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Competitor Positioning Matrix– SKCI Business Strategy Tool

Background 

The Competitor Position Matrix was developed by the technology consulting firm Gartner and is sometimes known as the Gartner Magic Quadrant. The function of the Matrix is to compare the market positions of businesses; comparing their vision with their ability to execute and how this is evolving over time.

Although the Competitor Positioning Matrix was originally created for the technology industry, it can be applied to any market, though it will be most relevant when the market is evolving quickly. 

When To Use Competitor Positioning – Gartner Magic Quadrant

This tool is particularly useful in the early stages of strategy development; you can use it to understand your organisation’s position in comparison with competitors and with the vision for your business. This allows you to watch your competition as well as solidifying where you see your vision taking you.

How To Use Competitor Positioning – Gartner Magic Quadrant

Firstly, establish who your competitors are and spend some time researching their performance and their stated vision.

Are they innovating? Have they cornered a segment of the market? This analysis can be as in depth as you want but the more time you spend researching your competitors, the better view you will have of the market. 

There are two points to plot on the graph for each competitor:

  • their current performance
  • where you think they are going

For both of these points, compare their vision and how they are executing it. You will have a far better awareness of their current position than their future one, and you can never know exactly where an organisation is heading, but it is helpful to consider both points in tandem. While it may seem impossible to predict the future, this step allows you to think a step ahead of your competitors and allows you to align your strategy accordingly.

The four categories can be defined as:

  • Leaders: Their performance aligns well with their vision. They are well-positioned to reach future goals.
  • Challengers: Their current performance is well executed but they are not in a good position for the future.
  • Visionaries: Show a good understanding of where the market is going but are currently lacking in the execution of goals.
  • Niche players: Have successfully focused on a small segment of the market, not currently aspiring to outperform others. 

Place your organisation into the graph, plot your current position and where you are on track to be.

Determine which category suits you best. Now look at where you sit relative to your competitors and consider where you would like to be. This may be completely different to your ‘on-track point’ or it could be a slight difference. Either way, this is where you should be working towards and is a point around which you can build your strategy. 

Use these questions to help analyse your competitive position:

  • How do you relate to the market leader?
  • Would your organisation benefit from being in the niche or visionary category?
  • How crowded is the market?
  • How sustainable is your competitive position?
  • How are you addressing the challenge of climate change?
  • Could your ESG strategy help to improve your market position? 
  • Are you consciously working towards your goals and vision?

Worked Example 

Let’s look at the example of NewTechNow, an imaginary B2B software and hardware company that we have seen in previous examples.

As we can see here, NewTechNow falls into the category of visionaries. They are producing new and innovative products but have yet to turn that into a successful business.

Point 1 is where they are currently on track to be in the future. They have chosen to focus on their vision and currently see little improvement in the execution of it. Now that they have seen where their competitors are, they can see that there is a huge gap behind the Leaders. People often think that being market leader is the end goal, but as we can see here, in certain markets the leader is not within anyone’s reach, and that’s ok! It would be ineffective for NewTechNow, a relatively small company, to take on a giant, instead they probably want to place themselves at the top of the visionary category. 

Point 2 is where NewTechNow wants their strategy to take them. This secondary point reflects an understanding of how their competitors are moving and a deliberate focus on improving the execution of vision. 

How Does This Fit Into The 5KQ Strategy Framework?

SKCI’s unique 5 Key Question (5KQ) strategy framework gives our clients an effective way of managing strategy development. Competitor Positioning- Gartner Magic Quadrant is applicable to question one, ‘Where are we now?’ and question two, ‘Where do we want to go?’.

Our framework allows you to ask the right questions at the right time and provides a clear structure for the development of your strategy. This tool encourages you to analyse your current position within the market, to give you a wide-angle view of your industry. This deeper awareness of your competitors’ relationship to yourself will allow you to focus on the direction of your strategy and produce effective goals.

Additional Resources

Additional Strategy resources, including blank worksheets in PowerPoint and Word format, are available from the SKCI website: www.skcinv.com/business-strategy-resources.

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