Aug 12, 2014

How to perform a competitive landscape analysis

Much of my work time in July was spent working on a competitive landscape analysis for a client of mine. It was an interesting learning experience, given that the scope was broad and there were many competitors to be analyzed. A step-by-step approach helped me to unravel the various dimensions, analyze competition and identify the underserved areas (or green-fields). Do note that although these perspectives are specific to a B2B product standpoint, the approach can be customized to B2C context as well. Here's my 9-step approach to perform a B2B competitive landscape analysis.

1) Define the scope of your domain
Which verticals fall under this domain? What are the adjacent/dependent areas in the value-chain? What activities fall under this domain?

Let's say, the domain of your interest is "Customer Service".
The verticals relevant to this domain are customer support, sales and account management.
The supporting functions are product development, procurement/shipment (in case of physical delivery), legal, manufacturing etc.
The activities included in the customer service domain are ticketing, call support, call routing, email support, help desk, feedback processing/routing, response tracking, communication etc.

2) For the activities included in the scope, identify prominent players in each space
Identify the leaders in each space and their relative strengths. Your solution/offering may not be targeted towards the entire scope. But this step gives a good understanding of the overall scope of the domain and the market leaders who could potentially expand/pivot to adjacent areas.

3) Identify an area(s) in the broad scope which you plan to focus on
The criteria for choosing a specific area of interest is based on multiple factors:
- Higher perceived value by your end-customers
- Your own strengths/interests/capabilities in this area
- Relatively less crowded in terms of incumbent players

4) For the chosen area(s), analyze the existing competition
Competitive analysis is much more than a table of feature comparison. Consider the following variables as a template to get an in-depth analysis of competition:
- Customer profile (industry, verticals, customer size, retention, new customers, key customers)
- Revenue and Pricing (annual revenue, number of customers, pricing strategies, product+service offering)
- Funding (stage, total funding, last funding timeline)
- Product Strategy (products offered, positioning and value proposition, releases/rollout)
- Marketing Strategy (inbound channels, social media activity)
- Product overview (demos, screenshots, benefits offered, features)

5) Identify strengths and weaknesses of competition
Based on the analysis in step (4), you will have a fair idea of the strengths and weaknesses of each player. These are based on your own judgment and is dependent on the variables identified above.

6) Analyze competition using positioning maps
In order to draw positioning maps, you will have to identify the key decision factors from an end-customer point of view. You could choose two factors among the following:
- benefits expected by the end-customer (high capabilities, solution completeness)
- pricing
- operational efficiency
- product superiority (innovative, high performance)

Draw a graph with the 2 relevant factors on each axis. Place each of the competitive player in this graph. You could also expand this further by breaking the factors into more specific angles and draw positioning maps accordingly.

7) Identify relevant parameters for the buyer and user(s)
For a typical B2B offering, the buyer and user(s) are different. There will be multiple personas who would be the users of your offering. Identify the parameters that are important to each persona. For the previous example on Customer Service, if your area of interest is HelpDesk, then the parameters that are important to the user would be ease-of-use and speed of response. A supervisor/admin who oversees help desk would want to know the number of issues being raised, responses given, escalations etc. For this persona, the parameters that are important would be summarized insights, a gist of next actions to be taken etc.

8) Rate each competitive player on a scale of 1-5
For the parameters that are important to each persona, rate your competition on a scale of 1-5, with 1 being the lowest and 5 being the highest. This is also based on your own judgment, substantiated with your analysis in step (4)

Average the values of each parameter. Narrow down those parameters with an average of less than 3. These are the areas that are not addressed (or underserved) by existing competition.

For example, in the comparison above, products offered by competition are not simple or easy to use by the help desk service reps. Information shown to supervisors are difficult to interpret. A simple, intuitive solution could be differentiating in this space.

9) Finalize the green-field areas
We have a list of parameters from step (8) that are underserved, which could be your potential green-field areas to create value and differentiation. Before jumping into how to address them effectively, you will have to validate with potential customers to check if these parameters are valuable to them and the price they are willing to pay for an offering differentiated in these areas.

Hope this 9-step approach was helpful. Please do share your comments/questions OR if you want me to elaborate on any specific steps.


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