What is a Competitive Universe Analysis?

A Competitive Universe Analysis is a quick visualization of where your business sits in the total consumer marketplace. It uses a bulls-eye diagram, with your company at the center, to identify your first, second, third and fourth level competitors.

Once you understand where your company stands in the competitive universe, you can use that knowledge to:

  • Understand your strengths and weaknesses in relation to competition.
  • Create new products or services that compete more closely with those successfully offered by outlying competition.
  • Decide where to focus your core business so that your level 1 competition list gets smaller.
  • Keep your eye on level 2 or 3 competitors and react if they start to erode your market share.
  • Target your marketing to customer bases that traditionally purchase from outer level competitors.
Competitive Universe Analysis

Level 1:  Competitors are companies that offer essentially the same product or service you offer in the same geographic market space.  For example, if you are a bakery in Denver and sell exclusively to walk-in customers at your store, another bakery in Denver that also sells exclusively to walk-in customers would be a Level 1 competitor.  A bakery in New York City that sells exclusively to walk-in customers would not, nor would a bakery in Denver that sells only to area restaurants.

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Level 2:  Competitors are those that offer a similar product or service to yours in the same geographic market space and may sell products like yours, but that have a different core business.  For example, if your business is selling postcards only, a Hallmark store would be a Level 2 competitor because it sells all types of stationary and cards, incidentally including postcards.

Level 3:  Competitors are those that offer an alternative, but closely related, product or service in your geographic market space.  For example, if you are a candy store, a level 3 competitor would be a cookie store—both sell indulgence snack foods.

Level 4:  Competitors are those that offer an alternative, but distantly related, product or service in your geographic market space.  For example, if your business sells fresh fruit, a level 4 competitor would be a candy store—both sell snack foods, but fall into different snack food categories (fruit= healthy snack, candy = indulgence snack).

To complete your analysis, simply fill in your competitors, or competitor categories to create a picture for your company.

The example is divided into two sections to accommodate businesses that serve multiple market segments.  For example, if you are a local Denver bakery that sells to walk in customers, but also sells wholesale to restaurants, one side of your diagram would address walk-in business and the other would address restaurant business.  If you serve only a single segment, remove the divider.

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Nell Gable

Nell Gable

Nell Gable is the content marketing manager at PaySimple.

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