Competitive Analysis Matrix In A Nutshell

The Competitive Analysis Matrix is a tool that allows businesses to define new growth opportunities. As the name suggests, the matrix is used to critically profile a company against its main competitors. The purpose of the Competitive Analysis Matrix is to provide a broad overview of the competitive landscape in a given industry. It helps businesses quickly identify gaps in product or service features and develop a point of differentiation as a result.

Understanding the Competitive Analysis Matrix

The matrix itself is simply a spreadsheet with specific features of an industry assigned to each row and the players (or competitors) of an industry assigned to each column. Then, each player is given a score based on how well they satisfy each feature. In most matrices, 1 is the lowest score and 5 is the highest. 

For example, a budget airline may score a 5 for affordability but a 3 for customer service and a 2 for in-flight dining. A competitor may then use the matrix to see if it might be able to offer better customer service and food choices while remaining competitive in the budget airline industry.

Four elements of a basic Competitive Analysis Matrix

  1. Grouped feature sets. To simplify the matrix, it’s important to group related features into a single row. Some large and complex industries may have hundreds of assessable features, which can quickly lead to overwhelm for analysts.
  2. A holistic view. Although the matrix is touted as identifying gaps in the features of products or services, businesses should not stop there. Instead, they should look at attributes that affect the entire business to consumer process. These include delivery, installation, distribution, and after-sales support. 
  3. Accurate measurements. Remember that the Competitive Analysis Matrix is a qualitative comparison. Refrain from giving yes or no answers.
  4. Customer focus. Resist the urge to assess product features that competitors are offering, since many of these features are superfluous to consumer needs. Indeed, the best approach is to determine what the consumer wants and then measure success against those features.

Disadvantages of the Competitive Analysis Matrix

Like many adaptable competitive matrices, there are some limitations to using the Competitive Analysis Matrix.

These include:

  • Subjective scores. Given that the scores for each attribute are subjectively assigned, there is likely to be some degree of inaccuracy. This is particularly prevalent when a business assigns scores to its competitors.
  • Incomplete information. While one business may know its distribution network inside and out, it may be difficult to obtain sufficient publicly available information on the network of a competitor. 
  • Dependent attributes. In some cases, a strength in one attribute may result in the weakness of another within the same organization. For example, the low-fare model (strength) of a budget airline may be diluted if the airline opts to increase the poor standard of their food (weakness). In this case, the fixing of the weakness creates another competitive disadvantage if the airline cannot maintain its low prices.

Key takeaways:

  • The Competitive Analysis Matrix allows businesses to quickly assess their market positioning and determine where their competitive strengths lie.
  • The Competitive Analysis Matrix should have four elements as a bare minimum: grouped feature sets, a holistic view, accurate measurements, and a focus on consumer needs.
  • The Competitive Analysis Matrix has several limitations, owing to subjective and sometimes dependent attributes and also a lack of publicly available information.

Key Highlights

  • Purpose and Overview:
    • The Competitive Analysis Matrix helps businesses assess their competitive position against rivals in an industry.
    • It provides an overview of the competitive landscape and identifies areas for differentiation.
  • Structure and Use:
    • The matrix is essentially a spreadsheet with competitors listed as columns and industry-specific features as rows.
    • Each competitor is scored for how well they meet each feature, often using a scale from 1 to 5.
  • Example Scenario:
    • A budget airline might score high for affordability (5), moderate for customer service (3), and low for in-flight dining (2).
    • This analysis reveals areas for improvement and differentiation.
  • Elements of the Matrix:
    • Grouped Feature Sets: Features are categorized for simplicity, especially in complex industries.
    • Holistic View: It’s essential to consider attributes affecting the entire customer process, like delivery and support.
    • Accurate Measurements: Scores are qualitative and not binary (yes/no).
    • Customer Focus: Assess features based on consumer needs, not simply replicating competitors’ offerings.
  • Disadvantages:
    • Subjective Scores: Scores are assigned subjectively, potentially leading to inaccuracies.
    • Incomplete Information: Lack of public data can hinder accurate competitor assessment.
    • Dependent Attributes: Improving one aspect may weaken another if not carefully balanced.

