse quality and price. Then you will research to get customer feedback, an important part of customer care, to understand how the market perceives a given brand and product.
It’s a powerful tool for uncovering how people think about your product against your rivals. It allows you to decide about your future marketing and position efforts, identify opportunities for better profitability, and obtain a competitive advantage in the marketplace.
For example, let’s say you work for a shipping company. You might think of sending out a survey to explore how the public views you and your competitors regarding price and efficiency.
After plotting out the results, the public view your services as slower but cheaper than the competition. In customers’ eyes, this may warrant the efficiency difference if you position it effectively. So, compile customer input to ensure objectivity while conducting the mapping process.
Porter’s Five Forces
Porter’s Five Forces examines how the threat your competitors represent to you. Coined by Michael Porter, these five forces are important in any industry to create a sustainable competitive advantage. The forces are:
- The threat of new entrants (access to the market for new entrants).
- The bargaining power of suppliers (buyer’s entry/exit costs) all feed into rivalry among existing competitors.
- The bargaining power of buyers.
- The threat of substitute products or services.
- The intensity of the competitive landscape.
Porter’s Five Forces is a framework for analysing an industry’s competitiveness in a particular market. It can identify opportunities, threats, and critical challenges in a given industry you may face in your efforts.
To conduct Porter’s Five Forces analysis, you need to gather data on each of the five forces. This data can be collected through market research, interviews with industry experts, and secondary research. Once you have gathered this data, you can begin to analyse each force individually.
This model helps companies assess the industries they want to compete in and uncover their unique positioning. This framework might also be leveraged when expanding current offerings or a product line or entering a new market.
But How Can You Determine the Best Framework for Competitive Landscape Analysis?
It depends on your goal.
If you’re looking for a strategic plan, you can use SWOT analysis, Strategic Group Analysis, Porter’s Five Forces, and PEST analysis.
You can use Strategic Group Analysis, Porter’s Five Forces, and SWOT analysis to penetrate a new market.
What if you want to expand a product line? Then you can use BCG Matrix, Porter’s Five Forces, and Perceptual Mapping.
If you want to do a competitive landscape analysis on a small scale, BCG Matrix and Perceptual mapping are much better than any other models.
If you want to understand the nature of the product Strategic Group Analysis and PEST analysis are perfect.
Finally, you can learn more about positioning and brand perception by conducting Perceptual Mapping and Strategic Group Analysis.
How Can Profiletree Help You?
One of the most frustrating business situations is when your product or service hasn’t achieved the success you expected— in other words, when you’re getting left in the dust by your competitors.
You need help finding out why. Everything looks perfect. Your products are top quality; your marketing message is unmistakable; your content gets relatively high engagement, and your marketing is sharp and informative. But…
You still see your market share slip away!
To solve this mystery, you can only keep promoting your service if you explore the core problem. You can’t just idly observe your competitors!
If you’re wondering what they’re doing right…
You must take a step back, explore the systematic approach, and create a competitive landscape analysis.
But because we know your time is limited, you must search for the best way to do this without wasting money, time and effort. There is no need to get stressed, our team is here to help you out!
How can you help your business?
- Do a competitive landscape analysis to understand how you can compete successfully and effectively with your industry peers.
- Conduct a proactive way to leverage your business’s strengths to make up the ground between you and your competitors.
- Help you control the competition landscape by avoiding a purely reactive approach.
- Plan and research before launching any campaign or promotion to guarantee you do it right.
- Collect market research data by designing your surveys and send to a carefully-selected sample.
- Test creative and unique product concepts based on automating approach to reporting and analysing.
To do a competitive landscape analysis, you need to communicate with a seasoned strategist who knows the market and how to keep tabs on your competitors ethically but efficiently. Contact us now!