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.
|1. Current Customer Overlap (C)||Analyze the key customers that are currently receiving value from the competitors and sustaining their businesses.||– Identify the target customer segments of each competitor. – Determine the customer base that is being served and the value they derive. – Assess the size, loyalty, and needs of these customer segments.||– Helps in understanding the competitive landscape and the market segments served by each competitor. – Identifies the customer base that competitors rely on for revenue and growth.||– Identifying and comparing customer segments served by multiple tech companies. – Assessing the customer loyalty and satisfaction levels with competitors.||Customer Overlap Analysis Example: Evaluating the customer base of two SaaS companies operating in the same industry.|
|2. Current Technology Overlap (T)||Examine the key technological advantages that sustain the value propositions of competing tech companies.||– Identify the core technologies, innovations, or proprietary solutions used by competitors. – Assess the technological capabilities, patents, or unique features that provide a competitive edge. – Evaluate the scalability and adaptability of the technology stack.||– Provides insights into the technological strengths and weaknesses of each competitor. – Helps in assessing the barriers to entry and differentiation in the market.||– Comparing the technological innovations and patents held by different tech firms. – Assessing the scalability and future potential of technology used by competitors.||Technology Overlap Analysis Example: Analyzing the unique technology stack and innovations of competing AI startups.|
|3. Current Distribution Overlap (D)||Investigate the key distribution channels employed by competitors to enhance the utilization of their technology.||– Identify the primary distribution channels and strategies used by each competitor. – Assess the reach, effectiveness, and partnerships associated with these distribution channels. – Analyze how distribution complements the technology and value proposition.||– Understanding how competitors reach and engage with their target audience. – Helps in identifying potential collaboration opportunities or areas where competitors have a competitive advantage in distribution.||– Evaluating the distribution strategies of competing tech companies in reaching customers. – Assessing the effectiveness of partnerships in expanding market reach.||Distribution Overlap Analysis Example: Examining the distribution channels and partnerships of competing e-commerce platforms.|
|4. Current Financial Model Overlap (F)||Explore how competitors finance their growth, whether through equity, debt, financing, or bootstrapping.||– Analyze the financial models employed by competitors, including funding sources and capital structure. – Assess whether competitors rely on equity funding, venture capital, loans, or self-funding. – Evaluate the financial sustainability and growth potential of each model.||– Provides insights into the financial strategies and sustainability of competing businesses. – Helps in understanding the risk exposure and long-term viability of different financial models.||– Comparing the financial models and funding sources used by tech startups in the same industry. – Assessing the scalability and profitability of various financial approaches.||Financial Model Overlap Analysis Example: Analyzing how competing software companies secure funding and sustain their growth.|
|5. Future Technology Development (FTD)||Investigate the technologies that competitors are actively developing to potentially create new markets.||– Identify ongoing research, development, and innovation efforts of each competitor. – Assess the potential impact of future technologies on market expansion and disruption. – Analyze the scalability and market readiness of upcoming technological advancements.||– Helps in forecasting the competitive landscape and potential market shifts. – Provides insights into competitors’ strategies for innovation and market expansion.||– Assessing the R&D initiatives and pipeline technologies of competing tech firms. – Evaluating the market potential of future technologies under development by competitors.||Future Technology Development Example: Analyzing the impact of AI advancements under development by competing tech giants on future markets.|
Perform a Competitor Analysis
Why competition in the business tech world looks slightly different
There are several ways to look at competition. However, in a digital world, the concept itself (for now) has become more fluid. Indeed, when you look at companies like Amazon, Tesla or perhaps Google, where would you start?
True, each of those companies has a main market/industry (Tesla = electric cars, Amazon = e-commerce, Google = search), and yet when we have a closer look at what those companies do we realize there is more to it.
Indeed, as those companies operate at the edge of business and technological innovation, often times they place bets on new markets and industires that if prove to develop, can become whole new industries.
So where do we start?
Understanding competition in the business tech world
- And Financial model.
Each of those parts is essential to build a viable long-term tech business model.
Thus, we can leverage on this same model to also analyze competition in the business tech world.
Breaking down competition in the business tech world
When it comes to competition in the business tech world, we’ll analyze it from a few perspectives:
- Current Customer Overlap: who are the key customers that are currently getting value and sustaining the business?
- Current Technology Overlap: what is the key technological advantage that sustains the value proposition of the business?
- Current Distribution Overlap: what is the key distribution channel the company is using to enhance the use of the technology that enhances the value proposition?
- Current Financial Model Overlap: is the company using equity/capital, debt/financing to grow or perhaps is it bootstrapping?
Once looked at the four components above, we can look at a fifth one:
- Future Technology Development: what technologies is the company developing that can help develop a whole new market?
Let’s see each of those elements in details.
Current Customer Overlap
Who are the key customers that are currently getting value and sustaining the business?
Current Technology Overlap
What is the key technological advantage that sustains the value proposition of the business?
Current Distribution Overlap
Current Financial Model Overlap
Is the company using equity/capital, debt/financing to grow or perhaps is it bootstrapping?
