F9. Competitor and Substitute Analysis From Real Customer Evidence
After this lesson you can
- Identify direct and indirect competitors, substitutes, workarounds and doing nothing
- Explain the threat of substitutes and the role of switching costs
- Build a comparison matrix using customer-named criteria and their own words
- Treat gaps in the matrix as hypotheses to test
- Replace a "no competitors" claim with a checkable description of alternatives
Video coming soon
Videos are planned to publish from December 2026.
A lesson on mapping what customers use today instead of claiming a venture has no competitors. It defines five kinds of alternatives, introduces the threat of substitutes and switching costs as concepts, and builds a comparison matrix from criteria customers named in interviews.
Questions and answers
Questions a learner would ask about this lesson. Think through your own answer before you open each one.
- What are the five kinds of alternatives?
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Direct competitors, indirect competitors, substitutes, workarounds and doing nothing. A direct competitor offers something similar to the same customers for the same need, while an indirect competitor offers something different that partly meets the need. A substitute meets the same need by a different means, and a workaround is something customers improvise with what they already have.
- Why is "doing nothing" treated as a competitor?
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Customers can live with the problem, and doing nothing costs no money and no effort. The lesson calls it often the strongest alternative you face. A useful interview question is what happens when nothing is done.
- Why is "we have no competitors" a warning sign?
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Customers with a real problem always use some alternative. "No competitors" often means the problem is misunderstood, or that it is not painful enough to act on. The lesson says to replace the claim with a map of alternatives.
- Where should comparison criteria come from?
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From the criteria customers named in interviews, in their own words, such as "in my language" or "someone I trust explains it." Criteria taken from a founder's favorite features or product websites tend to make the founder's own offer look best. Rate each alternative in customers' words rather than invented scores.
- What does Porter's "threat of substitutes" mean here?
Show answer
Porter (2008) describes five forces that shape competition in an industry, and the threat of substitutes is one. The threat is higher when a substitute offers an attractive price-performance trade-off and the cost for customers to switch is low. The course uses this at the concept level only.
Practice quiz
- Question 1According to Porter, the threat of substitutes is high when substitutes do what?
- Question 2Founder B's prospective clients currently use a volunteer faculty member for analysis help. In competitor analysis, what is this?
- Question 3What is the best source of comparison criteria?
- Question 4Which definition matches "switching cost" in the lesson?
- Question 5In Founder C's interviews, families who rely on relatives to translate are an example of which alternative?
- