How to Perform a Competitive Landscape Analysis: 5 Steps

What is competitive landscape analysis?

A competitive landscape analysis analyzes your entire competitive environment to give you a comprehensive overview of your industry. That means getting to grips with all your competitors, and discovering:

Who your competitors are. 🧐
Where your competitors position themselves. ⛰️
The strengths and weaknesses of competing products. ✅

Competitive landscape analysis also involves becoming familiar with the trends and developments in your industry. By the end, you’ll understand your own place in the landscape, buyer perceptions of you and your competitors, and what your industry might look like in the future.

Why is competitive landscape analysis important?

So far, so simple.

But why should you perform a competitive landscape analysis in the first place?

Here are a few reasons why:

Industries are becoming more competitive and disruptive

In the 2022 State of Competitive Enablement Report, we found that 100% of participants believed their industries had either increased or sustained their levels of competition.

In such competitive markets, being aware of your competitors, their strengths, and their strategies, is more critical than ever.

That’s where competitive landscape analysis comes in.

Landscape analysis gives you insight into competitor strategies, empowering you to anticipate their movements and develop counter-strategies of your own.

Today’s markets also change quickly. Technology is driving change faster than ever before, and established models for success can become obsolete quickly (remember Blockbuster?).

Performing a competitive landscape analysis puts your finger on the pulse of your target market. When you know what the industry trends are, you’re in a better position to anticipate disruption.

You need to understand your differentiators

It’s easy to think you’ve got a handle on what makes your product or service stand out above the rest, but what does the market think?

An analysis of your competitive landscape puts you in touch with the strengths and weaknesses of your competitors’ products and how those compare to your own. This in turn makes clear what makes buyers choose you over any competitor.

This not only tells you what your differentiators are in the eyes of your customers, it helps you further differentiate your business. By doing the hard work and research others aren’t willing to do, or don’t know how to do, all plays into acquiring and sustaining your competitive advantage.

Analysis empowers you to make informed business decisions

No product, or business, exists in a vacuum. When you position yourself competitively, you need benchmarks and yardsticks with which to measure your progress and performance.

You need to know where your competitors stand, and how they perform, to determine what your own place is within the landscape. Are you a major or minor player? How can you grow? Where are you strong, and where are you weak?

In the course of conducting a competitive landscape analysis, you’ll answer all these questions and more.

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How to do a competitive landscape analysis in 5 easy steps

So how do you go about performing an analysis of your competitive landscape?

Our favored approach is to break the process down into five simple steps. Each revolves around a question you want to answer.

1 - What do customers want?

The ultimate goal of competitive intelligence is to help you serve your customers better. By understanding what the market likes about your competitors, or about your own business, you learn what your customers value from a product and which problems they want solving most.

For those reasons, it pays to start your landscape analysis by refreshing your knowledge of what the market wants.

That means performing your own customer research.

By performing your own primary, qualitative research via customer surveys, focus groups, and customer interviews, you can find out exactly what your customers and prospects would like to see from solutions on the market.

This lays the groundwork for the rest of your analysis. At every other stage of the process, you’ll tie your findings back to what you’ve learned here.

2 - Who are your competitors?

Time to identify your competitors.

A simple list won’t quite cut it, though. Make sure to split your competitors into tiers.

Most practitioners we’ve spoken to like three tiers: primary, secondary, and tertiary competitors. Competitors might be categorized into one tier or another according to their threat level as a competitor, or the business value of winning deals from them, for example.

You can also split your competitors out into direct and indirect competitors, with ‘alternative solutions’ as your third tier.

It’s important to be aware of these alternatives, even though they might be products that look very different from your own. If customers are using them to solve the same problem your product solves, then they’re stealing market share from you. In that sense, they’re just as credible a threat as an imitator or direct competitor.

To conduct this and the next stage of the analysis, you’ll want to gather competitive intelligence. Read our practitioner’s complete guide to competitive intelligence for more info. 👇

3 - What do your competitors offer?

