Understanding competition is fundamental to shaping a company’s strategic direction so it’s something I like to think about and align on. Competition isn’t just about direct competitors—other companies offering similar solutions—it also includes functional forces that prevent customers from acting, such as the tendency to “do nothing” or to “build their own” internal solutions. Recognizing and analyzing these different forms of competition helps a company craft a compelling value proposition, refine its messaging, and position itself effectively against the customer’s other options. Without a clear understanding of the competitive landscape, you’ll misjudge customer needs, underestime threats, or fail to communicate your true value.

Competitive strategy must be developed at the company-wide level because differentiation and positioning affect every aspect of the business—from product development and pricing to sales enablement and marketing execution. A well-defined competitive strategy ensures alignment across teams, creating consistency in how the company presents itself – to customers, investors, and the market. It also provides a framework for responding to competitive threats, adjusting pricing strategies, and making informed investment decisions. By taking a big picture view of competition—considering both direct competitors and alternative solutions—companies can be deliberate in shaping their market position.

Competitive differentiation is where this comes together. The key with competitive differentiation: it must drive customer choice.  Differentiation is anything that makes your product or service different.   Competitive differentiation, what we actually care about, is the set of things that are different that buyers care about. In a crowded market, this differentiation is what converts prospects into customers, increases retention, and, ideally, commands a premium price for your solution.

Companies

Other organizations offering similar solutions. By examining the key players’ strengths, weaknesses, and market strategies, we can identify gaps and opportunities to position ourselves more effectively.

Functional

An overview of the key functional competitors your company faces.  This is a slightly different way to think about competition – which is typically named companies.  Here competitors are alternative approaches to addressing our Business Problem.   The two scenarios we contemplate here are:

• The “Do Nothing” scenario where the customer chooses to ignore the problem. In this scenario we want to understand what happens to the prospective customer if they take no action as it relates to our solution. 
• The “Do It Ourselves” scenario where the customer attempts to solve the problem internally.  This scenario describes an ad-hoc or home grown approach to something the company would provide in a structured fashion.