Competitive Analysis

Overview

Systematically analyze competitive landscape using Porter’s Five Forces, competitor mapping, and differentiation strategies

Steps

Step 1: Define the competitive arena

Clearly define what market/industry you’re analyzing:

MARKET DEFINITION:
- What product/service category?
- What customer segment?
- What geographic scope?
- What price tier?
Example: “Project management SaaS for mid-market companies in North America”
BOUNDARIES:
- What’s included? What’s excluded?
- Adjacent markets that might be relevant?
- How might boundaries shift over time?
COMPETITIVE SET:
- Who competes directly (same offering, same customers)?
- Who competes indirectly (different offering, same need)?
- Who might enter this market?
VALUE CHAIN POSITION:
- Where in the value chain does this market sit?
- Who are suppliers? Who are buyers?
- What are the critical activities?

Step 2: Analyze Porter’s Five Forces

Assess each of the five forces that determine industry profitability:

FORCE 1: THREAT OF NEW ENTRANTS How easy is it for new competitors to enter?

Barriers to entry (high = good for incumbents):

Capital requirements: How much investment needed?
Economies of scale: Do large players have cost advantages?
Product differentiation: Are existing brands strong?
Switching costs: How hard for customers to switch?
Access to distribution: Are channels locked up?
Government policy: Are there regulatory barriers?
Expected retaliation: Will incumbents fight back?

Rate: Low / Medium / High threat Evidence:

FORCE 2: BARGAINING POWER OF SUPPLIERS How much power do suppliers have over you?

Supplier power factors (high = bad for you):

Supplier concentration: Few suppliers or many?
Availability of substitutes: Can you switch suppliers easily?
Importance to supplier: Are you a big customer to them?
Differentiation of inputs: Are supplier products unique?
Switching costs: How hard to change suppliers?
Forward integration threat: Could suppliers become competitors?

Rate: Low / Medium / High power Evidence:

FORCE 3: BARGAINING POWER OF BUYERS How much power do customers have over you?

Buyer power factors (high = bad for you):

Buyer concentration: Few large customers or many small?
Purchase volume: How much do individual buyers purchase?
Switching costs: How hard for buyers to switch?
Buyer information: How much do buyers know about alternatives?
Price sensitivity: How important is price to buyers?
Backward integration threat: Could buyers make it themselves?
Product importance: How critical is your product to buyers?

Rate: Low / Medium / High power Evidence:

FORCE 4: THREAT OF SUBSTITUTE PRODUCTS How easily could customers solve their problem differently?

Substitute threat factors (high = bad for you):

Relative price/performance: Are substitutes better value?
Switching costs: How hard to switch to substitute?
Buyer propensity to substitute: Are buyers open to alternatives?
Number of substitutes: How many alternative solutions exist?

Consider not just similar products but different approaches:

Do-it-yourself (spreadsheets vs software)
Different technology (video calls vs travel)
Not solving the problem at all

Rate: Low / Medium / High threat Evidence:

FORCE 5: COMPETITIVE RIVALRY How intense is competition among existing competitors?

Rivalry factors (high = bad for you):

Number of competitors: How many similar-sized players?
Industry growth: Growing market or fighting for share?
Fixed costs: High fixed costs drive aggressive pricing
Differentiation: Can competitors differentiate or just compete on price?
Exit barriers: Are competitors stuck even if unprofitable?
Strategic stakes: Are competitors committed to winning?

Rate: Low / Medium / High rivalry Evidence:

Step 3: Profile key competitors

Create detailed profiles for 3-7 most important competitors:

FOR EACH COMPETITOR:

BASIC INFORMATION:
- Company name and overview
- Size (revenue, employees, market share if known)
- Ownership and funding
- History and trajectory
STRATEGIC PROFILE:
- Target customer segments
- Value proposition (what do they promise?)
- Pricing strategy and position
- Go-to-market approach
- Key partnerships and channels
PRODUCT/SERVICE ANALYSIS:
- Core offerings
- Key features and capabilities
- Technology and platform
- Quality and reliability reputation
- Roadmap and recent launches (if known)
STRENGTHS AND WEAKNESSES:
- What do they do well?
- Where do they struggle?
- What’s their sustainable advantage?
- What are their vulnerabilities?
COMPETITIVE BEHAVIOR:
- How do they compete? (price, features, service, brand)
- How do they respond to competitive moves?
- What are they likely to do next?
- How aggressive are they?
CUSTOMER PERSPECTIVE:
- What do customers like about them?
- What do customers complain about?
- Why do customers choose them vs alternatives?
- Why do customers leave them?

