#Three Types of Competitors — Direct, Indirect, and Substitute
| Category | Definition | Healthcare app example |
|---|---|---|
| Direct competitor | Same solution, targeting the same customer | Comparable diet apps A, B, and C |
| Indirect competitor | Solves the same problem in a different way | Personal trainers, nutritionist consultations |
| Substitute | The customer chooses not to solve the problem at all | Just living with it, or taking a friend's advice and moving on |
#The Basic Structure of a Positioning Map
A Positioning Map is a 2x2 matrix built from two axes — X and Y — on which you plot competitors. Good axes have to be variables that customers actually use when making a decision.
- X-axis — price range (low to high) or ease of use
- Y-axis — depth (simple to specialized) or degree of automation
- Place your own company in an empty quadrant (white space)
- Optionally use circle size to represent market share or revenue
#Examples of Bad Axis Choices
| Bad axis | Why it's a problem |
|---|---|
| Good service ~ bad service | A subjective judgment, not a decision variable |
| Uses AI ~ doesn't use AI | Customers don't choose based on whether AI is involved |
| Fast ~ slow | Vague definition, not measurable |
| Innovative ~ traditional | A value judgment, unrelated to how customers decide |
#Four Conditions for a Good Axis
- Measurable — expressed in objective units like price (currency), time (minutes), or frequency
- A decision variable — something customers actually use when comparing options
- Reflects your differentiation — your company should land in an empty quadrant
- Simple — expressible in one word, with no elaboration needed
When the axes are well chosen, your differentiation gets visualized automatically. It's often more efficient to work backward: decide which quadrant you want your company to occupy, then find the axes that leave that quadrant empty.
#Standard Format for a Competitor Analysis Table
Attaching a competitor analysis table alongside your Positioning Map significantly boosts credibility. The standard format uses these five columns.
| Column | Example |
|---|---|
| Competitor name | Company A, B, C |
| Core business model | Monthly subscription / usage-based billing / transaction fee |
| Target customer | B2B SMEs / B2C ages 30-40 / global enterprises |
| Key strength | Price, UX, domain expertise, proprietary data, etc. |
| How we differ | One-line differentiator (half the price, localized-first, more automation, etc.) |
#Describe Your Barrier to Entry and Moat Alongside It
A Positioning Map alone doesn't answer the question 'why can't a bigger company just copy this?' You need to explain whether your differentiation functions as a real barrier to entry, and whether it holds up over time.
- Technology moat — patents, proprietary data, an algorithmic edge
- Network effects — more users drive more value
- Distribution moat — exclusive channels, government certifications, industry licenses
- Brand moat — category recognition, an NPS advantage
- Cost moat — a unit-cost gap from economies of scale
#Self-Check Checklist
- Have you identified all three competitor types — direct, indirect, and substitute?
- Are both Positioning Map axes measurable decision variables?
- Is your company placed in an empty quadrant (white space)?
- Are all five columns of the competitor analysis table (name, business model, target, strength, difference) filled in?
- Have you explained whether your differentiation is a barrier to entry that holds up over time?
- Have subjective phrases ('we're better') been replaced with objective comparisons?
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