When it’s complete, I can rationalize my position with a cogent understanding of numerous qualitative and quantitative data points. The matrix helps keep track of everything that needs to be compared. It’s the most obvious way to do a cross-comparison, and by using a spreadsheet, I can methodically collect data and not miss anything while I’m surfing around to research. I have found the most efficient way to do a comprehensive competitive analysis is to collect all of the data in a matrix. To connect the dots, though, you first need to collect them. It will also help your team learn about the competitors, their best practices for design, and what types of customer segments use their products. If done thoroughly, the research can provide a treasure trove of insight into current trends and outdated manifestations of mental models. You want firsthand knowledge of the good and bad user experiences provided by your competitors. That’s why conducting market research on the competition is a crucial component of business strategy. To be competitive, you need to know what’s out there, what has worked, and what has not worked. Therefore, you want to study how all the current digital solutions address the needs of your target customers. You and your team might think you are creating a new marketplace with your product, but how can you be sure? Chances are you actually are entering an existing market. Using the Competitive Analysis Matrix Tool But the whole experience taught my father (and us kids) lessons that were huge. He decided to accept his fate and sold the stand at a significant loss, which was truly tough for my family. That comment depressed my father for days. “To be honest, Alan,” the man replied with a heavy Armenian accent, “You are married to a corpse.” Before he left, my father asked him what he thought of the business. The man came back the next day and watched another lunch shift. After one bite, she asked for her money back. In the first hour, an elderly woman who lived at the nearby senior-citizen home walked up and bought a hot dog. He bought a hot dog and then sat down at a table to observe the entire lunch shift. The man showed up to the stand at noon and introduced himself. One morning someone responded to his “Hot Dog Stand For Sale” ad. His management expertise did not translate into the emotional stamina and physical strength required to perform the daily operations of the business. Eventually, he realized that in spite of all his efforts, he couldn’t turn it around. At the time, my brother and I (then 10 and 12) would hang out at the stand on the weekends, and we could see that my dad didn’t know what to make of his new business. Worse, cockroaches crept across the serving counter, and my dad kept trying to squash them before customers walked up. On opening day, though, he sold fewer than 10 hot dogs. My father saw an opportunity for turning the stand into a profitable business and bought it immediately.įigure 4-2 shows how he gave everything a fresh coat of paint, updated the menu, and put up a big sign that said the stand was under “new management.”įigure 4-2. Polaroid of Alan Levy in front of his hot dog stand in 1978 The place was run down, and the owner appeared indifferent to his customers. He watched the operation briefly and saw how very few customers came to the stand even while their cars were being washed. He soon found a hot dog stand for sale next to a carwash in North Hollywood. So, my father was confident that his own management experience would bring him success. His good friend did well for himself by opening several hot dog stands in the Los Angeles area. He’d been working for others since he graduated from UCLA with an accounting degree and was eager to be an entrepreneur. In 1976, at the age of 38, he got up the courage to quit his full-time job as the area management supervisor for a popular California restaurant chain. But don’t you want to know what it will take to beat the competition sooner rather than later? If you don’t know what you don’t know, you are at risk of learning the hard way. And it also might bring tears to your eyes if you discover that your product vision is not actually unique. The more layers you peel, the more you reveal. Doing solid investigative market research is like peeling an onion.