The competitive analysis tool helps you define and refine the basis of competition within your Value Proposition's target customer segments, evaluate how well your solution addresses their needs, identify current and potential competing alternatives, and evaluate how well they stack up.
When you're offering a new product or solution, customers always have alternatives to consider. At the very least, they have the choice to do nothing and keep addressing their need the way they are today - the "status quo." More often, your solution is one of multiple alternatives they have. So, it's important to understand how your proposed solution compares to their needs, requirements, and alternatives. Just meeting their needs is not enough.
The competitive landscape is also not static. It's changing with the environment. So, one of the important aspects of competitive analysis is considering potential entrants and evaluating the implications and your response should players in adjacent areas move in. In addition, when direct rivals introduce new versions of their product or service or start marketing or positioning with new value propositions, that's a good time to update your analysis.
You can also use competitive analysis to identify areas where rivals may be over-serving the target market needs on some metrics and under-serving them in others. This can be a helpful way to prioritize where you want to focus your investment and carve out a unique and differentiated position.
