Competitor Analysis & Perceptual Maps

Innovation & New Business Proposal - TUHH Institute of Entrepreneurship & Institute of Innovation Marketing, Hamburg · part of my Technology Management MBA · study notes for revision.

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Every method so far in this module has looked inward from the customer: what they need, how they experience the service, which attributes satisfy them, what they will trade off, how to turn all of that into an engineering specification. The competitor block turns the camera around. The customer never chooses my offer in isolation. They choose it instead of something else, and that something else may not look anything like my product.

This matters because the module’s own project requirements make it a graded deliverable. The brief says the set of direct and indirect competitors has to be identified and analysed - their unique selling proposition, their strategy, their marketing approach, their funding and so on - and that the team must end up with a clear idea for the market positioning and the competitive strategy. So it is not enough to list three rivals on a slide. The analysis has to lead to a decision about where my venture stands.

The class notes give four concrete purposes for doing it: spotting an attractive position in the market relative to competition, for example an unserved customer segment; evaluating the odds of success of an innovation, a new business idea or a startup; calculating a differentiation value for the product, service or brand and translating that into a sensible price; and choosing the competitive measures that will actually win the fight.

Tip

The one idea to carry through. The way you define your market decides who you see as a competitor, and therefore which threats you notice at all. A narrow, product-based definition shows you the rivals who look like you. A wider, benefit-based definition shows you everyone who solves the same customer problem by any means, including the customer’s own workaround and the option of doing nothing. Founders lose to the second group, because they never put them on the list.

1 · How you define the market decides who you see

The slides make this the first point of the whole block, and it is the point I keep coming back to. There are two ways to draw the boundary of a market and they produce different competitor lists, different threats and different strategic moves.

Product-related definition physical-technical similarity

• We compete with everyone offering similar goods in architecture, design, main technical properties, manufacturing process or way of delivery
• Railway example: our market is transportation services provided on railway tracks
• Competitive measures that follow: lobbying, competing on price in calls for tenders
• Comfortable, measurable, and blind to anything from outside the industry

Benefit or need-related definition substitution in use

• We compete with everyone who, in a specific use context, provides the same benefit or fulfils the same customer need
• Railway example: our market is logistics and transportation services
• Competitive measures that follow: acquiring a logistics provider, building high-speed track to take on short-haul flights
• Harder to bound, but it is the definition that surfaces the real threats

Same company, same trains, two market definitions. Notice that the strategic options on the right are simply invisible from the left, because the companies those moves target are not even on the competitor list.

The illustration the class uses is a thought experiment. If Encyclopedia Britannica had changed its mission early, from we provide the best book encyclopedias in the world to we produce and distribute information, the entire digital threat would have appeared on its radar years before it arrived. A product-based market definition is a very good explanation for why established companies overlook emerging competition coming from other industries, other markets or other technology areas.

The same logic runs in reverse for a new entrant. A company can carry technical know-how across an industry boundary into a market it was never in: the classic example in the notes is a firm that built excellence in steering algorithms and sensors in the military sector and applied it to household cleaning robots. Nobody in the vacuum-cleaner industry had that firm on a competitor list.

Caution

Do not forget the five forces. The notes flag it explicitly: there are more threats than the existing, direct competitors inside the market. Suppliers, buyers, new entrants and substitutes all shape how much value the venture can keep, and a competitor analysis that only counts today’s visible rivals is missing most of the picture.

2 · Direct, indirect and the competition you have not noticed yet

The class turns the point into a simple two-by-two. One axis asks whether a player serves the same customers and needs as me. The other asks whether it uses the same product, service or technology. Four cells, four kinds of competition, four levels of urgency.

