In this age of cutthroat competition, companies are always trying to figure out ways in which they can stay ahead of their competitors. Analysing the competitive landscape helps companies derive necessary information about their competitors and devise plans that will help them stay ahead of their competitors.
A competitive landscape is a framework that helps businesses identify the competitors who might directly or indirectly pose a threat to a company’s business or service. Through competitive analysis, businesses can also draw comparisons between themselves and their competitors in terms of strengths, values, mission, and vision. Analysing the competitive landscape is also beneficial for those who are pursuing a digital marketing course so that they can tailor the best marketing plan for a business.
In this article, we will discuss how businesses can analyse a competitive landscape and explore new opportunities, identify possible threats, or figure out the arenas to grow.
What Does a Competitive Landscape Help to Analyse?
Analysing a competitive landscape helps businesses understand their competitors well, know them better, and research their strategies so as to enhance the acumen of their own business and domain knowledge.
Analysing the competitive landscape focuses on five key areas, which help businesses to devise their positioning and strategic direction in the market. The key focus areas are as follows:
- Developing an understanding of the competitors.
- Understanding the products and services offered by the competitors.
- Knowing the strengths and weaknesses of the competitors.
- Understanding the strategies being used by them.
- Understanding the latest trends in the market and dynamics.
Determining the Prices of Products Based on Prices Set by Competitors
Imagine two companies or online shopping sites selling the exact same product, the price of that sold by A being fifty bucks lower than that of B. Which one are you likely to purchase?
When buying a product, its price plays a major role in determining whether the customer will make the purchase. Setting the price of your product based on the price set by your competitors can be a great way to draw customers towards your product.
Competitive pricing is a strategy in marketing in which the prices of a product are determined based on the prices of other products or services in competition. Brands that grasp this concept correctly are likely to gain a competitive edge in the market.
To make the most effective use of this concept, brands need to develop a thorough understanding of the market before deciding the prices of the products. To put this into practise, brands have to determine what the other brands selling the same products or offering the same services have set the prices.
Based on their financial objectives, companies can set the price of their products above, below, or even equal to those of their competitors. Some common competitive pricing strategies are mentioned below:
- Companies can practise price skimming, which means charging a high price for a product that is new to the market. This helps in maximising profits.
- Brands can also adopt a penetration pricing strategy, which means, setting a low price for a product so that more and more people are compelled to buy it.
- Premium pricing is a strategy used by companies to set their products or services apart from other competitors and tag them as prestigious or luxurious.
- Companies may also practise a loss leader pricing strategy, in which a product is offered for a low price. The high sales volume helps to make up for the reduced price of the product.
Developing Products that Can Tell You Apart from Your Competitors
For a brand that is planning to launch new products in the market, it is important to identify the competitive products and analyse carefully how the new product is going to make an impact on the market.
There are three types of competitive products that brands need to look for when analysing their competition. They are as mentioned below:
- Direct competitive products: These products offer the same experience and are priced within the same price slab as that of your products.
- Indirect competitive products: These products fall into different categories and are available at different price ranges; however they target the same set of customers, which is responsible for the increase in competition.
- Replacement products: These products serve as alternatives to your products. They can be used by customers instead of your products to serve the same purpose as your product.
Taking all these factors into consideration, brands can diversify their products in order to boost sales and gain an edge over competitors.
Establishing an Identity for Your Brand
Companies offering similar kinds of services or selling the same products are often tangled in rivalry against one another. Brands in competition with each other should strategically plan how to establish an identity for themselves so that they can be told apart from one another.
To implement this strategy successfully, companies need to understand the market well, develop an understanding of the latest trends and requirements, and also understand the trends that are being followed by the competitors. There are many courses for marketing professionals available online that teach these concepts in detail and help companies stay ahead of their competitors.
Hope this gives you an idea about how important it is for the companies to adapt to the competitive landscape. Having an understanding of the competitive landscape helps brands remain aware of their direct and indirect competitors, understand their position in comparison to their competitor brands, and then devise their business plan accordingly so that they can gain an edge.
If you study digital marketing from Imarticus, you will be able to grasp these concepts better. Imarticus’ Post Graduate Certificate Program for Emerging Marketing Officers will equip you with all the knowledge that is needed to excel as a digital marketing expert. Visit the website to learn more!