Every business understands that there are competing services and product offerings that affect the growth and success of their company. Most businesses are concerned with their direct competitors, those that are similar in size, offerings, and who they most frequently lose business to. And we argue that it is definitely important to know and understand the strategies of your direct competitors to differentiate your business and grow.
However, it is not enough to survey only your direct competitors. To effectively compete in your marketplace, you must understand the competitive landscape. For example, you may be a local IT consulting firm operating in the state of Illinois. According to data from IBISWorld, you are just one of 21,710 establishments operating in your industry in Illinois, and one of 432,605 operating nationwide of which major players include high-profile global corporations like IBM.
All of these companies are competing for some piece of the pie, and if you don’t understand the competitive factors affecting the industry as a whole, your business may be one of those forced out of the industry.
Assessing the competitive landscape as a whole examines the basis of competition, looking both at internal and external competitive pressures. Going back to the example of IT consulting, IBISWorld reports that internal competition is “based primarily on technical expertise, quality of service, availability of value-added services and, to a lesser extent, price.” There is also a trend towards major players increasing merger & acquisition activity to expand their service base. External competition is also increasing from in-house IT departments, hardware and software companies, and even management consulting companies.
Knowing the types of market pressures you and your fellow industry participants face, can help you better assess your strengths and weaknesses, and develop a strategic plan for growth. You may want to consider employing a market focus strategy, in which your company specializes in a single, underserved niche. You can also look to innovate and expand your market presence by creating alliances and strategic partnerships
Access/Information has conducted research on the competitive landscapes of a variety of industries. Not sure if you have the resources you need to fully evaluate market potential, we can help.