SAME customers and needs (top row) · DIFFERENT customers and needs (bottom row)

Direct competition same customers · same solution

• Companies serving the same customers with basically the same product or service
• Tape example: other tape producers selling into automotive cable mounting
• Language-app example: other digital language services
• Already competition, so this is the set you must analyse in the most detail

Indirect or technology competition same customers · different solution

• Same customers, same job to be done, a different technology or delivery form
• Tape example: other mounting technologies such as glue or tucker bolts
• Language-app example: talking with native speakers, a classical language school, a language trip
• Dangerous substitutes, and the cell founders most often leave empty

Adjacent players different customers · same solution

• The same kind of product sold into a different market today
• Tape example: producers of construction or medical tapes
• Language-app example: digital services for learning instruments or business administration
• Very important, because they are one customer decision away from entering my market

Implicit or future competition different customers · different solution

• Nothing in common today, but the technology could make my whole category unnecessary
• Tape example: wireless transmission removing the cable, or new public mobility services reducing car production
• Language-app example: VR and AR solutions for training staff
• Lowest urgency, but they signal where the technology trend is heading

Left column: same product or technology as mine. Right column: a different one. The class exercise asks about exactly these cells, and it defines indirect competition as same customers, similar use value or job, different product, service or technology.

Direct: analyse in full detailIndirect: dangerous substitutesAdjacent: one step from enteringImplicit: watch the trend

Why founders systematically underestimate the indirect set. Three reasons recur. The indirect set is not searchable: I can google other language apps, but not the evening class my customer already attends. It does not look like a competitor, so it does not feel like one, since a spreadsheet or an intern doing the job by hand has no website and no funding round yet is what the customer uses today. And admitting it makes my market look smaller and my differentiation weaker, which is exactly the news a founder does not want.

Two entries belong on every indirect list and are almost always missing. One is the current workaround: whatever the customer does today to get the job done, however clumsy. The other is doing nothing at all, which is free, requires no change of behaviour and wins far more often than any competitor does. If my analysis cannot say why the customer would abandon their workaround, the rest of the competitive story does not matter.

3 · Finding the competitive set in practice

The identification step is grubby desk research, and the notes list the sources plainly. The module’s own description of the semester’s activities puts scanning of the market environment, including market statistics and the webpages of competitors, at the top of the list of things the teams will actually do.

Competitor websites and traffic toolsCustomer reviewsBrochures, newsletters, white papers, case studiesMarket and industry reports, often very costlyTrade showsBecoming a customer of the competitorMarket experts and former employeesSocial media and mass media presenceSearch and SEO analytics toolsFunding databases and company registersApp stores and review platforms

Two of these deserve emphasis because they are cheap and students skip them. Becoming a customer of the competitor - buying the product, taking the trial, sitting through the onboarding - tells you in an afternoon what a market report never will: what the experience actually feels like, where it breaks, and what they charge once you are past the headline price. And asking your own interviewees what they use today is the only reliable way to find the indirect set, because customers describe their workaround without ever calling it a competitor. The question is not who are our competitors, it is what do you do about this problem right now, and what did you try before that.

4 · The standard competitor analysis: what to record for each rival

Once the set is defined, the class gives a checklist of what to collect about direct competitors, and about indirect and future ones where you can. The point of a fixed checklist is that every rival is described on the same dimensions, so the rows can be compared instead of merely read.

What they sell and to whomthe offer itself

Key features, qualities and benefits · target customers · value proposition, claimed USP and key differentiatorsthis is the part you can usually read straight off their website, and the part you should trust least

How they make money and reach peoplethe commercial machine

Price points and revenue model · marketing and sales strategy, including which countries and which channelspricing tells you which segment they are really built for

What they are made ofthe capacity behind the offer

Key resources such as know-how, facilities and technology · size of company, ownership, funding and partners · market share, revenues and growth ratesthis is what tells you whether they can respond to you, and how fast

What it adds up toyour judgement, not their data

Strengths, weaknesses and the likely strategic intent or next movethe only rows you write yourself, and the only ones that turn a data dump into an analysis

The checklist from the class notes, grouped. Fill one column per competitor and the gaps become visible as empty patches in a row rather than as a vague feeling that nobody has done something.