Case Study

1. Identify CompetitorsBegin by identifying and listing the competitors that you want to assess and compare. These are companies operating in the same market or industry as your organization.– Competitors in the fast-food industry: Company A, Company B, Company C. – Competitors in the software industry: Competitor X, Competitor Y, Competitor Z.
2. Define Evaluation CriteriaDetermine the criteria or factors that you will use to assess and compare your organization and its competitors. These criteria can include financial performance, product quality, market share, customer satisfaction, etc.– Evaluation criteria for fast-food chains: Revenue, market share, customer reviews, menu variety. – Evaluation criteria for software companies: Revenue growth, product features, customer support, innovation.
3. Rate Your OrganizationAssess and rate your organization’s performance for each of the defined evaluation criteria. Use a predefined scale (e.g., 1 to 5) to indicate how well your organization performs in each area.– Your organization’s revenue: 4, market share: 3, customer reviews: 4, menu variety: 5. – Your organization’s revenue growth: 4, product features: 5, customer support: 4, innovation: 4.
4. Rate CompetitorsAssign ratings or scores to each competitor for each of the defined evaluation criteria. Gather data and information to assess how well each competitor performs in comparison to your organization.– Competitor A’s revenue: 5, market share: 4, customer reviews: 3, menu variety: 4. – Competitor X’s revenue growth: 5, product features: 4, customer support: 3, innovation: 5.
5. Calculate Total ScoresCalculate the total score for each organization (including your own) by summing the scores assigned to them across all evaluation criteria. The total score reflects the overall competitive performance.– Your organization’s total score: Sum of ratings for all criteria. – Competitor A’s total score: Sum of ratings for all criteria.
6. Analyze Competitive PositionAnalyze the total scores and competitive positions of your organization and its competitors. Identify areas of strength and weakness relative to the evaluation criteria.– Your organization’s total score: Total competitive position. – Competitor A’s total score: Competitive position relative to your organization.
7. Develop StrategiesDevelop strategic recommendations based on the analysis of competitive positions. Strategies may involve leveraging strengths, addressing weaknesses, and adapting to changes in the competitive landscape.– If your organization’s total score is higher than competitors, focus on maintaining and strengthening existing strengths. – If a competitor has a higher total score in certain areas, develop strategies to improve your organization’s performance in those areas.

Connected Analysis Frameworks

Failure Mode And Effects Analysis

A failure mode and effects analysis (FMEA) is a structured approach to identifying design failures in a product or process. Developed in the 1950s, the failure mode and effects analysis is one the earliest methodologies of its kind. It enables organizations to anticipate a range of potential failures during the design stage.

Agile Business Analysis

Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

Business Valuation

Business valuations involve a formal analysis of the key operational aspects of a business. A business valuation is an analysis used to determine the economic value of a business or company unit. It’s important to note that valuations are one part science and one part art. Analysts use professional judgment to consider the financial performance of a business with respect to local, national, or global economic conditions. They will also consider the total value of assets and liabilities, in addition to patented or proprietary technology.

Paired Comparison Analysis

A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.

Monte Carlo Analysis

The Monte Carlo analysis is a quantitative risk management technique. The Monte Carlo analysis was developed by nuclear scientist Stanislaw Ulam in 1940 as work progressed on the atom bomb. The analysis first considers the impact of certain risks on project management such as time or budgetary constraints. Then, a computerized mathematical output gives businesses a range of possible outcomes and their probability of occurrence.

Cost-Benefit Analysis

A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.

CATWOE Analysis

The CATWOE analysis is a problem-solving strategy that asks businesses to look at an issue from six different perspectives. The CATWOE analysis is an in-depth and holistic approach to problem-solving because it enables businesses to consider all perspectives. This often forces management out of habitual ways of thinking that would otherwise hinder growth and profitability. Most importantly, the CATWOE analysis allows businesses to combine multiple perspectives into a single, unifying solution.

VTDF Framework

It’s possible to identify the key players that overlap with a company’s business model with a competitor analysis. This overlapping can be analyzed in terms of key customers, technologies, distribution, and financial models. When all those elements are analyzed, it is possible to map all the facets of competition for a tech business model to understand better where a business stands in the marketplace and its possible future developments.

Pareto Analysis

The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.

Comparable Analysis

A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis it is possible to understand the competitive landscape of the target organization.

SWOT Analysis

A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

PESTEL Analysis

The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

Business Analysis

Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

Financial Structure

In corporate finance, the financial structure is how corporations finance their assets (usually either through debt or equity). For the sake of reverse engineering businesses, we want to look at three critical elements to determine the model used to sustain its assets: cost structure, profitability, and cash flow generation.

Financial Modeling

Financial modeling involves the analysis of accounting, finance, and business data to predict future financial performance. Financial modeling is often used in valuation, which consists of estimating the value in dollar terms of a company based on several parameters. Some of the most common financial models comprise discounted cash flows, the M&A model, and the CCA model.

Value Investing

Value investing is an investment philosophy that looks at companies’ fundamentals, to discover those companies whose intrinsic value is higher than what the market is currently pricing, in short value investing tries to evaluate a business by starting by its fundamentals.

Buffet Indicator

The Buffet Indicator is a measure of the total value of all publicly-traded stocks in a country divided by that country’s GDP. It’s a measure and ratio to evaluate whether a market is undervalued or overvalued. It’s one of Warren Buffet’s favorite measures as a warning that financial markets might be overvalued and riskier.

Financial Analysis

Financial accounting is a subdiscipline within accounting that helps organizations provide reporting related to three critical areas of a business: its assets and liabilities (balance sheet), its revenues and expenses (income statement), and its cash flows (cash flow statement). Together those areas can be used for internal and external purposes.

