All companies from the smallest startups to multinational corporations can benefit from competitive landscape analysis, that is, a structured process for identifying, researching, and defining your competitors so you can either use them as an example to improve your own results or avoid replicating what doesn’t work.
Approximately 90% of Fortune 500 companies perform competitive analysis, which is considered a key ingredient to success. But sometimes, companies don’t have the internal resources or expertise to do this ongoing process themselves. That is why 59% of companies outsource their competitive intelligence operations, and 69% of them have reported overall positive results after reaching out to an external consultant to help them gain better insights.
Relying on experts in the field can be particularly useful considering that the traditional competitive analysis frameworks are no longer enough. To fully anticipate your customers’ needs and understand your competitive landscape today, hyperlocal data—like mobility data—is becoming increasingly important, if not totally critical.
The Traditional Competitive Landscape Analysis Frameworks
Traditional frameworks, such as TOWS and SWOT analyses, BCG matrix BCG matrix or « growth-share matrix, PEST analysis, or Porter’s Five Forces, can be a great starting point but using these on their own will never give you a complete picture of your market. For example, the growth-share matrix doesn’t take into account factors other than market share and growth. This means it won’t give you any insight into why your products are succeeding or failing.
Since relying solely on these frameworks won’t provide enough information to address and solve complex business problems, going hyperlocal by combining these frameworks with accurate location data and advanced visualization tools is crucial. By doing so, you will be able to go further in analyzing your competitors and plan the future of your business with less risk.
4 Main Steps of a Hyperlocal Competitive Landscape Analysis
1. Identify the competition
The first step in a competitive landscape analysis is naturally to locate your existing competitors in each market using business data, which gives you the name and type of businesses, their geographical information, and a range of the number of employees and sales figures. The competition can then be sorted into four categories: direct (or primary), indirect (or secondary), perceived (or tertiary), and aspirational competitors.
The geographical position of your competitors is one of the most important points to consider, partly because having too many businesses similar to yours, especially in the same trade area, will inevitably dilute your market share. One way to determine why your competitors chose a specific location over another is to look at historical traffic data, which will show you the annual, daily, and hourly variations in road and foot traffic around that location.
For example, a business established in a trade area with complementary and traffic-generating businesses is more likely to have more visitors and therefore more sales. So, with mobility data, you can estimate the performance of your competitors’ stores with the travel habits of their target customers. However, it is important to note that over time, traffic volumes can fluctuate, hence the importance of frequently questioning the choice of a commercial site.
You can then identify your competitors’ strengths, weaknesses, growth, and trajectory, along with external factors such as market opportunities, threats, and trends. By comparing these factors to your own, you will have a clear picture of the overall market share.
2. Define your competitors’ target audience
The second step in your competitive landscape analysis is to define your competitors’ brand positioning, and, above all, their target audience with the help of demographic, consumer, and mobility data. By analyzing the demographics of your competitors’ audience—such as age, gender, education, social status, and more—you can have a good idea of the different customer profiles or personas in your market and determine which ones are more likely to also shop at your store.
Consumer spending data will further refine these audience segments by giving you information about the total expenditures of households, as well as their total, disposable, and discretionary income. At last, mobility data will add an additional dimension to the previous data by correlating the customers’ characteristics, behaviors, lifestyle choices, and spending patterns with their travel habits, including their departure points, their travel time and speed, the duration of each of their trips, and their destination.
With this kind of insight, you can make better social media and location-based marketing strategies depending on where different audience segments are at specific times of the day.
3. Analyze their product offering and pricing
The third step is to analyze your competitors’ comparable products and services and how they charge for them to help you set your own prices. Pricing should always match market perceptions, as overpricing could lead to losing customers on a tight budget, and underpricing could convince your audience that your products or services are not of the highest quality.
One way to determine the effectiveness of your competitors’ pricing strategies over a period of time is to analyze the traffic pattern variations around their businesses. By tracking your competitors’ price fluctuations and layering traffic patterns, you’ll be able to evaluate the influence and result of said fluctuations. This can also influence your own marketing efforts to compensate for your competitors’ promotions.
For maximum customer satisfaction, you can even use demographic and consumer data to adapt your strategies to different audience segments and provide them with the most relevant product and service offerings.
4. Build a long-term competitive analysis framework
With all this information, you will have a great starting point for building a competitive analysis framework that includes the next steps and strategies for your business in order to get the best market outlook and realign where you are underperforming.
In addition to business, demographic, consumer, and mobility data, you will need to add a few more hyperlocal data to achieve optimal competitive intelligence, such as:
- Surrounding points of interest to monitor changes in market share and the presence of cannibalization.
- Physical obstacles and risk areas to understand the factors that would dissuade customers from visiting your or your competitor’s store.
- Drive-time polygons to determine the accessibility of a store.
You can then bring these data to life in a visualization tool that will provide the perspectives and insights needed to anticipate customers’ needs before anyone else and make the right decisions for your business regarding site selection, marketing, pricing, and merchandizing.
The Devil Is in the Details and So Is Your Way to Success
To truly comprehend your competitors and develop solid strategies to match or outperform them, you will need a detailed competitive landscape framework supplemented by accurate and reliable location data.
Contrary to what you might think, hyper-localization doesn’t mean analyzing location by location manually. With Korem’s Data and Analytics offering, we will help you automate your analysis and create user-friendly dashboards that will allow your teams to easily visualize your framework in order to make better and more informed investment decisions.
Need more convincing? Korem developed a geo-dashboard solution for Shell to reflect the fuel market realities and help its teams take action on a daily basis. With this tool, Shell can now have a single view of its loyalty data and competitor data, analyze and manage site performance, and monitor pricing strategies.
By automating and simplifying its analyses, Shell was able to improve its revenue margin by more than 3M euros in Germany alone in just three months of working with us.