The class also shows several ways of presenting the result, and each has a job:

Format	What it is	Best for
Comparison table	Competitors as columns, criteria as rows, filled with facts	The working document; everything else is derived from it
Attribute fulfilment table	The same grid but scored, for example how a printed book, an e-reader and a tablet fare on readability, mobility and price	Showing at a glance who wins on which customer benefit
Checkmark table	A tick where a competitor offers a feature, blank where it does not	Feature-heavy categories such as software platforms
Spider web	One axis per attribute, one closed shape per competitor	More than two dimensions at once, as long as there are few players
Two-by-two matrix	Two chosen dimensions, competitors plotted as points	Communicating a position; the perceptual map is the rigorous version

One classification matrix worth knowing is the one built on market share against market growth, which the notes give memorable animal names to. A small player in a fast-growing market is the young challenger to watch; a large player in a fast-growing market is the heavyweight that will defend hard; a small player in a stagnant market is easy to ignore until it bites; a large player in a stagnant market is slow but powerful. The animals are only a mnemonic - the useful part is that share and growth together tell you how a rival will react when you enter.

5 · From the table to a judgement about white space

A filled table is not yet an analysis. The move that matters is reading across the rows and asking three questions: which customer benefit does nobody score well on, which segment is served by everyone in the same undifferentiated way, and which rival is strong where I am weak in a way I cannot fix. The first is a candidate position, the second is a warning that the segment is commoditised, and the third is a reason to pick a different fight.

But a gap is not automatically an opportunity. The class is blunt that the differentiation value is difficult to assess, and names three ways a claimed differentiation turns out to be worth nothing.

Meaningless or false differentiationthe points of superiority are unimportant to customers, or rest on a false presumption of being superior at all

Uneconomic or invisible differentiationcustomers will not pay extra for the added performance, or they never notice the difference

Unsustainable differentiationthe feature can be imitated in a short time, so the advantage evaporates

Three ways a difference fails to become an advantage. A white space on a map survives only if it passes all three: customers care, customers will pay and notice, and a rival cannot copy it next quarter.

Notice how neatly these connect to earlier chapters. Do customers care is the Kano question. Will they pay is the conjoint question. Can it be imitated is the resources-and-capabilities question that the competitor checklist above was collecting evidence for.

6 · Perceptual maps: the market as the customer sees it

A perceptual map, sometimes called a positioning map, is a picture of a market drawn on axes that represent customer perception. The class introduces it as another kind of competitor analysis, and the framing is what makes it worth the effort:

Objective attributes your perspective, and it is biased

• What the company, brand, product or service actually is, measured in specifications
• This is the version the founding team carries in its head
• It is also the version that has no influence on the purchase decision

Subjective perception the customer perspective

• What customers believe the offer is, which is what they actually choose on
• Your own and competing offers may simply not be perceived the way you think or hope
• Modelling and mapping this perception is the entire purpose of the tool

The gap between the two panels is the reason the map exists. A map drawn from the team’s own ratings is just the team’s opinion with axes on it.

The stated motivation in the notes is simple: innovators want to know where the empty spaces in the market are. Plot the current market offers as perceived by customers, plot your own intended offer, and the regions that nobody occupies become visible.

Building the map: attributes, ratings, preferences

The mechanics start with a multi-attribute model, which is a good way of looking at your company and your competitors through the eyes of the customer. Customers rate each competitor on each attribute, and they also rate how important each attribute is to them. The class uses two scales of one to ten: for importance, one means not important at all and ten means extremely important; for performance, one means very poor and ten means extremely good. Multiplying performance by importance and summing gives a weighted total score per competitor.

The kiteboard example runs the same structure with a questionnaire in two halves. One half asks about perception - how is the running smoothness of this brand, answered on a five-point scale from very high to very low. The other half asks about preference - how important is running smoothness to you, answered from very much to not at all. Attributes for a preliminary study came from the product itself: stability, convenience of the foot pads, upwind performance, manoeuvrability, stiffness, running smoothness, reflex and pop.

Plotting all of that as a spider web is tempting and it collapses quickly. The notes make two objections. With many attributes and many competitors the web becomes unreadable, so you have to aggregate the attributes down to a small number of underlying dimensions. And the web contains no preferences at all - looking at two overlapping shapes cannot tell you whether the green brand is better than the black one, because better depends on what customers want. Both objections push you toward a two-dimensional map with preference information on it.

