How to Differentiate You Product Using a Competitive Matrix

beat the competition

Every business that provides a product or service needs to differentiate themselves from their competitors or alternative solutions. For purposes of this article, I don’t really make a distinction between competitors and alternatives since both will keep customers from using your product or service. For example, Amazon Books technically competes with Barnes and Noble (B&N), but an alternative to Amazon and B&N would be your local library where books are free.


When developing your differentiation strategy, you should look at the problems that your target customers have and how your product or service solves those problems. List each problem in a table or spreadsheet down the first column as in Table 1:

Competitive Matrix
Table 1: Competitive Matrix

When scoring your product, try to be as objective as possible, not overvaluing your product and undervaluing competitive or alternative products that solve your customers’ problems. Also, prior to putting together this matrix, your should already have a firm grasp of the problem(s) you are solving and who are your target customers.

The next step in this process is to do a quick calculation comparing your product against the average score of your competition’s ability to solve your customers’ problems. The process involves pretty simple math:

  • Take the average of your competitors/alternatives for each problem line (ex for line 1: (1.00+1.00+3.00+2.00+3.00)/5 = 2.00)
  • Subtract the average for each line from your product’s score for that line (ex: for line 1: 4 – 2.00 = 2.00)
  • Take the average of the difference for each line.

Table 2 below shows how this fictional “Fancy Problem Solver” stacks up against the competition with an overall score of 1.53.

Competitive Score
Table 2: Competitive Score

In my experience, anything less that a 1.5 has some serious competitive problems. Also, anytime you have this many competitors and alternatives, you should consider solving a different problem or creating a new category that doesn’t exist. This does not mean that you are making up a BS category to avoid the hard work of competing. What it means is that you create a new category in the minds of customers so that they no longer associate your product or the problems you solve with any other alternatives.

I have personally helped may clients define their product, competitive landscape, and how to position their solution in the minds of their customers. For example, I have a client that provides a luxury, high-end service. They were have trouble defining the services and attracting customers on a recurring basis. In looking at what they offered, I first determined that they were defining their services in the sports therapy category, when they should be defined in the luxury therapy category. Once we had a new category definition, we then reached out to multiple luxury car dealerships in the area (this is a very posh, well-to-do community in Southern CA) to offer memberships to the dealerships’ customers. All they need to do is show up with their key fob and they were treated like royalty. This has translated into an increase in foot traffic and most importantly, an increase in sales and profit margins.

If you would like to discuss how I can help with your product or service strategy, feel free to contact me via the comments or LinkedIn.

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