As a growing business, a comprehensive understanding of your competitive landscape is necessary for survival. By performing a competitive analysis of your market, you’ll be able to figure out who the major players are, what they bring to the table, and what areas they might be lacking.
The businesses that succeed are the ones that understand how to turn competitor research into actionable insights for rapid and sustainable growth. To identify these golden opportunities, many companies use a tool called a competitor map.
Here’s everything you need to know about how to conduct a competitive analysis using the competitor mapping strategy.
What Is a Competitor Map?
Competitive analysis is an essential part of your marketing strategy. It’s a process that involves gathering data on your competitors and assessing their strengths and weaknesses in order to improve your own market positioning.
A competitor map (also called a perceptual map) is a visualization tool used for market analysis. It entails mapping out different variables to figure out how you and your competitors are perceived by your target market and understanding how those perceptions impact buying behavior.
When it comes to your brand positioning, consumer perception is everything. For marketers, determining your actual position and where you believe yourself to be can be a challenge. That’s where competitor maps come in handy.
Competitor mapping is especially valuable when launching a new product or service or when creating a new marketing strategy. It’s an excellent tool to help you refine your brand messaging to better appeal to your target audience.
If you’ve done your competitive analysis correctly, you should be able to quickly identify what strategies your competitors are using to provide value to potential customers. Then, compare these strategies to find potential gaps in the market and create opportunities for your business to capture market share.
What Does a Competitor Map Show?
Depending on your parameters and your industry, competitor maps can look drastically different; but there are some commonalities.
Most competitor maps compare two different variables on an X and Y axis. For example, cost and quality are two common variables that a business might look at:
As mentioned, competitor maps can be highly specific to your industry. For instance, if you were launching a new beverage product, your competitor map might look something like this:
If you’re conducting a competitor analysis for the first time, generally, you’ll want to start with more broad variables (like cost and quality) and narrow down to more specific product or service qualities.
Why Competitor Maps Are Important for Startups
With so many options out there nowadays, customers need a compelling reason to buy from you.
A competitor map helps you gain clarity on these reasons early on, so you can figure out your competitive advantage and tailor your messaging and pricing accordingly.
Here are some other ways competitor mapping can set you up for future growth:
- Build a stronger product or offer a better service.
One of the main benefits of a competitive analysis is that it can help you identify areas for improvement. It might be a new product offering or service that customers are asking for, but competitors aren’t yet offering or improving upon an existing product feature to create a better customer experience.
- Find opportunities to expand your market share.
Market share refers to the total percentage of a market that a single company controls. It’s an essential metric for growing businesses, especially since it indicates a company’s profitability and future growth. Competitor mapping can help you expand your market share by identifying gaps in your target market. Whether it’s expanding to new locations, building customer loyalty, or adjusting pricing, your competitive analysis can help you spot opportunities.
- Improve your marketing campaigns.
Understanding your business’s strengths compared to your competitors can help you identify your unique value proposition. Your value proposition refers to a phrase or statement that encompasses why your product or service is unique. By using your map to see what you offer that others don’t, you can highlight your value in your messaging to market more effectively to your target audience.
- Uncover market trends.
A thorough competitor analysis can highlight potential trends in your target market. For example, you might notice that several of your competitors have increased their prices over the last year or perhaps have all integrated a similar new product feature. This can indicate that you need to make changes to continue your growth and remain competitive.
How to Create a Competitor Map in 6 Steps
To create an effective competition map for your company, follow these simple steps:
1. Define Your Target Market
Before you can get a clear idea of the competition, you’ll need to understand the market you’re looking at. You might look at a single customer segment or several different segments to understand how customers perceive you and your competitors’ products or services.
Set concrete boundaries using factors like industry, location, and target audience. Next, identify the consumer needs you want to understand in that market. This will help you focus your market research so you can select the most relevant competitors within your market.
2. List Out Your Competitors
Now that you know what market you’re looking at, create a list of 5-10 competitors selling similar products or services. These will be the companies you include in your competitor map.
A thorough competitive analysis should include both direct competitors and indirect competitors. According to HubSpot, a direct competitor is a business offering the same service for the same customer need in the same market. In contrast, an indirect competitor refers to a company targeting the same customer need in the same market but with a different product or service.
If you aren’t sure where to find your competitors, a simple Google search is a great starting point. Google the keywords more closely associated with your business and see what comes up. You can also refer to blogs, market reports, media articles, and reviews to see what companies are mentioned.
3. Select Your Variables
The primary purpose of a competitor map is to see how your business stacks up against others in a few key focus areas.
Theoretically, the number of variables you choose to map out could be unlimited, but most competitor maps will compare two different factors across the X and Y axes.
To choose your variables, consider your customer journey and what factors most likely affect their buying decisions. It could be price, quality, shipping times, or even your social media presence.
4. Collect and Plot the Data on Your Competitor Map
The variables you’ve chosen to map out in your competitor analysis will determine how you collect the relevant data. Some areas will be more straightforward, such as pricing, whereas others, like social media presence or brand sentiment, can be more complex.
Once you’ve gathered your data, compare your competitors and plot them along your map's x and y axes. You can streamline the process using a free online competitor mapping template. The finished result should be a visual representation split into four quadrants that shows how your competitors stack up.
5. Determine Where Your Business Falls on the Map
Once you’ve plotted out your competitor data, it’s time to figure out where your business falls. The data on your map should give you a clear idea of where your business fits and help align your perception of your business with what a potential consumer might believe.
Did the results surprise you? Your competitor map may spark some interesting conversations about the current perception of your product or service.
If your business model is too similar to your competitors, it might be time to differentiate your product or service through a new feature or a promotional campaign to shift consumers' attitudes.
Additionally, you can evaluate your pricing, messaging, and other factors to ensure your competitive positioning and marketing efforts are aligned.
6. Brainstorm Solutions for Filling Competitor Gaps
Remember: while a competitor map is a useful tool for understanding your business, it can also be a roadmap to identify gaps in the market.
Use these gaps to inform your growth strategy [link to growth strategy blog] and identify opportunities for future expansion or product development. By being proactive about these growth opportunities, you can ensure you’re constantly ahead of the curve and can take advantage of high-growth opportunities before the competition.
Stay One Step Ahead of Your Competition
In today’s world, fast-growing teams and organizations need to stay ahead of the competition. Competitor maps are one of the best tools in your arsenal to do exactly that.
To transform the findings from your competitor map into a sustainable growth strategy, you may consider working with a partner that excels at helping lean teams and startups scale. At Delverise, we seek to understand your competitive landscape and use those findings to help create a defensible, long-term strategy to support your growth.
Book a call with one of our experienced growth strategists today.