Most companies have a fairly clear idea of who their competitors are. They track companies selling similar products, compare pricing and features, monitor launches, and build positioning around why customers should choose them instead.
There is nothing wrong with that approach, but it assumes customers define competition the same way businesses do. Very often, they don't.
A customer deciding whether to buy your product isn't necessarily choosing between you and the three companies sitting beside you on a competitor matrix. They may be choosing between completely different ways of solving the problem, spending the money, or using their time. In B2B, they may simply decide that changing anything isn't worth the effort.
That creates a much more interesting question for businesses: if the customer doesn't choose you, what do they choose instead?
The answer can reveal a competitive landscape very different from the one you thought you were operating in.
Companies Think in Categories. Customers Think in Choices.
Categories make competition easier to understand. Nike competes with Adidas, Coca-Cola with Pepsi, Netflix with Disney+, and a project management platform with other project management platforms.
Customers experience those decisions differently because their choices aren't constrained by industry categories. Someone sitting at home at 9 PM isn't necessarily deciding which streaming platform should win their attention. They could watch Netflix, scroll through YouTube or TikTok, play a game, read, go out, or simply go to sleep.
Netflix has famously recognized this broader definition of competition. Reed Hastings once described sleep as one of Netflix's competitors because the underlying resource the company competes for isn't simply streaming spend. It is people's leisure time.
Once competition is viewed that way, the strategic question changes. Netflix isn't only trying to make a better streaming service than another streaming service. It needs to remain one of the most compelling ways someone can spend their limited free time.
Many businesses are competing across similarly broad boundaries without recognizing it.
A Gym Isn't Just Competing With Another Gym
Imagine a premium fitness club opening in a major city. A conventional competitive analysis would map nearby gyms, comparing membership prices, equipment, classes, trainers, facilities and opening hours.
Useful information, but incomplete.
Someone who wants to become fitter could join that gym, start running, buy home equipment, follow workouts on YouTube, download a fitness app, join a sports club or simply walk more. They could also decide that getting fitter isn't important enough right now and do nothing.
From the customer's perspective, all of those options are competing with the gym membership.
That changes the positioning problem considerably. If the gym focuses entirely on having better equipment than the club down the road, it is positioning itself within a narrow competitive frame. But if the real customer problem is finding a way for busy professionals to exercise consistently, convenience, accountability, community and proximity may become much stronger reasons to choose it.
The product hasn't necessarily changed. What changed is the company's understanding of what it is actually competing against.
In B2B, Your Biggest Competitor Might Be Excel
This becomes even more obvious in software.
Imagine a startup has built an intelligent platform that automates a complex operational workflow. The founders identify five competing software products, study their features and pricing, and build a website explaining why their platform is faster and more capable.
Then the sales team starts speaking to customers and discovers something uncomfortable: most prospects aren't using any of those competing products.
They are using Excel, email, shared documents, an internal tool somebody built years ago, or employees manually completing the process. The competitive battle the startup prepared for isn't necessarily the one taking place inside the customer's organization.
The customer isn't asking whether Product A is better than Product B. They are asking whether the problem is painful enough to justify changing the way their team already works.
That is a fundamentally different sale.
Feature comparisons become less important because the startup first needs to demonstrate why changing the existing process is worth the cost, implementation effort, organizational attention and disruption involved. The company thought it was competing against software, when in reality it was competing against inertia.
The Status Quo Is an Extremely Powerful Competitor
Doing nothing has several advantages that companies tend to underestimate. It doesn't require budget approval, onboarding, procurement, employee training or implementation. Nobody gets blamed if a new system fails because no new system was introduced.
The existing process may be inefficient, but it is familiar. That familiarity has economic and psychological value.
This is why companies can struggle to sell products that appear objectively better than whatever customers currently use. Being 20% faster, slightly cheaper or powered by AI may not create enough value to overcome the cost of changing behavior.
For startups creating new categories, this challenge becomes even more important. There may be no established budget, familiar buying process or executive already responsible for solving the problem. The startup isn't simply asking customers to switch vendors; it is asking them to start doing something differently.
In those situations, positioning against the status quo can matter more than positioning against another company.
Luxury Shows How Wide Competition Can Become
Consider someone thinking about buying a $5,000 watch. A traditional competitive analysis might compare Rolex, Omega, Cartier and other brands operating around the same price point.
But the customer doesn't necessarily have a "$5,000 watch budget." They may simply have $5,000 of discretionary spending.
That money could go toward jewelry, a holiday, fashion, art, a premium experience or nothing at all. Those categories may look unrelated from an industry perspective, but they can become direct alternatives at the moment the customer decides where the money goes.
This helps explain why positioning becomes so important in mature categories such as luxury, fashion, beauty and hospitality. Thousands of brands can compete inside markets that already look saturated, yet new companies continue to break through.