Step 4: Create competitive mapping

Map competitors on strategic dimensions to visualize positions:

SELECT MAPPING DIMENSIONS: Choose 2 dimensions most relevant to your market:
- Price (low to high)
- Quality (basic to premium)
- Features (simple to comprehensive)
- Service level (self-serve to high-touch)
- Market segment (SMB to enterprise)
- Geographic scope (local to global)
- Specialization (generalist to specialist)
- Technology (legacy to cutting-edge)
POSITION EACH COMPETITOR:
- Where does each competitor sit on the map?
- How large is each (bubble size = market share/revenue)?
- Are positions clustered or spread out?
IDENTIFY PATTERNS:
- Where is competition most intense (crowded)?
- Where are gaps (underserved positions)?
- What strategic groups exist (clusters)?
- Who is moving and in what direction?
MAP YOUR POSITION:
- Where do you currently sit?
- Where would you like to be?
- Is desired position defensible?
- What would it take to move?
ALTERNATIVE VIEWS: Consider multiple maps with different dimensions to reveal different competitive dynamics.

Step 5: Identify differentiation opportunities

Find opportunities to differentiate from competitors:

TYPES OF DIFFERENTIATION:

PRODUCT DIFFERENTIATION:
- Features competitors don’t have
- Superior quality or performance
- Unique technology or approach
- Better design or user experience
- Broader or deeper functionality
SERVICE DIFFERENTIATION:
- Better customer support
- Faster implementation
- Training and education
- Professional services
- Customer success focus
CHANNEL DIFFERENTIATION:
- Different distribution approach
- Partnership ecosystem
- Self-serve vs high-touch
- Geographic presence
- Platform/marketplace strategy
PRICING DIFFERENTIATION:
- Different pricing model (subscription, usage, outcome)
- Different price point
- Bundling/unbundling strategy
- Freemium or trial approach
BRAND/POSITIONING DIFFERENTIATION:
- Target different segments
- Different brand personality
- Thought leadership position
- Community building
- Values alignment (sustainability, etc.)

FOR EACH OPPORTUNITY:

What is the differentiation?
Is it valuable to customers?
Is it unique vs competitors?
Is it hard to copy?
How long would advantage last?
What would it cost to achieve?

Step 6: Assess industry attractiveness

Synthesize Five Forces into overall industry assessment:

FORCE IMPACT SUMMARY: For each force, assess impact on profitability:
- Threat of new entrants: [rating] -> [impact on profits]
- Supplier power: [rating] -> [impact on profits]
- Buyer power: [rating] -> [impact on profits]
- Substitute threat: [rating] -> [impact on profits]
- Competitive rivalry: [rating] -> [impact on profits]
OVERALL ATTRACTIVENESS:
- Highly attractive: Most forces favor incumbents
- Moderately attractive: Mixed forces
- Unattractive: Most forces pressure profits
- Very unattractive: All forces pressure profits
TREND ASSESSMENT: Is the industry becoming more or less attractive?
- Which forces are strengthening?
- Which are weakening?
- What’s driving the changes?
PROFIT POOL ANALYSIS:
- Where in the industry is profit concentrated?
- Which positions capture the most value?
- Are there high-profit niches?
STRATEGIC IMPLICATIONS:
- Should we enter/expand in this industry?
- How should we position to capture value?
- What industry changes should we anticipate?

Step 7: Develop competitive strategy

Synthesize analysis into competitive strategy recommendations:

COMPETITIVE POSITION ASSESSMENT:
- Where do we stand vs competitors?
- What is our sustainable advantage?
- Where are we vulnerable?
STRATEGIC OPTIONS:

COST LEADERSHIP:
- Can we be the low-cost provider?
- Do we have scale or efficiency advantages?
- Is price the primary buying factor?
DIFFERENTIATION:
- What unique value can we provide?
- Will customers pay a premium for it?
- Can we protect the differentiation?
FOCUS/NICHE:
- Is there a segment we can own?
- Can we serve them better than generalists?
- Is the niche large enough?
BLUE OCEAN:
- Can we create uncontested market space?
- What industry assumptions can we challenge?
- Can we make competition irrelevant?
RECOMMENDED STRATEGY:
- Which strategic option fits best?
- What specific moves should we make?
- How do we defend against competitive response?
COMPETITIVE RESPONSE PLAN:
- How will competitors respond to our strategy?
- How should we respond to their likely moves?
- What early warnings should we monitor?
KEY SUCCESS FACTORS:
- What must go right for this strategy to work?
- What resources and capabilities do we need?
- What are the risks?

When to Use

When entering a new market or industry
Before launching new products or services
During strategic planning cycles
When competition is intensifying
To evaluate acquisition targets or partnership opportunities
When pricing strategy needs validation
When market share is declining
For investor communications requiring market analysis
When deciding between market opportunities

Verification

Market is clearly and consistently defined
All five forces analyzed with evidence
Key competitors profiled with objective data
Competitive positions justified, not assumed
Differentiation options assessed for sustainability
Strategy recommendations follow from analysis

Input: $ARGUMENTS

Apply this procedure to the input provided.