One of the best tools you can use to define new opportunities for business growth is the competitive matrix analysis. A competitive matrix is an industry-analysis tool that can help you find opportunities to innovate with new or improved products, services, and marketing strategies.
A competitive matrix is used to critically profile and compare your company against your known competitors. This analytical tool helps you establish your company’s competitive advantage in an easy-to-read format. At one glance you should be able to see your company’s competitive landscape, your position in a given market, and possible opportunities to differentiate your company’s products and services from the competition.
How to build a competitive matrix
This matrix can be just a simple chart or table, and it typically starts with evaluation factors that are pertinent to your company’s industry and that will help you begin to differentiate your products and services from your competitors. You can also include features and benefits in these factors.
For features, answer simply Yes or No, and for benefits go deeper and assign a ranking versus your competitors of 1-5, with 1 being low and 5 being high. Ultimately, you will want to define those features that deliver significant benefits to your customers when compared to the competition.
An example of a competitive matrix
Analyzing the competitive matrix
Your matrix will undoubtedly be longer than the above example. Try to identify all the key features or benefits that are important to your existing and potential customers, and then rank how your company compares with your competitors.
Now that you have completed the competitive matrix, it’s time to analyze what it means to your company’s profitable growth strategy. Here are a few things the matrix may reveal:
- Improve your service function to help customers use your products more effectively.
- Develop a customer training function that trains the people who will use your products how to use them in the safest and most effective way.
- Think of new ways to easily customize your products to meet the differing needs of customers, and that will differentiate your products from the competition.
- Develop a new marketing campaign linked to a revised sales plan to communicate your message of cost-effective benefits more clearly to potential customers.
- If you find an opportunity to develop a new product that will further differentiate your company, form an internal team, set a timeline, and find available and affordable resources to help you get this done as quickly as possible.
- Use this competitive matrix as an internal sales training tool to help your sales staff and outside reps communicate your company’s competitive advantage more clearly to customers.
- Use the matrix to find ways to improve your products or services as compared to your competitors.
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Why a competitive matrix analysis is important
One thing we know about profitable growth is that companies that design and deliver more distinctive products can command a higher margin and are therefore more profitable. If your company is competing today only on cost, then your future is at risk—this should be a red flag. Your products can easily be outsourced to lower-cost producers either in the United States or off-shore.
But by continually seeking out ways to make your products and services more unique and distinctive, as well as delivering measurable benefits to your customers, your company will be on the road to developing a profitable growth plan now and in the future. The key is to take the first step on the road to profitable growth, and the competitive matrix is an excellent first step to the journey.
RELATED: Do You Know What Your Competitors Are Doing? Create a Competitor Analysis in 5 Easy Steps