The class gives two routes to those two dimensions:

Variant 1 · Factor analysisspecify attributes in a preliminary study, have target customers rate each competitor on every attribute and state their preferences, then let the statistics compress many correlated attributes into a few factors that become the axes

or

Variant 2 · Multidimensional scalingposition the offers purely by how similar customers judge them to be; similarity is either computed indirectly from attribute ratings or asked directly, pair by pair

Both routes end in the same picture. Factor analysis names the axes for you out of the attributes; multidimensional scaling produces the spatial arrangement first and leaves you to interpret what the axes mean.

Getting preferences onto the map depends on the shape of the relationship between the attribute and preference. If more of an attribute is always better, preference is a direction, and you can draw a preference vector pointing toward the region of higher preference. If there is an optimum, with too little and too much both being worse, then each customer has an ideal point - a spot on the map where their perfect offer would sit. Plotting many customers as ideal points shows where demand is concentrated, and a cluster of ideal points with no brand near it is the definition of a market niche for innovation.

Reading a map, and choosing the axes honestly

The axes are the whole decision. They must be the dimensions that genuinely drive customer choice, not the ones that are easy to measure or the ones that flatter my product. The kiteboard map in the notes uses axes like a convenient versus a sporty surfing experience, and good for jumping versus good for waving - both are things a rider actually cares about and neither is a specification. The cities exercise does the same for destinations, rating Berlin, London, Shanghai and Rio de Janeiro on cultural offerings such as museums and theatres, rich history, attractive cityscape and architecture, quality of the catering, creative atmosphere, nightlife and subcultures, tolerance of society and friendliness of the people. Those are perceptions, and they are exactly what makes someone book a trip.

Reading the finished map:

• A dense cluster is a commoditised position. Entering there means competing on price against incumbents with more resources.
• An empty space near a cluster of ideal points is the prize: customers want something there and nobody is offering it.
• An empty space with no ideal points near it is empty for a reason. Nobody wants what would sit there, and the map has just saved you a year.
• Where I actually sit is often not where I thought. If customers place me next to a rival I consider inferior, my differentiation is invisible, which is one of the three failures from section 5.

The limits of the tool

The notes are candid about the shortcomings, and these are examinable:

Limitation	Why it bites
Attributes may be unknown	For a genuinely new product or service, nobody yet knows which attributes matter, so there is nothing valid to put on the axes
Complex maps resist interpretation	Many attributes, a fuzzy factor structure and customers with heterogeneous preferences produce a picture nobody can read
No cost, no feasibility	Positioning models say nothing about what it would cost to reach a desired position, or how likely you are to get there
Static by nature	The model ignores the dynamics of customer perception; the fix is to compare maps drawn at different points in time
Only two dimensions	A map shows two axes at a time, so the choice of which two is itself a strategic assumption you should test with a second map

7 · How this connects backwards and forwards

Backwards, to the House of Quality. The class explicitly says a competitor analysis can be integrated into the House of Quality by comparing how well your product or service meets each customer requirement compared with competitors. That is the competitive-comparison column on the right of the house: for every customer requirement, a score for you and a score for each rival, taken from customer perception. Read together with the importance weights, it points straight at the requirements that are both important and badly served by everyone, and those feed the target values and the competitive comparison at the foot of the house.

Forwards, to the strategy. The module wants a clear idea for the market positioning and the competitive strategy, and that comes out of this chain: define the market by benefit, list direct and indirect players, fill the standard checklist, map perception, find a space that customers want, then check that the difference passes the three tests - customers care, customers will pay and can see it, rivals cannot copy it quickly. What survives is a differentiation strategy, and what follows from it is the choice of competitive measures.

Worked example

The venture. A speaking-practice app for working professionals who can already read and write a second language reasonably well but freeze in live conversation. Call it LinguaShift. Target customer: an employed adult in a company where meetings are held in the second language, with roughly twenty spare minutes a day at unpredictable times.

Step one, the market definition. A product-based definition would say we compete with language-learning apps. A benefit-based definition says we compete with everything that helps a working adult get comfortable speaking a second language, which immediately pulls in schools, tutors and the customer’s current habit of avoiding speaking altogether.