They don't necessarily succeed because the market suddenly became ready for another handbag, watch or skincare brand. They succeed when they give a particular group of customers a sufficiently compelling reason to choose them over everything else competing for that purchase.
The battle isn't simply over who makes the better object. It is over what the object means, who it is for and why it deserves someone's money.
There Is More Than One Kind of Competitor
Thinking about competition from the customer's perspective creates a broader competitive map.
There are category competitors, the companies selling roughly the same product. There are alternative competitors, which solve the same problem differently. A gym competes with running, while an analytics platform may compete with an employee manually creating reports.
There are also attention competitors. Netflix and gaming may offer completely different products, but both can compete for the same evening. Then there are budget competitors, where unrelated products compete for the same discretionary spending.
Finally, there is the status quo, where the customer concludes that none of the available options creates enough value to justify changing anything.
For some companies, the category competitor remains the biggest threat. For others, it isn't even close.
Understanding which form of competition dominates the customer's decision can fundamentally change how a company approaches positioning and go-to-market.
This Changes How You Position the Product
Most competitive positioning begins with a familiar question: why are we better than Competitor X?
That question is useful when customers are actively comparing two similar products. It becomes much less useful when Competitor X isn't what customers are actually choosing instead.
Consider a startup selling AI software for customer-support teams. If its customers are already evaluating several AI support platforms, feature differentiation matters because the buying decision is happening within an established category.
But suppose the target customer still has 30 people manually answering repetitive support tickets. The positioning problem changes completely.
The company doesn't primarily need to prove that its AI is better than another AI platform. It needs to demonstrate why the existing operating model no longer makes sense. Support costs, response times, scalability and the amount of human capacity spent on repetitive work may become far more important than another feature comparison.
The strongest positioning therefore depends partly on what the product is trying to displace.
Sometimes You Are Competing Against a Behavior
Some of the hardest competitors don't have companies behind them at all. They are habits that have become embedded in everyday behavior.
A meditation app may compete with someone's habit of checking social media when they wake up. A meal-delivery service competes with cooking, takeaway and stopping at the supermarket. A productivity tool might be competing with the notebook someone has used every morning for ten years.
Changing products can be relatively easy. Changing established behavior is much harder because the challenger has to provide enough value not only to win a rational comparison, but also to interrupt something the customer already does automatically.
This is one reason becoming the default can create such a powerful competitive advantage. Once a product becomes habitual, it doesn't need to win the purchasing or usage decision every day because eventually the customer stops consciously making that decision.
Your Real Competition Can Change Your Market
Defining competition differently can also change how companies think about the size of their opportunity.
Traditional market sizing begins with categories: the CRM market, running-shoe market, design-software market or premium skincare market. Those numbers are useful, but they can sometimes constrain how companies see the customers available to them.
Canva is a useful example. If its opportunity had been defined purely around capturing existing spending from professional design software, the competitive landscape would have looked very different.
Instead, Canva made design accessible to marketers, teachers, students, entrepreneurs and millions of people who didn't consider themselves professional designers. It wasn't only competing for existing category demand; it helped broaden who could participate in the category.
That distinction matters. Sometimes the largest opportunity isn't convincing customers to leave your competitor. It is convincing people who never considered buying the category that there is now something relevant to them.
AI Will Make Narrow Competitor Thinking More Dangerous
AI is making it easier to create products that look increasingly similar on the surface. Features can be replicated faster, software can be built by smaller teams, content production is becoming cheaper, and new competitors can enter categories at remarkable speed.
If every company responds by watching the same five competitors, categories can quickly converge. Everyone adds similar features, adopts similar language and eventually starts looking interchangeable.
The more interesting opportunities may come from looking beyond those obvious competitors. What existing behavior could the product replace? What customer budget could it compete for? Which manual workflow could disappear? What new audience could enter the category? What happens when the customer decides not to buy anything?
Those questions can reveal opportunities that a conventional competitor matrix rarely captures.
The BeyondB Perspective: Start With the Customer's Decision
At BeyondB, we believe competitive strategy should begin with the decision the customer is actually making, not simply with a list of companies operating in the same category.
Understanding direct competitors still matters. Companies need to know how alternatives are priced, positioned, distributed and perceived. But that analysis becomes incomplete when it ignores what customers actually do when they don't choose any of them.
For one company, the biggest threat may genuinely be an established market leader. For another, it may be Excel, an internal process, a completely different category competing for the same budget, or simply the customer's reluctance to change.
Once that becomes clear, positioning gets sharper, go-to-market becomes more relevant and product decisions can be made around the actual behavior the company is trying to change.
The companies on your competitor slide are still worth watching.
But the more important question is what happens when the customer doesn't choose any of them.
Because your biggest competitor might not be another competitor at all.
