What Are The 6 Most Popular Frameworks For Competitive Landscape Analysis

In today’s highly dynamic business landscape, simply adjusting your business model by studying your competitors does not guarantee business continuity. You need to anticipate the moves of your rival businesses to stay afloat amidst rising competitiveness. This foresight within your target market can be gained by conducting a competitive landscape analysis.

What is competitive landscape analysis?

Competitive landscape analysis is a technique used to identify and analyze your competitors in the target market. It is a continuous process that sheds light on prevalent industry trends and facilitates strategic planning driven by data according to your brand position in the market. The fundamental data points of competitive landscape analysis typically include profiles of your competitors, their product or service offerings and pricing, communication and branding strategies, as well as, market share insights.

This approach helps you trace the evolution of your competitors within the same market, which is equally insightful in revealing the modifications that created their success trajectory. It also helps you clearly gauge your position in the business landscape and empowers you to make better business decisions. 

Frameworks for Competitive Landscape Analysis

Businesses employ certain frameworks or methodologies to ensure the effectiveness and reliability of competitive landscape analysis. The six most popular frameworks used for this purpose are –

• SWOT analysis

SWOT is an analytical approach or framework. It stands for strengths, weaknesses, opportunities, and threats. This framework serves as a tool that you can use to assess the competitive potential in its target market. The internal factors that influence the market position and potential of a business, are its strengths and weaknesses, while the external factors are the opportunities and threats it faces.

SWOT analysis can be executed internally to assess your company or externally to evaluate your business competitors. A successful competitive landscape analysis should ideally combine both approaches, which can be achieved using this framework.

• BCG growth-share matrix

The growth-share matrix developed by the Boston Consulting Group helps you compare your products or services with those of your competition. This matrix weighs products based on two criteria – market share and growth rate, and gives rise to four different categories of products – 

• Stars – In a high-growth market, these products typically have a high market share; they experience intense competition but are presently positioned as a leader.

1. Cash cows – It can be tough competing with these products or services when they hold a significant market share while the rate of market growth is slow. Therefore, it is smart to capitalize on these products to generate more revenue.
2. Question marks – These products belong to a market that is experiencing rapid growth, yet your market share is relatively low. Although your current brand position is not very powerful, you might succeed if you can outperform your rival businesses during volatile market conditions.

• Pets – Businesses are generally recommended to either liquidate or reposition this category of products or services.
• Porter’s Five Forces

Harvard professor Michael E. Porter developed a framework for competitive landscape analysis in cases where SWOT analysis becomes too company-specific. “Porter’s Five Forces” framework can be employed to analyze the entire industry.

1. 1. Competition within the industry – Your competitors and their competitive abilities.
   2. Bargaining power of suppliers – The dependency of your business on specific suppliers and the potential to hike the costs of essential supplies.

• Bargaining power of consumers – The level of bargaining power your customers hold to secure more favorable deals for themselves.
• The threat posed by new entrants in the market – The easier it is for new businesses to enter an industry and vie for market share, the higher the threat posed by potential new entrants.
• The threat posed by substitutes – Examine if there are comparable substitutes available for the company’s product or service.
• PEST analysis

PEST analysis evaluates external macroeconomic factors such as political, economic, social, and technological forces that could potentially impact the competitive position of an organization. This framework is generally adopted by giant corporations owing to their direct vulnerability to macro-level influences. Since it does not evaluate competitors, it can be combined with a SWOT framework to yield a highly effective and robust methodology. 

• Strategic group analysis

Using strategic group analysis, you can segregate your competition into distinct groups based on similar strategies they adopt. This encompasses marketing tactics, pricing models, geographical reach, and other related traits. By categorizing your competitors, you also get to position yourself and modify your business strategies, focusing on entire groups rather than over-focusing on individual companies.

• Perceptual mapping

Perceptual mapping involves a diagrammatic technique utilizing a two-dimensional axis to evaluate different businesses based on customer perceptions. Here, the brand positioning is subjective to customer perceptions instead of that of other businesses in the target market. This matrix format offers a picture of your proximity to specific business competitors and also helps analyze your strengths and weaknesses in comparison to theirs.

Final words

While these frameworks are popular for their effectiveness across varying business sizes and market landscapes, the data you use for analysis is of prime importance. Therefore, it is critical to leverage reliable sources of data as a basis for this analysis. The more accurately you compare your business with its competitors, the better you can define your unique value proposition, i.e., what distinguishes your brand, so that you can effectively communicate it to your customers.