Step two, the standard comparison table. Five rivals across the checklist dimensions. Values are illustrative, of the kind desk research would produce.

Dimension	Gamified vocabulary app	Structured course app	Live-tutor marketplace	Evening language school	Do-it-yourself workaround
Type	Direct	Direct	Indirect	Indirect	Indirect, and the real default
Offering	Short drills, streaks, vocabulary and grammar	Graded lessons, some scripted speaking	Marketplace of human tutors, video calls	Weekly classroom course, fixed term	Podcasts, subtitles, an occasional exchange meetup
Target customers	Everyone, mass consumer	Serious self-learners	Learners who can pay for a person	Local adults, employer-funded	Anyone unwilling to pay
Claimed USP	Fun, habit-forming, free to start	Structured path to a certificate level	Real conversation with a real human	Qualified teachers, a real group	Free
Price and revenue model	Freemium subscription, ads on the free tier	Mid-priced monthly subscription	Commission per booked lesson hour	Fee per course block, invoiced to employers	Zero
Channels and marketing	Heavy paid social and app-store presence	Content marketing, app store, some employer deals	Marketplace SEO, tutor-side recruiting	Local advertising, corporate sales	Word of mouth
Resources, funding, size	Very large, listed, deep war chest	Well funded, mid-size	Venture backed, growing, asset-light	Small, local, thin margins	None
Strengths	Distribution and brand recall	Credible pedagogy	Genuine speaking practice	Accountability and peer group	Free, zero friction
Weaknesses	Almost no live speaking practice	Speaking is scripted, not spontaneous	Expensive and needs a scheduled slot	Rigid timetable, cannot fit a work week	No feedback, no correction, easy to abandon
Likely next move	Bolt an AI conversation feature onto the existing app	Add employer-facing reporting	Push cheaper group sessions	Move some classes online	Nothing, but it will not disappear

Reading across the rows, one pattern dominates: everything that gives real speaking practice requires a scheduled appointment, and everything available on demand gives almost no speaking practice. That is a gap in a row, not an opinion.

Step three, the perceptual map. Two axes, both chosen because they drive the choice rather than because they are easy to measure. The vertical axis is how much spontaneous speaking practice with correction the customer perceives they get. The horizontal axis is how well the option fits an unpredictable working week, from a fixed schedule to fully on demand.

↑ HIGH perceived speaking practice with correction

Fixed schedule, high practice top left

• Live-tutor marketplace and the evening school sit here
• Customers rate the practice highly and the convenience poorly
• Effective, expensive, and repeatedly abandoned when work gets busy

On demand, high practice top right - the white space

• Empty. No current offer is perceived to sit here
• Customer ideal points cluster here: our interviewees want practice in the gaps of their day
• This is where LinguaShift intends to sit

Fixed schedule, low practice bottom left

• Largely empty, and empty for a good reason
• An offer that is both inconvenient and ineffective has no reason to exist
• A useful control: not every gap is an opportunity

On demand, low practice bottom right - crowded

• The gamified app, the structured course app and the self-study workaround all land here
• The most crowded quadrant, and the one with a free option in it
• Entering here means competing on price and marketing spend against the largest player

↓ LOW perceived speaking practice · left = fixed schedule · right = fully on demand

The crowded quadrant is bottom right, where a free option already sits. The genuine white space is top right, and the bottom-left emptiness is the reminder that a hole in the map is only worth something if customer ideal points are sitting in it.

Step four, the check before celebrating. Is the top-right space empty because it is valuable and hard, or because nobody wants it? Interviews put ideal points there, so demand exists. It is empty because live human practice has historically required a scheduled human - a cost and feasibility barrier, which is exactly the kind of thing a perceptual map cannot tell you and the competitor table can. That barrier is also the differentiation test: customers care, they told us so; they will pay, because they already pay tutors more; and it is not trivially imitable, though the large player’s likely next move shows the window will not stay open.

The positioning claim that follows. LinguaShift is the only way for a working professional to get spontaneous, corrected speaking practice in the gaps of an ordinary working day, without booking a person.

Apply it to your project

1. Write your market definition twice. Once narrowly, by product or technology, and once widely, by the customer benefit or job in a specific use context. Keep the wide one. It is the one that generates the competitor list the module is asking for.

