One of the most frustrating business situations is when you’re getting left in the dust by your competition — and you can’t figure out why. Your products are top quality, your customer service is attentive, your marketing is sharp and informative, but you still see your market share slip away. To solve this mystery, you can’t just idly observe your competitors and wonder what they’re doing right. You need to take the methodical approach and create a competitive landscape analysis.
A competitive landscape analysis is a proactive way to understand how you compete with your industry peers. By leveraging your business’s strengths, you can make up the ground between you and your competitors, avoiding a purely reactive approach. It takes planning and effort to do it right, but the benefits can be significant.
What is competitive landscape analysis?
A competitive landscape analysis is a structured way of identifying and researching your competitors. You perform a detailed investigation into how they’re conducting product development, marketing, sales, and other vital operations. The analysis allows you to develop counter-strategies based on accurate and reliable data instead of guessing why you are underperforming.
A competitive landscape analysis should cover five key topics:
- Who your company’s competitors are
- The products and services your competitors offer
- Your competitors’ strengths and weaknesses
- The strategies your competitors are using to achieve their objectives
- The overall market outlook
Every business can benefit from competitive landscape analysis, from the smallest startup challengers to an industry’s reigning titans. Learning what the competition is doing to grow their bottom line is a great way to grow your own.
The value of competitive landscape analysis
A competitive landscape analysis sets the direction for where your business could go in the future. In the short term, it lays out a plan for the needed next steps. By engaging in a methodical survey of your competitors’ activities, you learn more about who your potential customers are and how you can do a better job of reaching them.
Studying the competition also helps you paint a clearer picture of your company’s unique value proposition (UVP). Knowing your UVP allows you to focus on the extraordinary qualities that make your business stand out. These are the things that you do better or differently than the competition.
The value of competitive landscape analysis is well-known by successful businesses. Around 90% of Fortune 500 companies engage in competitive analysis. 69% of companies that have outsourced their competitive intelligence operations have reported overall positive results from doing so. With a solid plan and the right tools, any business can start reaping this useful practice’s rewards. Here’s how to get started.
8 Steps to create a competitive landscape analysis
1. Get organized
Reams of raw data won’t yield many insights if it’s not organized or structured. Step one is to create a tool to organize your data. Create a spreadsheet or matrix you can update, sort, and share. Having a way to visualize your data can be extremely helpful, too.
You’ll end up with lots of varied information and data points to record, but you can list and categorize your known competitors to get started.
2. Identify your competition
Who are your competitors? And how should you categorize them? You can probably answer that first question off the top of your head, but you shouldn’t limit yourself to studying only the most obvious competition.
Begin with a list of ten competitors and sort them into three categories: primary, secondary, and tertiary.
The primary category is for your direct competitors—companies that provide essentially the same product or service as you.
Secondary competitors are similar, but not quite the same. Companies that sell a version of your product with different features, or market to different demographics, would be your secondary competitors.
The tertiary category includes companies that sell something fundamentally different that could be an alternative purchase to what you’re offering.
3. Analyze their content
Once you’ve identified the players, you can start reviewing and analyzing the content they’re putting out. Look closely at:
The imagery they use
Their website and everything they publish on it (blogs, whitepapers, ebooks, testimonials, newsletters, etc.)
Multimedia content like videos, webinars, and podcasts
One way to do this is by using software tools to find and scrape the content. Don’t be afraid to engage in manual research when necessary. Pretend you’re a customer, embark on the purchasing journey, and see what content your competitors set out for you. See what themes, messaging styles, and branding choices stand out the most.
4. Monitor their social media
One of the best sources of competitor intelligence is social media. Now more than ever, buyers are turning to social media for unfiltered information and real talk about their potential purchasing decisions. B2C and B2B businesses alike are rushing to meet that demand with a compelling social media presence, a consistent voice, and tons of content.
Social media is where you’ll often get the strongest feel for a company’s brand persona. It’s an easy place to discover their newest marketing strategies and see how they engage with their audience.
Because social media is such a vast space, social media listening tools can come in very handy here. They can ensure you’re watching the right hashtags, keywords, and relevant conversations that might be happening.
5. Analyze their marketing strategy and offers
Once you’re watching and listening in all the right places, you’ll be able to perceive the bigger picture of your competitors’ marketing strategy.
What you want to know is:
Where are they focusing their marketing efforts?
Where are they purchasing ads?
What incentives are they offering to draw buyers further into their sales funnel?
Look closely at the CTAs in their content. Check out their opt-ins to see where and how they ask prospects to engage for further information. Join their email list to see first-hand how their email marketing is structured and sequenced. Find out what special offers or giveaways they might be promoting. With this information, you can piece together their tactics for lead conversion.
6. Evaluate their offers and pricing
You don’t just analyze your competition so you can copy what they’re doing. Sometimes you get to see what isn’t working, so you don’t want to copy that. It’s also essential to consider that a good strategy for a competitor may not be suitable for your company. This is especially true when you’re looking at secondary or tertiary competitors.
However, knowing what your competitors are charging for comparable products or services is important when setting your prices. You can’t expect to win the fight for customers if you’re overcharging. Conversely, significantly undercutting competitor prices can suggest lower quality or minimal customer support.
You can also learn a lot about customer expectations by studying typical promotional offers for the type of goods you sell. This information can help you determine whether it makes sense to offer customer enticements such as free trials, discounts, or subscriptions.
7. Determine their positioning
Companies with a strong marketing and communications strategy know it’s crucial to create a unique position for themselves in the marketplace. They do this by finding ways to differentiate themselves from their competition. When analyzing your competitors, look for the themes and ideas in their messaging that function as differentiators.
For example, imagine three pizza parlors on the same block. One offers the largest slices; one offers the fastest delivery; and the third promises the healthiest ingredients. They’re all in competition, but they position themselves very differently. To find your own unique selling proposition, you have to know how the competition is positioned.
8. Use frameworks: SWOT the PEST
You don’t have to invent a structure for a competitive landscape analysis process. There are existing, proven frameworks you can use, such as SWOT and PEST.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses reflect the internal characteristics of your business. Opportunities and threats represent outside factors. In competitive landscape analysis, you try to identify your competitors’ SWOT factors to compare them against your own.
PEST is a complementary framework that dives deeper into external factors. It looks at Political, Economic, Social, and Technological (and sometimes Legal and Environmental) pressures to understand how a business reacts to them. There are other frameworks you can explore, but SWOT and PEST provide a necessary foundation.
Competitive landscape analysis for the win
Once you’ve completed a competitive landscape analysis, what does that mean for your business? You now have an excellent starting point to devise more effective sales and marketing strategies, find new leads, and shape your brand’s perception.
However, a competitive landscape analysis isn’t a one-and-done process. Your competition isn’t static and unchanging, so you can’t lean too long on a single analysis that captures what was going on during a particular period.
Technology is changing marketing and other aspects of business incredibly fast. Therefore, it is good practice to revisit the competitive landscape and update your analysis regularly. With the right frameworks and tools in place, you can ensure that you always have an accurate picture of the companies competing for your customers. You’ll have up-to-date knowledge, allowing you to make the right proactive moves that will help you win in your market.
This article was originally published on Oktopost.