The term “competitive landscape” is used to describe a comprehensive view of the competitive environment within a specific market or business sector. This means a detailed analysis that includes all elements of competition, covering current players, potential entrants, suppliers, customers, and various other stakeholders that influence the dynamics of the business or industry.
This analysis enables businesses or organizations to understand competitive forces, market structure, and strategic positioning while operating in a particular environment. This is critically important for businesses and decision-makers to understand the challenges and opportunities of the competitive landscape, as well as its strengths and weaknesses, in order to make informed decisions and create effective strategies.
What is Competitive Landscape Analysis?
Competitive landscape analysis is a comprehensive and systematic process that examines and evaluates the dynamics and landscape of competition. It serves as a critical tool for businesses and organizations to understand in detail the competitive aspects of the area in which they operate.
This analysis asserts that competition involves more than just identifying competitors. It assesses not only the strengths and weaknesses, strategies, and performances of existing competitors but also the threats posed by potential new entrants or disruptive elements in the market. It also includes examining the relationships and dynamics between a business and its suppliers and customers, as these relationships significantly affect factors such as pricing, product quality, and innovation.
Furthermore, a comprehensive competitive landscape analysis takes into account external factors affecting the market, such as regulations, economic conditions, technological advances, and changing trends. These external factors can create opportunities and threats that need to be considered.
The ultimate goal of this analysis is to provide businesses and decision-makers with a complete 360-degree view of the competitive landscape in which they operate. An in-depth analysis of competitive forces, market structure, and the strategic positioning of businesses or organizations enables informed decision-making and the development of effective strategies.
This analysis is vital for identifying growth opportunities, mitigating risks, assessing strengths, and addressing weaknesses. All these are fundamental elements for maintaining and enhancing competitiveness in the market.
Why is Competitive Analysis Important?
Let’s take an example, in the year 2020, global e-commerce retail sales grew by 27.6% reaching $4.2 trillion, yet total retail sales worldwide fell by 3%. A significant part of the growth in the e-commerce market stemmed from a pandemic-induced shift in consumer behavior towards online shopping; previously, they prioritized physical store sales.
The above situation encouraged many retailers to launch (or expand) their online presence. Many e-commerce-focused businesses saw a significant increase in sales. During 2020, businesses selling on Amazon generated over $4.8 billion in sales worldwide from Black Friday to Cyber Monday, which is more than a 60% increase compared to 2019.
What do these data tell us? The retail market has been largely reshaped, and a significant portion of profits shifted to the online environment. It is still not certain how permanent this change will be. However, market forecasts to date indicate that it will grow slower than in 2020 and will only grow by 14.3% by 2024. For these reasons, a business looking to grow must learn to identify its competitors in a competitive market and develop strategies to guard against and outmaneuver them.
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Clarify your market position in terms of value proposition.
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Estimate the barrier to entry into your target market/niche.
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Identify the key consumer expectations set by others.
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Find market gaps and opportunities for improvement.
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Uncover potential risks and weaknesses in your marketing plans.
Not just the e-commerce industry is dynamic but all sectors are. Observing today’s market reveals just how much radical transformations, innovations, and changes are on the agenda. This principle affects not only consumers and their purchasing habits but also the companies themselves. Preferences, expectations, and goals of B2B customers are changing; therefore, analyzing competitors is vital for B2B businesses. Indeed, it is only in this way that one can understand how companies move and what steps they take to adapt to (or predict) changes in the market. This principle is applicable both to the markets we are currently in and those we wish to enter. In this situation, we may already know our competitors, but in a globalized economy, the picture is much broader and a strategy could be threatened by another country at any moment.
What Should Be Included in Competitive Analysis?
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Identifying Competitors: List and categorize your direct and indirect competitors. Direct competitors are businesses that offer similar products or services in the same market, while indirect competitors meet a different need but compete for the same customer budgets.
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Competitor Strategies: Analyze the strategies your competitors use. This includes marketing tactics, pricing strategies, distribution channels, and any unique selling propositions.
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Strengths and Weaknesses: Evaluate the strengths and weaknesses of each competitor. Understanding what advantages they have over your business and where they fall short is quite important. This requires assessing their resources, market share, and capabilities.
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Market Share: Determine the market share of each competitor, so you can understand their position in the industry.
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Customer Analysis: Examine which types of customers your competitors target, their customer base’s demographic characteristics, needs, and preferences.
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Product or Service Offerings: Analyze the products or services your competitors offer. Are there unique features or benefits that distinguish them from others?
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Pricing Analysis: Look into the pricing strategies your competitors employ. Are they selling their products or services at higher, lower, or similar prices compared to yours?
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Distribution Channels: Understand how your competitors distribute their products or services. Are they using a different distribution network or technology?
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Marketing and Advertising: Examine their marketing and advertising efforts, including online and offline campaigns, social media presence, and branding strategies.
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SWOT Analysis: Conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis for each competitor and your own business. This helps to understand your position in relation to your competitors.
How to Conduct a Competitive Analysis?
Identify Competitors
Before starting a competitive analysis, you should know which competitors to analyze. Spend time and effort on research with demographic and geographic features. For B2B businesses, the best option is usually to identify the top 5 competitors. Then, you can select 3 direct competitors and 2 indirect or tertiary competitors for desired results.
Categorize Competitors
After identifying your competitors, the next step is to categorize them accurately.
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Primary Competition: These are direct competitors known as businesses with the same products and services, targeting the same audience, and operating in the same geographical area.
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Secondary Competition: These competitors may sell your products and services in a similar way, but they have a different target audience.
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Tertiary Competition: This includes competitors that operate within the same niche but may not sell similar products and services.
Analyze Competitor’s Online Presence
Online presence plays a significant role in a business’s growth. It is also an integral part of every B2B business plan. Therefore, you should be very careful and meticulous while analyzing your competitors’ website, social media accounts, and reviews. Consider the following important points to analyze your competitors’ online presence in detail:
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The blog strategy and FAQ section of their websites.
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The types of products offered and how they are presented on the website.
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The number of likes, shares, and comments on social media posts.
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The frequency of social media posts.
Compare your online presence with your competitors and if you find inspiring things that could elevate your business, make plans to improve your strategy.
Research Competitor’s Sales Tactics
Analyzing your competitors’ sales tactics will be extremely useful for your sales and marketing team and will help them cope with the competition. You can gather information from annual reports for publicly traded companies.
However, for private businesses, you can do this through CRM (Customer Relationship Management). Find potential customers who prefer your competitors over you and ask them a few key questions.
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Which channels did competitors use in the past to reach these firms in the target audience?
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What did competitors do differently during the potential sales process?
When you get answers to these types of questions, you will have seen what your competitor does differently from you.
Review Marketing Strategy
While analyzing your competitors’ online presence, you should pay attention to their content marketing strategies. Whether it’s videos, blogs, or infographics, you should examine the content your competitors produce. Determine which keywords your competitors compete for and try to learn if their content strategies work. Also, check whether their content directs visitors to the desired pages.
Many factors can be included here, such as their social media languages, the brand image they create, and the channels through which they present their ads to users. In addition, outdoor advertising and collaborations also play a major role in creating a brand’s marketing strategy.
To Summarize
Finally, when we briefly look again, we see how important competitive analysis is in establishing or expanding a business, creating and growing a market share. Who ensures the domination of the market we will do business with, what are the strategies of other actors? Answering questions like these can often be confusing, so our team specialized in strategy development is with you.
Metheus Consulting is ready to accelerate and lead your B2B customer journey to success by developing and customizing solutions to meet your business needs. Reach out to us today to propel your business towards significant success!