Future Technology Development
What technologies is the company developing that can help develop a whole new market?
Case Study: Tesla Competitive Analysis
Tesla is also an electric generation and storage company, with SolarCity’s acquisition, which is an essential element of the Tesla business model’s future success. It is enabling the ecosystem that will make Tesla sustainable as a company in the long-term.
In addition, Tesla is also investing on autonomous driving player. For that, we’ll have to analyze Tesla from these three perspectives.
Within the automaking segment, Tesla has over the years diversified its products‘ lines, to cover different segments of the market. When Tesla entered the market, as a go-to-market strategy it had to enter it (nonetheless Elon Musk’s long-term vision to make the electric car available to the masses) with the Roadster model.
Sport & Performance
The primary models covering this segments are:
- Roadster: here some of the competitors are Dodge Challenger, Porsche Chiron, and Bugatti
- Model S: in this segment, Tesla competes with players like Mercedes S-Class, BMW 7 Series, Porsche Panamera, Audi A7 & A8 and more.
The primary models covering this segments are:
- Model X: here some of the competitors are BMW X5, Mercedes-Benz GLS-Class, Volvo XC90, Porsche Cayenne.
- Model Y (compact SUV): in this segment, Tesla competes with Renault Zoe, Nissan LEAF, Volksvagen e-Golf, Audi e-tron and more.
In this segment, Tesla just launched the Cybertruck:
Cybertruck’s competitors comprise Rivian, Ford, Bollinger.
Tesla has finally its mass-market product, the Model 3. This model competes with models such as BMW Series 2,3,4,5 Mercedes Class C, CLA, CLS, Audi A3, A4, A5, Lexus, ES, GS, and many others.
Energy Generation & Storage
Tesla acquired SolarCity back in 2016, for $2.6 billion, and with that, it competes in the electric production and storage industry with players like SunRun, SunPower, Vivint Sonar, Trinity Solar, and SolarWorld to mention a few.
Tesla’s Autopilot is one of the key ingredients of its technology and one of the most interesting future developments for the company. In this segment, Tesla competes with other autonomous driving companies like Zoox (bought by Amazon), Waymo (an Alphabet bet), and Baidu.
- Competitor Analysis Importance: Competitor analysis is a critical process for tech companies to gain a comprehensive understanding of their competitive landscape. By identifying and studying key players operating in the same business domain, companies can make informed strategic decisions. This involves delving into various aspects of the competition, such as:
- Customers: Understanding who the competitors’ target customers are, what their needs and preferences are, and how well they are served.Technologies: Analyzing the technologies competitors use to develop their products or services, and comparing them to the company’s own technological capabilities.Distribution Channels: Examining the various channels competitors use to distribute their offerings, including online platforms, retail stores, partnerships, etc.Financial Models: Studying competitors’ financial structures, revenue streams, pricing strategies, and cost management approaches to identify potential areas of improvement.
- Tech Business Model Components:The tech business model is made up of four essential components that collectively define how a tech company operates and creates value:
- Value Model: This component outlines the company’s value propositions, which are the unique benefits or solutions it offers to customers. It also includes the company’s mission and vision, which provide a sense of purpose and direction.
- Technological Model: Here, the focus is on managing research and development activities. This involves allocating resources to innovate and improve existing technologies or develop new ones, ensuring the company remains competitive and aligned with market trends.
- Distribution Model: This component involves structuring the company’s sales and marketing operations. It includes determining the target audience, selecting distribution channels, and designing strategies to effectively reach and engage customers.
- Financial Model: The financial model encompasses revenue modeling, cost structures, profitability analysis, and management of cash flow. It’s crucial for ensuring the company’s financial sustainability and growth.
- Perspectives on Competition:Several perspectives aid in analyzing competition in the tech business landscape:
- Current Customer Overlap: Identifying key customers shared with competitors helps prioritize efforts to retain and satisfy these important clients.
- Current Technology Overlap: Assessing technological advantages helps understand the unique selling points and innovation potential compared to competitors.
- Current Distribution Overlap: By examining distribution channels, a company can determine which channels effectively enhance the value proposition and expand reach.
- Current Financial Model Overlap: Analyzing competitors’ financial models aids in refining the company’s financial strategies and approaches for growth.
- Future Technology Development: Exploring emerging technologies provides insights into potential areas for expansion into new markets or industries.
- Case Study: Tesla Competitive Analysis:Tesla serves as a case study to illustrate the concepts discussed. Tesla is not solely an automaker; it also engages in electric energy production and storage (SolarCity) as well as autonomous driving technology. The case study focuses on Tesla’s competition across different segments, including:
- Automaking: Analyzing how Tesla competes with other automakers in the electric vehicle market.
- Sport/Performance: Understanding Tesla’s competitive stance in the high-performance vehicle sector.
- SUVs: Examining Tesla’s competition in the SUV market segment.
- Trucks: Analyzing how Tesla’s electric trucks compete in the commercial vehicle industry.
Competitors’ Case Study Analyses