Competitive Landscape Guide: How to Analyze the Competition

A competitive landscape refers to the specific marketplace in which a company does business and how its activities compare to direct and indirect competitors. Other businesses in a company’s competitive landscape may offer the same products and services or seek to disrupt how others operate in the industry.

A competitive landscape analysis involves comparing its products, market share, marketing strategies, prices, and growth projections to other related businesses to identify advantageous opportunities.

A competitive landscape analysis (or competitor analysis) involves studying how the practices of a specific business compare to other businesses’ strategies in the same marketplace. Practices that come under scrutiny during a competitive landscape analysis include the pricing, marketing strategies, target demographics, business models, and growth projections of similar companies.

Analyzing these variables allows business owners to assess their company’s strengths and weaknesses to remain competitive in their specific industry. Due to the constant evolution of market trends, business models, and product development, businesses should regularly conduct competitive landscape analyses to maintain growth and profitability.

The objective of the competitive landscape analysis process is to give a business an advantage over the competition in the marketplace. This type of competitor research can also help a business in the following ways:

1. 1. Develop new goals: Competitor data can help a company’s operations or sales departments set benchmarks. For example, if you find that your rival business has highly rated customer support, you can develop initiatives to improve your customer support ratings.
2. 2. Identify market trends: A competitive landscape analysis helps your business monitor and adapt to shifting market trends. For example, a competitive analysis might reveal a marketplace-wide increase in online sales over brick-and-mortar sales, leading to a growth strategy more focused on SEO (search engine optimization) to increase website traffic.
3. 3. Improve business strategy: Competitive intelligence enables business owners to assess and improve their in-house strategies. Assessing your business’s unique value propositions (the reason the target audience buys your products) in relation to your competitors allows you to develop beneficial new strategies based on the competitive value your target audience gains from your services.
4. 4. Reveal weaknesses: A business evaluating its competitors’ activity can reveal areas of improvement or blind spots for gaining revenue or exposure. For example, a competitive landscape analysis may reveal that a rival business prices its products much lower than your comparable products. As a result, the business owner could lower their prices—potentially by reducing COGS (cost of goods sold, referring to the cost of production)—to match or beat their competitor’s prices.

Follow these steps to perform a competitive landscape analysis for your own business.

1. 1. Identify your competitors. The first step in conducting this analysis involves identifying the competition, including direct competitors selling the same product to the same target audience, indirect competitors (those selling a similar product to the same target market), and tertiary competitors (businesses that may develop new products to become direct or indirect competitors). For example, a donut shop owner could search their area for other donut shops to find their direct competitors. Potential indirect competitors would include local eateries selling other breakfast baked goods (like bagel shops); tertiary competitors would include coffee shops that don’t sell food yet.
2. 2. Perform market research. Research every competitor and log your data in an organized spreadsheet. Analyze each company’s product offerings, pricing strategy, recruitment tactics, customer service, branding, website content, special promotions, marketing efforts (including social media, email marketing, physical ads, and digital ads), and other relevant information.
3. 3. Administer a competitor analysis framework. Once you’ve gathered all relevant data, choose a competitive landscape analysis framework to synthesize your data. Two popular choices are a SWOT analysis and Porter’s Five Forces analysis. A SWOT analysis (which stands for strengths, weaknesses, opportunities, and threats) is a four-point analysis that businesses use to evaluate internal and external positives and negatives. This strategy helps identify your company’s competitive advantages and areas for improvement. Porter’s Five Forces examines the competitive nature of an entire marketplace by evaluating the competitive threats of substitute products, new entrants, supplier power, buyer power, and the intensity of the competitive landscape. This strategy is useful for businesses looking to expand into a new area of the market.
4. 4. Apply the results. Use your learnings to reevaluate the elements of your own company’s business strategy. Focus on practical applications that can improve business in tangible ways. Set new goals based on market trends so that your business can evolve and grow.
5. 5. Continue analyzing your competition. It is wise to run a competitive landscape analysis at least once or twice a year to keep up with trends. Keep tabs on your competition and log data in your competitive analysis spreadsheet as time goes on. If you need to achieve a specific goal during a set timeline, use a competitive analysis as a guide.

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