2. List the four cells, not one. Direct competitors, indirect competitors with the same customers and a different solution, adjacent players with the same technology and different customers, and implicit future threats. Force at least one name into every cell before you allow yourself to say a cell is empty.

3. Add the two entries founders always forget. The customer’s current workaround, described concretely, and the option of doing nothing. Write down what each of them costs the customer today.

4. Run the desk research. Competitor websites, customer reviews, app stores, brochures and case studies, market and industry reports, trade shows, funding databases, social and search analytics. Where you can, become a customer of one competitor and take notes on the whole experience.

5. Ask your interviewees what they use today. Never ask who your competitors are. Ask what they do about the problem right now, what they tried before, and what made them stop. This is the only reliable source for the indirect set.

6. Fill one comparison table with the same rows for every rival: offering and key features, target customers, positioning and claimed USP, price points and revenue model, channels and marketing approach, key resources, funding and size, strengths, weaknesses, and likely next move. Leave a cell blank rather than guessing, so the research gaps are visible.

7. Read the table for patterns, not for facts. Which customer benefit does nobody serve well, which segment is served identically by everyone, and which rival is strong exactly where you are weak.

8. Choose two axes that drive customer choice and defend the choice in one sentence each. If you cannot say why a customer would care about an axis, it is the wrong axis.

9. Fill the map with customer perception, not team opinion. Even a short survey in which target customers rate each option on both axes beats an internally drawn map. Add importance ratings so you know where the ideal points sit.

10. Test the white space against the three differentiation failures. Is the difference meaningful to customers, is it visible and worth paying for, and can it be imitated quickly. Then draw the second map on a different pair of axes to check the position is not an artefact of the first pair.

11. State the position in one sentence and derive the competitive strategy from it, then feed the same competitive comparison into the House of Quality column so the design decisions and the positioning stay consistent.

Key terms

Term	What it means in plain words
Product-related market definition	Drawing the market boundary around offers that are technically similar to yours, which hides threats from other industries
Benefit-related market definition	Drawing the boundary around everyone who delivers the same benefit in the same use situation, however they do it
Substitution in use	The test behind the benefit definition: if a customer could use it instead of yours in that situation, it competes
Direct competition	Companies serving the same customers with basically the same product, service or technology
Indirect competition	Same customers and the same job to be done, but a different product, service or technology
Adjacent competition	The same technology sold to different customers today, so one decision away from entering your market
Implicit or future competition	Different customers and a different technology now, but capable of making your category unnecessary later
Current workaround	Whatever the customer already does to get the job done, including doing nothing, and usually your strongest rival
Standard competitor analysis	A fixed checklist applied identically to every rival so the rows can be compared: offer, customers, USP, price, channels, resources, funding, strengths, weaknesses, likely move
Differentiation value	What your difference is actually worth to the customer, which is difficult to assess and easy to overestimate
Perceptual or positioning map	A picture of a market drawn on two axes of customer perception, showing where offers sit and where the spaces are
Multi-attribute model	Rating every competitor on every attribute and weighting by how important customers say each attribute is
Factor analysis variant	Compressing many correlated attribute ratings into a few underlying factors that become the axes of the map
Multidimensional scaling	Positioning offers by how similar customers judge them to be, either computed from ratings or asked directly
Ideal point	The spot on the map where a given customer’s perfect offer would sit; a cluster of them with no offer nearby is a niche for innovation
Preference vector	The direction of increasing preference on the map, used when more of an attribute is always better

Test yourself

1. Explain, using the railway example, how a product-related and a benefit-related market definition produce different competitors and different competitive measures.
2. Name the four cells of the competition matrix in terms of customers and technology, and give the tape example for each.
3. Give two reasons why founders systematically underestimate their indirect competition, and name the two entries that are almost always missing from an indirect list.
4. List at least six things a standard competitor analysis records about each rival.
5. A team draws a perceptual map from its own ratings of itself and its rivals and finds an attractive empty space. Give two separate reasons why that finding might be worthless.
6. State the three ways a claimed differentiation can fail to be worth anything, and say which earlier method in the module tests each one.

