The competitive landscape of an industry or sector can be defined by several factors. Whether you have your own business, or you are thinking of starting a business it is important to be aware of what defines a competitive landscape. If you just want to invest in the stock market, it is also important to understand the competitive landscape in which some companies are.

Every sector has a different competitive landscape

There are some aspects of a business competitive landscape that are common across sectors. However, every industry has its own intricacies. For that reason depending on which industry the business is focused on, there will be different factors affecting the competitive landscape. It is important to keep this in mind when you analyze a particular industry. 

Factors that affect the competitive landscape

There are several factors that can influence the competitive environment of a specific business. It is crucial to be able to plan your competitive strategy based on these factors that can highly influence your business's success.

How location affects the competitive landscape

Where your business is located is perhaps one of the most defining factors of the competitive landscape. Some businesses can be located anywhere and still have a worldwide presence. Other businesses are highly dependent on their location to attract customers. Being able to plan your competitive strategy based on the location of your business is an important aspect. 

You should also analyze your competitors based on their location. This can impact their ability to compete with you. It might also influence customers to prefer your products or services based on that. A business location can also be a great competitive advantage for your business. 

Example: Imagine a restaurant located on an Island. This type of business will have a completely different competitive landscape due to its location. If we compare it with an ecommerce store, the reality is totally different. Being able to adapt your competitive strategy based on the location of your business and customers is a key aspect of business success.

Number of competitors

The number of competing businesses is also another important factor that defines the competitive landscape. Broadly speaking, the number of competitors in a particular industry is mainly influenced by two factors - margins and barriers to entry. Businesses that are known for their high margins usually attract a great number of competitors. The number of competitors will depend on the barriers to entry. If there is a very high barrier to entry, then the number of competitors will be lower.

Understanding these concepts is important to formulate your competitive strategy, and approach. Depending on the number of competitors you might be able to easily analyze them and define the correct strategy. This will allow you to build or adapt your business so that you can differentiate yourself from the competition. In turn, you will be able to attract more customers and increase your market share.

Example: Coca-cola has some tremendous margins, but due to its high barrier to entry, there are not a lot of companies that offer the same product.


Depending on the sector your company is in, this can also affect your competitive landscape. A market that is growing at a fast pace, will usually experience an increase in competition. As businesses try to capture the growth. However, an expanding market will often allow each company to thrive and grow. The same does not apply to more mature markets. Mature markets tend to have well-established companies that are able to retain their customers. Being able to adapt your competitive strategy based on the sector you are in is also crucial.

Example: If you are running a publishing company, your competition will be entirely different than someone running a restaurant. Understanding your sector, and how it can affect your competitiveness is also important.

Competitor’s strategy

Although the ability to analyze the competition will be lower if the number of competitors is higher. Understanding your competitor's strategy can be an important factor. If you are able to analyze the competitor’s strategy, you will be able to define your own strategy with that in mind. You will be able to recognize which areas of the market are not sufficiently explored, and how you can formulate your own strategy to be able to acquire more customers.

Example: If you understand your competitor’s strategy you can adapt your products to attract those customers that the competition is not targeting. Let’s imagine you want to start a hotel, figure out what kind of customers your competitors are attracting. For instance, if they are attracting higher-end customers, consider offering a low-cost option. Adapt your hotel based on the type of customer you want to attract.

Products and services 

Your products and services are among the most important factors when it comes to being able to deal with the competition. Businesses need to make sure that their products and services are able to capture consumers' attention. It is critical that your products and services remain fairly priced, and updated. Another important aspect is to make sure that your product and service offerings are able to satisfy every customer. Consumer behavior changes, and being able to keep products or services that attract customers is of the utmost importance.

Adapting your offerings based on customers’ demands is also a way to remain highly competitive.

Example: Imagine that your business is selling t-shirts. If you analyze your competitors and see that they don’t have a certain type of t-shirts that some of your customers like. Try to offer some of the options that are not available in the competition.


The products or services you offer are sometimes highly dependent on the suppliers you work with. Independently of the industry, you operate in, it is always wise to actively engage with different suppliers. This allows you to be up to date with the industry, and make sure you get the best suppliers to work with you. This ensures the quality of the product or services you offer to your own customers. It might also allow you to discover new innovative products, and services before the competition.

Example: Let’s say that your usual supplier decides to raise prices. You will therefore have a lower profit margin. Being able to contact other suppliers can help you save money, by maintaining or even increasing margins.

Pricing power

This is perhaps one of the most important aspects that define the competitive profile of each business. To put it simply there are companies that have pricing power, and others that don’t. Several factors affect a company’s ability to have pricing power. There are two main features when it comes to pricing power. 

One of them has to do with the suppliers. This is also highly related to the point mentioned previously. If you need to acquire most of your products through a supplier, you are highly dependent on the prices they charge. In essence, if you do not produce the product you are selling, your company will always be subject to unpredictable price changes. This is why it is important to always look for new suppliers so that you have as many options as possible.

The other aspect is your pricing power among consumers. Some companies have the ability to raise prices without losing any of their customers. There are other companies that will be highly affected if they decide to raise prices. Pricing power among customers will be directly related to the quality of your products and services. It is also affected by the competitive landscape, and how the competition adapts its own pricing.

Example: An interesting example of this is perhaps McDonald’s. McDonald’s might see its suppliers raise prices because raw materials increased in price. Due to its competitive advantages, the company can easily raise prices to its consumers without losing a meaningful number of customers.

Comparing prices

The ability that consumers have to compare prices is another important aspect. Today with the internet it is fairly easy to compare prices across the board. Despite that, there are some industries where this does not apply. You need to be aware of the type of information available to your customers. Being able to adapt your products or services, based on the competitors' pricing is also important to take into consideration.

Example: When you buy a new computer, you might look online for a particular model and choose the seller that has the lowest price. The same is not true for other products or services. If you offer a custom product that requires a quote, that can make it more difficult for your customers to have different prices available. Take advantage of this.

How to differentiate your business within the competitive landscape

There are several ways in which you can differentiate your business from the competition. Although some people still believe that you need a completely innovative strategy to be able to create a long-term successful business. There is much more to it than that. 

Better product or service

You do not need to have a unique product or service, it just needs to be better. Having a unique product or service can be great, but being the first in a particular industry or sector does not determine your success. Does anyone remember Myspace? No. The reason is that being the first to move into an industry gives you an advantage, but it does not guarantee success.

Better Execution 

Another way you can differentiate yourself from the competition is to execute better than them. When McDonald’s initially opened there were other places offering burgers. Perhaps with similar prices. What they did was focus on execution. Being able to offer fast service, granted them operational excellence that they still have today. There are always ways of doing things better. Figure out how your business can execute better than the competition.

Cheapest product or service

Price is also another distinguishing factor in business. If you are able to offer the cheapest product or service this can also grant your business a competitive advantage. This will allow you to capture the consumers that are more influenced by the price of a product or service.

Strategy is affected by the competitive landscape

Whether you are starting a business, or you are already running a business, competitiveness should be one of your main concerns. Being able to define a competitive strategy, and differentiate yourself from the crowd is a very important aspect of every business. Your business strategy should be defined based on the competitive landscape. This ensures that your business will remain competitive, no matter what the competitors do.

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