Your Competitors May Not Be Who You Think They Are

Most competitive analyses start with a list of companies that look like us. Same category. Similar products. Similar language. Then the team builds a feature matrix, compares prices and decides where it is better. It is clean. It is also often wrong.

Customers do not buy categories. They make decisions. Sometimes the choice is between two vendors that sell nearly the same thing. Sometimes it is between software and a consulting firm, a spreadsheet, an internal team, an adjacent platform or the decision to wait. All of those alternatives can take the budget, urgency or attention away from you.

A competitor is not just a company that sells what you sell. It is anything the customer can choose instead.

Start With the Buying Decision, Not the Industry List

The word competitor sounds precise, but it covers several very different situations. A company that appears next to yours in an analyst report may rarely appear in the same deal. A small service firm may never appear in a market-share chart, yet win because the customer wants someone to do the work. An internal team may stop a purchase before vendors are even evaluated.

Before naming competitors, define the decision. What is the customer trying to accomplish? What triggered the search? Who owns the problem and the budget? What constraints matter? What happens if the customer does nothing? Those questions create a more useful competitive field than a list built from product labels.

The Four Competitive Sets

A useful competitive analysis separates four kinds of alternatives. The categories matter because each one enters the buying decision differently and wins for a different reason.

Direct Competitors Matter, but Not Equally

A direct competitor should be defined by shared customer decisions, not surface similarity. The strongest evidence is behavioral. Do the same buyers consider both companies? Do they appear in the same deals? Do customers switch between them? Does one company’s pricing or product move change the other company’s win rate or discounting?

The U.S. Department of Justice and Federal Trade Commission use similar evidence when assessing close competition, including switching, win-loss records, discount approvals and customer testimony. That is a useful discipline for strategy too. Actual customer behavior should carry more weight than category labels.

The distinction matters because strategy gets distorted when every category peer is treated as equally important. Sales teams prepare for rivals they rarely see. Product teams chase feature parity. Leaders miss the alternative that is actually winning. I would rather have a short list supported by real buyer behavior than a large matrix built from websites.

If two companies rarely appear in the same decision, they may be peers. They are not close competitors.

Substitutes Compete for the Job

Substitutes are easy to miss because they do not look like your product. The better question is not, “Who sells what we sell?” It is, “What else can the customer hire to make the same progress?” Jobs-to-be-Done theory is useful here because it focuses on the outcome the customer is trying to create. Once the job is clear, the alternative set often becomes much wider.

A software platform can compete with an agency, a managed service, a consultant, a broader suite, a point tool or a feature bundled into another product. The substitute may be less capable on paper and still win because it is easier to buy, more familiar, less risky or better aligned with the customer’s operating model.

This changes positioning. A feature comparison explains why you are better than a similar vendor. It does not explain why software is better than hiring help, why a specialist is better than a broad platform or why a new process is worth adopting at all. The message has to address the tradeoff the customer is actually making.

Internal Solutions Are Often the Hardest Competitor

The internal solution may be a spreadsheet, an analyst, a shared inbox, a weekly meeting or a patchwork of existing tools. It does not have to be elegant. It already has users, owners and a place in the budget. The customer understands its limitations and has learned to live with them.

Internal solutions win for practical reasons. They avoid a new procurement process. They preserve control. They use sunk investments. They do not require a new vendor relationship, implementation or change program. A vendor has to overcome all of those costs before product superiority matters.

Doing nothing belongs in this group too. It wins when the problem is real but not urgent, when ownership is unclear or when the perceived cost of change is higher than the expected benefit. A long sales cycle with no decision is not evidence that the buyer chose nobody. The buyer chose the current state.

Illustrative example

What Competes With a Competitive-Intelligence Platform?

Its direct rivals may be other intelligence products. Its substitutes may include a research firm or a broader sales platform. Its internal solutions may be CRM notes, analyst searches, sales meetings and spreadsheets. The emerging threat may be an AI capability embedded in a system the customer already owns.