This is where you delve into the features and benefits of competing products, and sees you collecting a bit more competitor intel while beginning to analyze what you’ve gathered.

Understanding each competitor’s positioning is key to understanding their product offerings.

Each competitor will position itself slightly differently. Everyone wants to be unique and occupy their own space in the market. Even if they’re positioning themselves as the ‘antidote’ to another key player, that’s valuable information about:

How the competitor sees their own product.
What the competitor thinks its product’s strengths are.
The problems this competitor thinks it’s a priority to solve for the market.

Bear in mind that some competitors’ positioning strategies will be ineffective. While they see themselves one way, the market sees them another. Make sure to understand both perspectives by checking back in with your findings from the customer research phase.

There are other elements of competitor strategy you can analyze for deeper insights into their market offering.

Pricing strategy, for example, is highly useful. Where a competitor prices itself tells you a lot about its target audience, as well as how it’d like the market to perceive its products.

In this stage, analyze:

Competitor pricing strategies.
Competitor marketing strategies.
Competitor positioning and messaging.
Product features and benefits.

To do this, it’s helpful to audit competitor content. Dig through their social media accounts for announcements, and search online for press releases and news coverage. Website content, whether it’s an article, product demo, or a user manual, will help you learn more about a competitor’s marketing strategy too, while a competitive SEO analysis lets you dig even further.

4 - How well do they meet customer needs?

At this stage of the process, it’s helpful to circle back around and touch base again with your interviewees and survey participants from the customer research phase.

This allows you to ask more detailed questions about competitors, knowing much more about their products and positioning.

Even if you don’t have the resources to do this, cross-referencing your findings from the first phase is still important. You want to determine how well each competitor is meeting customer needs, with the ultimate goal of learning where opportunities and gaps exist in the market for you to exploit.

5 - Relate this back to your business

As the final stage in the process, you’ll want to relate all this back to your business.

If a particular competitor has an offering that’s similar to yours, with some additional features thrown in that the market loves, you’ll want to use this information to inform your strategy going forward.

You might ask yourself questions like:

Does it make sense for us to add these features to our own product?
Do we have the budget to do so?
Would that fit our existing UX and positioning?
Could we improve upon those features to further differentiate?

To help you with this, we’ve pulled together a list of some handy competitive analysis frameworks. 👇

Competitive landscape analysis frameworks

Competitive analysis frameworks are tried and trusted methods of tying your competitive intelligence findings back to your business, and determining your next strategic step.

Here’s a list of six of the best:

1 - SWOT analysis

SWOT analysis has you look at the strengths, weaknesses, opportunities, and threats posed by one market participant to another.

That means the strengths and weaknesses of one of your competitors, the threats they pose, and the opportunities for growth afforded by the gaps between their strengths and weaknesses and your own. Such gaps put you in a great position to win some of their market share.

2 - PEST analysis

The PEST competitive analysis framework has you look at macro market factors and evaluate how they might impact you and your competitors in the longer term.

PEST stands for political, economic, social, and technological factors. Practitioners sometimes also incorporate legal and environmental factors.

PEST lends itself extremely well to analysis of the market as a whole, independent of any competitor. When you understand the strengths and weaknesses of your competitors, and where they’ve positioned themselves, though, PEST analysis becomes even more useful.

That’s because, by understanding how the current political and economic climate is impacting your industry right now, you’ll get a sense of how the industry might begin to change over time. You’ll also better understand which competitors might be in a tight situation.

Let’s take the current economic crisis as an example. If the cost of living is rising and people are cutting costs, a budget solution might be poised to steal a ton of market share. This will be increasingly likely if its budget status is driven by the creative use of technology and code to scale cheaply.

3 - Porter’s five forces

Michael E. Porter proposed in Competitive Strategy: Techniques for Analyzing Industries and Competitors, that five competitive forces interoperate to “determine the attractiveness of an industry”, going into detail as to “how these forces change over time and can be influenced through strategy”.