Answers

1. Under a product-related definition the market is transportation on railway tracks, so competitors are other rail operators and the natural measures are lobbying and price competition in calls for tenders. Under a benefit-related definition the market is logistics and transportation services, so competitors include road hauliers, logistics providers and short-haul airlines, and the measures become acquiring a logistics company or building high-speed track to take passengers from airlines. Same company, entirely different strategy set.
2. Same customers and same technology is direct competition, for example other tape producers. Same customers and different technology is indirect or technology competition, for example glue or tucker bolts as alternative mounting methods. Different customers and same technology is the adjacent cell, for example producers of construction or medical tapes, who are one step from entering. Different customers and different technology is implicit or future competition, for example wireless transmission that removes the cable altogether, or new public mobility services that reduce car production.
3. Any two of: the indirect set is not searchable, so desk research does not surface it; it does not look like a competitor, because a spreadsheet or an evening class has no website or funding round; and acknowledging it makes the market look smaller and the differentiation weaker. The two missing entries are the customer’s current workaround and the option of doing nothing.
4. Any six of: key features, qualities and benefits; target customers; value proposition, USP and key differentiators; price points and revenue model; marketing and sales strategy including countries and channels; key resources such as know-how, facilities and technology; company size, ownership, funding and partners; market share, revenues and growth rates; strengths and weaknesses; likely strategic intent or next move.
5. First, the map is built on the team’s own perception rather than the customer’s, and the whole premise of the tool is that offers are often not perceived the way the company thinks or hopes. Second, an empty space is only an opportunity if customer preferences, as ideal points, actually sit there; a space can be empty simply because nobody wants what would go in it. A third acceptable answer: the map says nothing about the cost or feasibility of reaching that position.
6. Meaningless or false differentiation - the advantage is unimportant to customers or not real; the Kano model and customer interviews test this. Uneconomic or invisible differentiation - customers will not pay for it or cannot see it; conjoint analysis and willingness-to-pay research test this. Unsustainable differentiation - it can be imitated quickly; the resources, funding and capability rows of the competitor table test this.

Revision summary

Tip

The one-minute recap

• The market definition decides the competitor list. A product-related definition counts companies that are technically similar; a benefit-related one, based on substitution in use, counts everyone serving the same need in the same situation. The narrow definition is why incumbents get blindsided from outside their industry.
• Four cells: direct (same customers, same solution), indirect (same customers, different solution, the dangerous substitutes), adjacent (same technology, different customers, one step from entering) and implicit (different on both, but a signal of where technology is going). Porter’s five forces is the reminder that rivals are not the only threat.
• The indirect set is the one founders miss, and the two entries always missing from it are the current workaround and doing nothing.
• Sources: competitor websites and traffic tools, customer reviews, brochures and case studies, market reports and trade shows, becoming a customer of the competitor, market experts and former employees, social and search analytics, funding databases and app stores. The best question to an interviewee is what they do about the problem today.
• The standard analysis records the same rows for every rival: offer and features, target customers, USP, price and revenue model, channels and marketing, key resources, size and funding, market share and growth, strengths, weaknesses, and likely next move. Assemble it into one comparison table so gaps show up as patterns.
• Three ways a difference fails: meaningless or false, uneconomic or invisible, unsustainable. A white space is only an opportunity if it survives all three.
• A perceptual map plots offers on axes of customer perception, because your own view of your offer is biased and irrelevant to the purchase. Build it from a multi-attribute model, compress attributes with factor analysis or arrange offers by similarity with multidimensional scaling, and add preferences as a vector or as ideal points.
• Read it for the crowded cluster (commoditised, price war) and the empty region (a niche, but only where ideal points sit). Limits: attributes unknown for very new offers, complex maps hard to read, nothing about cost or feasibility, static unless you compare maps over time, and only two dimensions at a time.
• It closes the loop with the House of Quality, whose competitive-comparison column scores you against rivals on each customer requirement, and it opens the next decision: the positioning claim and the competitive strategy the project has to state.

Next: Prototyping Strategy → - learning fast in the face of uncertainty.