What is the Competitive Landscape?

Imagine a map of all the businesses offering similar products and services to yours – that would be your Competitive Landscape.

Here’s another way of looking at it. If you made a list of options that your customers or prospects could choose rather than your product or service, that list would be your competitive landscape.

From this point onward in this article, when you see the term ‘product(s),’ it also includes ‘services.’

If you ask the questions “Where else could my customers go?” “Who could steal my customers? “If my customers left my company, where would they go?” You are wondering about your competitive landscape.

Direct and indirect competitors

Creating a competitive landscape is a business analysis technique that can help you determine who your direct and indirect competitors are in the marketplace.

A direct competitor is a business that offers products or services that are the same as or very similar to yours.

An indirect competitor’s products are not the same but could satisfy your customer’s need or solve the same problem.

Coffee shops, for example, are indirect competitors of soft drink companies, as both provide options for customers looking for something to drink. We also consider coffee shops as indirect competitors of pubs and restaurants.

My Accounting Course says the following about the term:

“A competitive landscape is a complete description of competitors and their relative position in a particular market. It is a strategic marketing concept that applies to the conditions of competition and rivalry that a company and its products have to face in the market they are part of.”

Four executives holding suitcases racing on a running track - plus a definition of the COMPETITIVE LANDSCAPE.
Image created by Market Business News.

What does a competitive landscape contain?

Your competitive landscape is essentially a map of all businesses that offer identical or similar products to yours. Here are some of the components of the landscape:

  • Direct competitors

The Coca-Cola Company and PepsiCo are direct competitors, both offering similar types of beverages.

  • Indirect competitors

Companies that offer slightly different products but could still fulfill the same customer needs. As mentioned earlier, coffee shops (cafés) are indirect competitors of soft drinks companies, pubs, and restaurants.

  • Substitute products

Alternatives that customers might choose instead of your offerings, even if they’re from a different industry. For example, a person who regularly drinks coffee to stay alert may switch to energy drinks like Red Bull.

The Competitive Landscape is Good for Business

Analyzing your competitive landscape can help you in several ways. Let’s take a look at some of them:

  • Identify Strengths and Weaknesses

Find out what your competitors do well and where they fall short. Learn from their successes and capitalize on their mistakes. You will probably find that this exercise helps you identify your own strengths and weaknesses.

  • Differentiate Yourself

Gaining insights into who your competitors are, what they are made of, plus their strategies and weaknesses, can help you highlight what makes your business and offerings truly unique.

  • Spot Opportunities

The competitive landscape can reveal gaps in the market, niches you can fill, or changing customer needs. The marketplace is a dynamic place where things never stay the same for long.

  • Make Informed Decisions

Use the insights you gain from a competitive landscape analysis to make better decisions about pricing, marketing strategies, and product development.

  • Improve Customer Experience

Learning about how your competitors address their customer needs and preferences can help you serve your customers better. It can also aid in anticipating market trends and consumer behaviors.

Creating Your Own Competitive Landscape Analysis

Here are some key steps to help you craft your own competitive landscape:

  • Identify Competitors and Substitutes

Start with the obvious rivals, but also consider indirect competitors and potential substitutes. A potential substitute for a gym membership, for example, could be a mobile fitness app.

  • Gather Information – Lots of It!

Look at their your competitors’ websites, feedback comments, marketing materials, social media, pricing, customer reviews, product catalogs, annual reports, press releases, and industry analyses – anything you can find.

  • Analyze Their Strengths and Weaknesses

Pay attention to product features, pricing models, customer service, marketing strategies, distribution channels, and brand reputation. What are your competitors good at or bad at? Do their products compare well or badly with yours, and if so, how?

  • Identify Your Position

Where do you stand in relation to others? Are you a market leader, a challenger, a market follower, an innovator, a cost leader, or a niche player?

  • Evaluate Technological Advances

How is modern technology altering your particular marketplace? Are your competitors adopting these technologies, and where do you stand in comparison?

  • Identify Market Trends

Stay updated regarding broader market trends that could impact your industry and influence competitor strategies. Examples include shifts towards sustainability, increasing consumer preference for digital services, and changes in international trading regulations.

Final Thoughts

The competitive landscape is constantly evolving – it never remains the same for very long.

Monitor your competitors and the market regularly so that you are always aware of changes and emerging trends. Adapt your strategies as needed to maintain your competitive edge.

You will be better equipped to make intelligent business decisions and gain a long-term advantage if you take the time to understand and analyze your competitive advantage.

There is one thing that all the world’s most successful companies have in common – they recognize the importance of the competitive landscape and consistently prioritize it in their strategic planning.