The best sports coaches are meticulous planners and tactical thinkers.
They study the opposition, devise a plan to overcome them, and win. If they do it with style? Bonus point.
Launching a product into an existing market is a similar ball game (pun intended).
Studying and analyzing your market helps you create something better. Or, in the best-case scenario, you create something different that solves the need of your ideal customers.
Either way, you can’t create, market, and sell a product until you know what and who you’re up against.
This article will guide you through the steps to analyze your market, the frameworks you can use, and how to leverage the information you gather to differentiate and successfully launch your business.
Without a competitive analysis, how can you differentiate your offering? At Lean Labs, we take all of our clients through a competitive landscape analysis. It’s surprising how much clarity it can bring.
Why is it Essential to Analyze the Competitive Landscape?
Analyzing the competitive landscape is like looking at a map before you take a road trip.
You need to know the terrain, the speed traps, and which routes will get you to your destination in the fastest time. Without this knowledge, you’re driving blind and could get stuck in traffic or take an unnecessarily long route.
Let’s break it down.
- Understand your position in the market, how you compare to other providers, or what you’re bringing that’s new. For example, if your SaaS product is a appointment scheduling app, how do you compare to Calendly, or what do you bring that’s different?
- Identify opportunities and threats. What’s your potential for growth? And in which areas are you vulnerable? Think about threats from new entrants, changes in consumer preferences, or disruptive technologies.
- Develop a competitive strategy that considers the strengths and weaknesses of competitors, market trends, and the unique features of your products or services.
- Stay ahead of the competition by anticipating changes in the market and adapting your strategy. If you’re not early, you’re late. For example, Uber stays ahead of the competition by adding the services people need. It continues to innovate with UberEats. And now, with uberESSENTIALS, customers in the Washington DC area can get the everyday items they need in 10 minutes or less.
- Make data-driven decisions based on competitors, the market, product development, pricing, marketing, and more.
Competitive Landscape Analysis Step-by-Step Guide
- Identify Your Competitors
- Gather and Analyze
- Understand the Market and Trends
- Identify your Unique Value Proposition
- Develop a competitive strategy
- Keep your Analysis Up to Date
1. Identify Your Competitors
It’s best to think of direct competitors and indirect competitors. You can’t skip this step.
Direct competitors are businesses that offer the same products or services as you. They are easy to identify by searching for businesses in your industry or niche.
For example, if you sell B2B accounting software, your direct competitors are other accounting software like Quickbooks.
Indirect competitors are businesses that offer similar products or services that may fulfill the same customer need. These competitors can be harder to identify as they may be in a different industry or niche than you.
Using the accounting software example, indirect competitors would be tracking expenses in spreadsheets or hiring an accountant.
Tools for Identifying Competitors
There are various tools you can use to identify competitors.
They also provide data on traffic and keywords of your competitors.
SEMRush, in particular, offers six reports to find competitors, including reports on organic, paid, and backlinks competitors.
Customer survey tools like SurveyMonkey are helpful, too. You can ask potential customers why they chose their current provider or what alternatives they’re considering as they search for solutions.
The more you know about their thought process, the better positioned you are to win their business.
Take it one step further by assessing the strengths and weaknesses of your competitors. It provides valuable insights and highlights opportunities to improve your own offering or exploit gaps left by your competitors.
With this information, you can differentiate your service or product. Ask yourself, “Why would our ideal customer switch to, or choose us over our competitors?”
2. Gather and Analyze Data
It’s time to get granular! Most data is available online if you know where to look for it.
- Financial data: Look for revenue, profits, and growth rate. It gives you insight into your competitors' overall financial health and their ability to invest in their business.
- Market share: What market share do your competitors control, and is there room for growth?
- Customer demographics: Knowing your competitor's demographics can help you target similar or complementary demographics with your marketing.
- Marketing strategy: Determine how your competitors position their brands, the channels through which they reach their customers, and the messaging they use to sell their products.
- Product and features: Deep dive and find what products or services your competitor offers, their pricing, and any unique features or benefits they provide.