Direct rival

Wins on familiar capabilities, price, specialization or an existing relationship.

Substitute

Wins because the customer wants the work completed, not another tool to manage.

Internal solution

Wins because it is already funded, understood and embedded in the current process.

Emerging threat

Wins through convenience, bundling or access to data and users the customer already has.

Each alternative wins for a different reason. That means each one requires a different response.

Emerging Threats Rarely Look Dangerous at First

An emerging threat is not simply a small company with a new feature. It is an alternative that could change how customers solve the problem, how value is delivered or where the economics sit. It may begin in a segment the incumbent does not prioritize. It may enter through a use case that looks too narrow. It may be bundled into an adjacent platform and priced below the standalone product because the provider makes money somewhere else.

Disruption research is helpful because it explains why credible threats can be easy to dismiss. New entrants often begin with customers who are overserved, overlooked or not buying at all. Their early product may look weaker by the incumbent’s standards. The risk is that it improves while carrying a simpler model, a different cost structure or easier access to customers.

The answer is not to label every startup or AI product a strategic threat. Test five things:

That test separates a headline from a threat worth acting on. Do not ask only what a competitor could do. Ask what it has a reason and the ability to do next.

Competitive Intelligence Should Change a Decision

Competitive intelligence can become a collection activity: news alerts, screenshots, battlecards and feature grids. That material has value only if it changes a decision. Useful intelligence should affect where to play, how to position, what to build, what to charge, which partners to pursue or how sales should handle a specific alternative.

The quality of the decision depends on the quality of the evidence. I would organize that evidence in three levels:

Every finding should be marked as fact, inference or unknown. That small discipline prevents confidence from outrunning evidence. It also forces the team to ask what would disprove its view. Good intelligence is not certainty. It is a better-calibrated decision.

Read the Competitor From the Inside

To anticipate a move, look at the competitor’s incentives and constraints. What growth problem is it trying to solve? Which customers are most valuable? What capabilities, channels and partnerships does it already have? What would it have to stop doing to pursue this market?

Job postings, leadership changes, acquisitions, partner announcements, product releases and regulatory filings can be useful when interpreted together. A single signal is rarely enough. The pattern is what matters.

The InsightLab Competitive Field Framework

The goal is a decision system, not a longer watchlist. I use five steps to keep the work grounded in customer behavior and tied to action.

1. Define the decision. Name the customer job, trigger, buyer, budget, success criteria and cost of inaction. A vague decision produces a vague competitor list.
2. Build the four alternative sets. List direct competitors, substitutes, internal solutions and emerging threats. Use customer language, not just industry categories.
3. Compare on customer criteria. Evaluate the alternatives on the factors that drive the decision: outcome, time, risk, control, effort, economics and fit with the operating model.
4. Weight likelihood and impact. Estimate how often each alternative appears, where it is strongest and what happens if it grows. Not every threat deserves the same response.
5. Turn insight into action. Assign a decision, owner, evidence threshold and review date. Monitor the signals that could change the conclusion.

Measure What Customers Actually Do

The most useful metric is often not market share. It is how the choice set changes in the deals and customers that matter to you.

The Real Test

A competitive analysis should explain what customers choose instead, why those alternatives win and what the company should do differently. If it only describes similar vendors, it is incomplete. If it produces information but no decision, it is unfinished.

The goal is not to know everything about every company near your category. It is to know which alternatives change customer behavior, where they are strongest and how that should change your next decision.

Your competitors are not defined by the category you occupy. They are defined by the choices your customers are willing to make.

Sources & Further Reading

• Michael Porter — The Five Competitive Forces That Shape Strategy
• U.S. Department of Justice and Federal Trade Commission — 2023 Merger Guidelines
• Christensen Institute — Jobs to Be Done Theory
• Christensen Institute — Disruptive Innovation Theory
• U.S. Securities and Exchange Commission — How to Read a 10-K
• Harvard Business Review — What You Can Learn from a Competitor’s Job Postings
• McKinsey — How to Predict Your Competitor’s Next Move