The Competitive Matrix

February 19th, 2009 by Sharon Larsen

Along with Porter’s Five Forces Model, Rich uses the Competitive Matrix to analyze business ideas. 

 

 

This tool is exceptionally helpful when it comes to determining the gaps your gourmet root beer can fill in the marketplace. Below I’ve shared a hypothetical example of GRB’s regional analysis for the U.S. market. The clouds are your competitors. Their placement on the chart corresponds with their geographic location and price point. The analysis indicates GRB has a great opportunity for product sales in the Southwest across the price spectrum and a solid opportunity for product sales in the Northwest at the lower end of the price spectrum. You can run this analysis for a number of different areas of interest, including but not restricted to:

 

·         Location

·         Demographic

·         Price

·         Distribution method

 

I typically run the model three or four times with relevant pairs; for example, distribution method and price or demographic and price. Do your research online or on foot–any way you can. Learn about your competitors, and then apply what you learn to the matrix.

 

After running your idea through this process, the answers will tell you if you need to tweak your product game plan. My strong recommendation is to fill a profitable niche or hole in the market and not go up against the big boys—at least not yet. If your goal is to be purchased by a larger competitor, try not to overlap with what they are doing. Rather, complement their products and services and give them a reason to purchase your company. (We flesh this idea out more completely in chapter 19, “No Exit Strategy?”.)

 

Porter’s Points – The Competitive Matrix

 

  • Do not overlap your product or services with competitors if your target is a sale. Overlapping invites them to stomp you out; complementing invites them to buy you out.
  • Depending on your product, conduct a regional, price range, distribution, or demographic analysis of your competitors. Find where you can fit in, map it, and plan on it.
  • Run this model three or four times with different pairs of indicators. Go out and do research!

 

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