Tools for Gathering Data
- Financial reports: Publicly traded companies are required to file financial reports with regulatory agencies, which are available via their websites or financial databases.
- Online reviews: Sites like Yelp, Google, and G2 can provide valuable information on a competitor's product quality and pricing.
- Forums and groups: You can find out what customers think about your competitors and their products through online forums and groups.
- Social Media: You can learn much about your competitors' marketing strategy and customer engagement by monitoring social media platforms such as Facebook, Twitter, and LinkedIn.
- Website analytics: Monitoring your competitor's website traffic, bounce rate, and user behavior can help you gain insight into how your website compares and what improvements you can make.
Alright, so you have the data. Now how do you analyze it?
Here’s where you get some creative license.
What is your competitor’s primary advantage? Let’s say it’s that they’re a big box provider, and they offer full-scale software that’s more powerful.
Who are they the best fit for? With powerful software, perhaps they work best with enterprise businesses.
So what risks are there to your ideal customer now that you know this information?
It could be that although they fit in a box for this provider, they’ll be just another number instead of a valued customer. And maybe their reviews back up that assertion.
Now, as you look to position yourself, you could highlight the pains, frustrations, and anxieties customers have with big box providers and position yourself as a business that cares about other small businesses and provides excellent customer support.
See how that works?
3. Understand the Market and Industry Trends
Next, you want to look at the market overall. Any strategic decision-making needs to consider the big picture.
When you understand market trends, you can look for further opportunities for growth and expansion.
For example, if a trend indicates a shift in consumer preferences towards a specific product or service, your business can capitalize on that trend by offering it to its customers.
For example, Apple developed an in-house research team. Through the online community, the “Apple Customer Pulse,” Apple uses surveys to create new products, and modify its existing products, based on user preferences.
The last thing you want is to let your product or service go stale or stagnate. What you offer has to be in demand and relevant to stay competitive. If it’s not, you can pivot. The same goes for changing markets.
Can you adapt if you need to?
Developing a long-term strategy is crucial, but also be open to change.
4. Identify Your Unique Value Proposition
Now that you have one eye on the market overall and diving deep into what your competitors are doing, you can start to differentiate your business. A unique value proposition highlights:
- The result your customers will achieve
- The vehicle you use and how you deliver that result
- How you do it differently from your competitors
Let’s say you solve specific customer needs or pain points, and your competitors do the same. Just because they get a similar result doesn’t mean they get there the same way you do. What sets you apart?
Your UVP is one of the first things your target customer sees, so it’s an early chance to differentiate your business.
Here’s an idea: Find ten competitors and look at the homepage of their website. If they’re smart, their UVP will be a the top.
Write each UVP in a document and see what they have to offer, how they position their offer, what sets them apart, and how you can differentiate.
Here are some questions you can ask to help create your UVP:
- Where do you fit into the market? In other words, why is your solution the perfect fit for your ideal customer? Develop a deep understanding of their specific challenges, preferences, and goals.
- What makes your solution the best fit for your customers? You need to actually solve the problems your ICP has. Think about your competitors. Maybe their solution is cheaper, but yours provides more value.
- What makes your business unique that’s difficult to replicate? In other words, how do you stand out? Pro tip: Research your competitors on sites like G2, Software Advice, and Capterra. Use negative reviews to find out where your customers are having problems. Find the gaps and opportunities to position your brand.
For further reading on unique value propositions, check out How to Come Up With an Effective Unique Value Proposition (With Examples) and Build a World-Class Growth Marketing Strategy in 10 Simple Steps.
You’re only a few steps away from creating your killer UVP!
5. Develop a Competitive Strategy
If you’re following the steps, you have everything you need to start developing your competitive strategy. Now is the time to Identify the gaps in the market, the opportunities to differentiate, and to claim a corner of the map as your own.
What do you want to be known for?
Note: This is a living document. You must update it regularly and not hold so steadfastly to it that you’re afraid to pivot if necessary
Here is where you’ll drill down into your competitive advantage. It can be eye-opening to realize what sets you apart or gives you an edge. With your competitive advantage, which strategy will you use?
