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.

Connected Analysis Frameworks

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 (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 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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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 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.

Other strategy frameworks:

Additional resources:

Scroll to Top