Post-Mortem Analysis

Post-mortem analyses review projects from start to finish to determine process improvements and ensure that inefficiencies are not repeated in the future. In the Project Management Book of Knowledge (PMBOK), this process is referred to as “lessons learned”.

Retrospective Analysis

Retrospective analyses are held after a project to determine what worked well and what did not. They are also conducted at the end of an iteration in Agile project management. Agile practitioners call these meetings retrospectives or retros. They are an effective way to check the pulse of a project team, reflect on the work performed to date, and reach a consensus on how to tackle the next sprint cycle.

Root Cause Analysis

In essence, a root cause analysis involves the identification of problem root causes to devise the most effective solutions. Note that the root cause is an underlying factor that sets the problem in motion or causes a particular situation such as non-conformance.

Blindspot Analysis


Break-even Analysis

A break-even analysis is commonly used to determine the point at which a new product or service will become profitable. The analysis is a financial calculation that tells the business how many products it must sell to cover its production costs.  A break-even analysis is a small business accounting process that tells the business what it needs to do to break even or recoup its initial investment. 

Decision Analysis

Stanford University Professor Ronald A. Howard first defined decision analysis as a profession in 1964. Over the ensuing decades, Howard has supervised many doctoral theses on the subject across topics including nuclear waste disposal, investment planning, hurricane seeding, and research strategy. Decision analysis (DA) is a systematic, visual, and quantitative decision-making approach where all aspects of a decision are evaluated before making an optimal choice.

DESTEP Analysis

A DESTEP analysis is a framework used by businesses to understand their external environment and the issues which may impact them. The DESTEP analysis is an extension of the popular PEST analysis created by Harvard Business School professor Francis J. Aguilar. The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.

STEEP Analysis

The STEEP analysis is a tool used to map the external factors that impact an organization. STEEP stands for the five key areas on which the analysis focuses: socio-cultural, technological, economic, environmental/ecological, and political. Usually, the STEEP analysis is complementary or alternative to other methods such as SWOT or PESTEL analyses.

STEEPLE Analysis

The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

Activity-Based Management

Activity-based management (ABM) is a framework for determining the profitability of every aspect of a business. The end goal is to maximize organizational strengths while minimizing or eliminating weaknesses. Activity-based management can be described in the following steps: identification and analysis, evaluation and identification of areas of improvement.

PMESII-PT Analysis

PMESII-PT is a tool that helps users organize large amounts of operations information. PMESII-PT is an environmental scanning and monitoring technique, like the SWOT, PESTLE, and QUEST analysis. Developed by the United States Army, used as a way to execute a more complex strategy in foreign countries with a complex and uncertain context to map.

SPACE Analysis

The SPACE (Strategic Position and Action Evaluation) analysis was developed by strategy academics Alan Rowe, Richard Mason, Karl Dickel, Richard Mann, and Robert Mockler. The particular focus of this framework is strategy formation as it relates to the competitive position of an organization. The SPACE analysis is a technique used in strategic management and planning. 

Lotus Diagram

A lotus diagram is a creative tool for ideation and brainstorming. The diagram identifies the key concepts from a broad topic for simple analysis or prioritization.

Functional Decomposition

Functional decomposition is an analysis method where complex processes are examined by dividing them into their constituent parts. According to the Business Analysis Body of Knowledge (BABOK), functional decomposition “helps manage complexity and reduce uncertainty by breaking down processes, systems, functional areas, or deliverables into their simpler constituent parts and allowing each part to be analyzed independently.”

Multi-Criteria Analysis

The multi-criteria analysis provides a systematic approach for ranking adaptation options against multiple decision criteria. These criteria are weighted to reflect their importance relative to other criteria. A multi-criteria analysis (MCA) is a decision-making framework suited to solving problems with many alternative courses of action.

Stakeholder Analysis

A stakeholder analysis is a process where the participation, interest, and influence level of key project stakeholders is identified. A stakeholder analysis is used to leverage the support of key personnel and purposefully align project teams with wider organizational goals. The analysis can also be used to resolve potential sources of conflict before project commencement.

Strategic Analysis

Strategic analysis is a process to understand the organization’s environment and competitive landscape to formulate informed business decisions, to plan for the organizational structure and long-term direction. Strategic planning is also useful to experiment with business model design and assess the fit with the long-term vision of the business.

Related Strategy Concepts: Go-To-Market StrategyMarketing StrategyBusiness ModelsTech Business ModelsJobs-To-Be DoneDesign ThinkingLean Startup CanvasValue ChainValue Proposition CanvasBalanced ScorecardBusiness Model CanvasSWOT AnalysisGrowth HackingBundlingUnbundlingBootstrappingVenture CapitalPorter’s Five ForcesPorter’s Generic StrategiesPorter’s Five ForcesPESTEL AnalysisSWOTPorter’s Diamond ModelAnsoffTechnology Adoption CurveTOWSSOARBalanced ScorecardOKRAgile MethodologyValue PropositionVTDF FrameworkBCG MatrixGE McKinsey MatrixKotter’s 8-Step Change Model.

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