For example, perhaps you’ll try to find a niche market. Or develop a strategic partnership with a ‘competitor’ that works with the same audience but provides a complimentary solution.
Either way, you can create a product development plan, pricing strategy, and marketing and sales strategies.
Pro tip: Use your research to equip your sales team. Give them talking points and data to compare your solution against competitors.
You’ll also need to choose which channels to leverage. Depending on your budget, how will you attract your audience? If your competitors are battling each other in paid search, perhaps you’ll focus on growing through Twitter or LinkedIn.
Similarly, if competitors focus on video and podcasts, perhaps you’ll find more luck with written content. Ideally, you can spread your content over multiple channels, but that comes later, when you’re scaling.
To start with, focus on nailing one channel.
6. Keep Your Analysis Up-to-Date
The SaaS B2B market is expanding exponentially. That’s no exaggeration. The market increased in size by around 500% in the last seven years.
There will always be new players in the market, and keeping your finger on the pulse is imperative.
Not only that, but keeping track of your current competitors can bear fruit. Returning to our coaching analogy, the best coaches watch what their opponents are doing so they can identify opportunities to exploit their gaps and gain an edge.
How can you stay informed?
- Monitor industry news and trends: Understand the changes in the market and industry, including new competitors, market trends, and technological advancements.
- Track competitor activity: Keep an eye on your competitors' products, prices, marketing strategies, and any changes in their business.
- Solicit customer feedback: Regularly gather feedback from your customers, including their preferences, needs, and opinions on your products and services and those of your competitors.
- Monitor market conditions: Be aware of changes in customer demographics, buying behavior, and changes in the market's size and shape.
- Maintain the accuracy and relevance of your competitive landscape analysis by regularly reviewing it. Be sure to keep it up-to-date as the market and your competitors change.
- Engage key stakeholders: Include sales, marketing, and product development teams in your competitive landscape analysis. You can work together as a team to update your analysis based on the latest market and competitor information.
We start many huddles with, “If you don’t know your numbers, you don’t know your business.”
Similarly, if you don’t know the market, how do you stay current and ensure that your product or service is relevant and beneficial to your target market?
Bonus: Which Competitive Landscape Framework Should You Use?
You don’t have to spin your wheels wondering how to run a competitive landscape analysis. There are plenty of frameworks to choose from.
One of our favorites is a detailed SWOT analysis. But you can choose whichever fits your business model, product, or service.
- Porter’s Five Forces: Identify your industry’s competitive dynamics. It is advantageous in sectors with low entry barriers, where new entrants are rare.
- SWOT Analysis: B2B companies can use this framework to identify their internal strengths, weaknesses, as well as market opportunities and threats. It’s particularly useful for identifying areas where you may be vulnerable to competition.
- PESTLE Analysis: Analyze external factors that could affect your business, such as regulations or economic conditions.
- The Ansoff matrix: Expand your product and service offerings or enter new markets. The tool can help you identify growth opportunities and potential risks.
- Value Chain Analysis: Which processes can you improve to increase efficiency and reduce costs? How do you create value for your customers?
- McKinsey 7S Framework: Companies can use this framework to understand how different elements of their organization are connected and how changes in one area may affect others.
Choose the framework that allows you to plan and implement your analysis easily.
How a Competitive Landscape Analysis Helps You Win
A competitive analysis is just one piece of your entire go-to-market strategy.
Launching a product before having a well-planned-out go-to-market strategy is futile; you’ll waste time and money, be frustrated with disappointing or dismal results, and lose the opportunity to get your awesome product into the market
Why? Because your messaging is getting lost. It’s not landing.
The market sees you… But it doesn’t believe you. And when people don’t engage with your message, the algorithms bury it. But what if your message was undeniable?
What if your ideal clients see your message and product and say, “Hey! That’s me!”
Now you’re in a position to win.
Lean Labs is here to help. We can show you how to identify your audience, differentiate yourself from your competitors, and develop a killer go-to-market strategy.
It all starts with our free Growth Playbook.
The Growth Playbook lays out the exact steps any business can follow to plan for growth, budget for growth, and accelerate results.