This course was created by EntrepreneurNOW. We are please to offer this training in our library.
- Convincing investors your company beats the competition
- Deciding which company strengths to emphasize
- Selecting competitors to include on the matrix
- Ranking your company and competitors fairly
Skill Level Beginner
- Now, I love this tool because it's a visual representation of how you're set up amongst all of your competitors and how you're positioned against them based on your two greatest strengths. Now, the key to this entire process is just that. It's your two greatest strengths and you in fact, get to pick your two greatest strengths. So what this does is it kind of takes it into the realm of a marketing tool. Now, everybody knows it's kind of a marketing tool. That's okay, because you get the opportunity to kind of manipulate it to show yourself in the best light which is terrific. Now, I want to warn you, you absolutely want to make sure that the strengths that you have are relevant. They have to be realistic and relevant. It's very important. Now, how to investors look at this tool? They love it. They love it because it's graphical and essentially investors have the attention span of a three year old child and I've watched them. They flip through the business plan and all of a sudden they hit the competitive matrix and they stop and they start to analyze it 'cause they're looking for a couple of things. One, is they're looking for differentiation. They're looking to see what two strengths did you pick and hopefully they're your two strongest strengths that really create a differentiation for you. Number one. Number two, it's quick and easy. They love to be able to see the entire landscape, your competitive landscape, all in one page, if you will, and they can start to compare and contrast a bit against who you have in your competitive landscape. So, it really does help hone your entire competitive business into one nice picture. All right. Let's go ahead and start to take a look at this and see how they work. Now, it's a little bit hard to get used to right at the beginning but we're going to walk you through it step by step. Essentially what you have are two axes. You have an x-axis and a y-axis and what that allows you to do is represent your two greatest strengths based on those axes, right? All right, so, we're going to have an x strength and a y strength. Now, it's important as far as what direction that go in. Directionally, you want to always go from lower to higher, from bad to good, from negative to positive, right? And it's important because we have to get you up in this area here on the stream. All right, so, let's go through and let's take a look at each one of these areas and see what they represent. This area down here is actually where your, those are where the bad competitors go. Those are the competitors who are not so good. It's kind of the lower area of your quadrant, right? So you want to make sure you're never there, okay? And this other lower area, this is the area where the x strength, the strength that represents the x-axis is stronger, where the y strength is kind of weak, okay? And so that's also not the greatest area in the world. This gets a little bit better. So your stronger competitors will go up here. Your x strength is a little bit weaker and your y strength is stronger in this particular area. And then the magic, the magic quadrant right up here. Right up here where your strongest, your greatest strengths exist here. The higher you are in this area the better it is, right? Now, it's okay to have other competitors in this area as well. You actually want competitors. You want to surround yourself with some really good competitors up here as well but you always want to be number one if you can be that as well. Very important. Now, let's go ahead and take a look at a real life example and I picked Tesla as a company that I want to represent, right? I love Tesla and so we're going to take a look at a competitive matrix for the electric car industry, right? So what's Tesla good at? First, the have the longest battery life in the industry, so they're going to really want to promote that, right, in their competitive matrix and two, they're really prestigious. They have luxury cars, so, we also want to take that as a key strength and promote that as well. So I picked their two key strengths. Now, let's see how they plot against all the other competitors in this space and again what you see, Tesla, up and to the right, okay? Brilliant. Now, they're surrounded by some really important competitors here that are strong but they are the best because they have the longest battery life in the industry and really they are the most prestigious car and so if I was doing a competitive matrix for Tesla, this is exactly how I would do it. Now, we're going to go ahead and walk you through this entire process in just a moment. Let's take a look at an example of how a competitive positioning matrix applies to a particular industry. I picked the electric car market because A, it's really an interesting market, B, it's growing like crazy and C, I love Tesla and I want to be Tesla. So, I'm going to build this as if I'm Tesla and I'm going to start by picking their two greatest strengths, right? And the first strength is, well, they're a luxury car, prestige oriented car, so I'm going to pick that as one of my strengths versus economy car and I'm also going to look at their driving range. And what Tesla's known for, more than anything else, is their incredible battery life, right, which equates, then, to driving range. So I'm going to pick low driving range or short driving range versus long driving range, right? All right, as as I start to build this, I want to go ahead and take my x-axis and I'm going to put my economy versus luxury on my x-axis and on the y-axis, I'm going to go from short driving range to long driving range. Now, keep in mind that the direction that you're going in is very important. Remember, we always want to go from bad to good, from negative to positive, right, because it will allow us to then always make sure we're up and to the right in this particular process. In the lower quadrant, we have the Ford Focus, the Fiat and the Kia. The next quadrant we have is really where you do have some of the strengths coming in now from some of the competitors. So, like, BMW, Volkswagen, Mercedes Benz. They're definitely more luxury oriented but they still don't have the battery life and the driving range that can move them up in the quadrant. Let's go ahead and move up the matrix a little bit further to take a look at Chevy Bolt, Hyundai and the Nissan Leap. Now, they're still economy, but their driving range is much, much better. And then we look at our magic quadrant, the fourth quadrant, and in this area, we have Volvo and Tesla, of course, us. So, Volvo's an absolute important competitor. Anybody looking at this matrix would say, "Oh, Volvo, that's a very well established brand "and it's certainly something to be associated with," but Tesla, of course, having the longest driving range and the most prestigious car puts them up and to the right. So what this does, is it kind of takes it into the realm of a marketing tool. Now, everybody knows it's kind of a marketing tool. That's okay because you get the opportunity to kind of manipulate it to show yourself in the best light which is terrific.