These forces are:

The entry of new competitors.
The threat of substitutes.
The bargaining power of buyers.
The bargaining power of suppliers.
The rivalry among existing competitors.

Since the competitive landscape is a kind of lens through which you view the chessboard of your industry, the five forces that determine, in Porter’s words, “industry attractiveness” are key.

After all, if you’re to create a sustained competitive advantage for yourself, it’d help immensely if you could sway these forces in your favor. This is what Porter calls the “ultimate aim of competitive strategy”.

4 - Strategic group analysis

Strategic group analysis is a kind of competitor segmentation framework that batches competitors with similar strategies and other shared characteristics into groups. This helps you uncover gaps and opportunities in the market.

For example, a few of your competitors might be priced similarly on the lower end of the scale, and have messaging that makes it clear they’re targeting smaller businesses that want a simple, no-fuss solution. This would constitute one strategic group.

Another set of competitors might have a more complex solution with multiple products. Their positioning makes it clear they’re targeting enterprise customers with budget and time to spare. These customers are looking for a long-term contract with a provider they trust. This would be another group.

A strategic group analysis like this would help you identify a gap in the market for late-stage scale-ups that are no longer ‘small’ businesses. They don’t need a complex solution, but they’re looking to spend a bit more for better customer service, platform stability, and peace of mind. If this lines up with your offering, you’d be well-positioned to target this strategic group.

The growth-share matrix is a comparison matrix that investors use all the time. They plot their potential and existing investments on a map with ‘growth’ on one axis and ‘market share’ on the other.

Businesses can use the growth-share matrix when they have multiple products and want to make strategic decisions as to which deserve further investment and which should be phased out.

The growth-share matrix uses some interesting names for its quadrants:

Cash cows
Stars
Question marks
Pets

Cash cows: low-growth, high-share

These are the steady, reliable products that bring in cash every quarter. They’ve a dedicated, loyal user base, but they don’t see much growth. These are often trusted solutions that have been around for a long time. They don’t tend to require much new investment, and can be ‘milked’ for cash to reinvest in other products.

Stars: high-growth, high-share

These are the products that are growing rapidly, bringing in more and more revenue every quarter, and show no signs of slowing down. They’ve a lot of future potential and are the opportunities you’ll want to invest in heavily.

Question markets: high-growth, low-share

These products are growing quickly, but have a low market share. You’ll need to make a judgment call on whether to cut them or invest in them more, depending on their chances to grab more market share.

Pets: low-growth, low-share

Products or businesses that fall into the ‘pets’ quadrant tend to only be in the portfolio because the person with the cash has a soft spot for them. The business advice for these products is to liquidate, divest, or reposition them.

In your competitor analysis, you can use the growth-share matrix to figure out which products, out of your own and your competitors’, are performing the best. Seeing all available products through an investor’s eyes can help you better understand where you sit in the market.

TL;DR

Here’s what we’ve learned:

🧠 A competitive landscape analysis gives you a comprehensive understanding of your industry and its players.

🧐 Landscape analyses are important because markets are more competitive than ever, and they help you make more informed decisions.

🛍️ To perform the analysis, first orient yourself toward what the market wants.

🤺 Second, ask who your competitors are, and how well their products deliver what the market needs.

🧮 To tie all this back to your own business, competitive analysis frameworks like Porter’s Five Forces, are super useful.

Get the playbook on positioning your brand

Competitive insights can inform business strategy across all four corners of business. But when it comes to positioning your brand in a competitive market, there are pitfalls to sidestep, and best practices and processes to implement.

Inside the Competitive Positioning Playbook, we give you best practices and processes, covering:

⏰ How not to waste your internal resources and data sources to save yourself hours of time.

🧘 What “minimum viable positioning” is, and why it’s a key milestone early in the process.

🙅‍♀️ The three steps you must not skip in crafting competitive positioning.

These aren't just our opinions - we consulted with some of the best in the industry to put together these insights. (Oh, and it won't cost you anything).

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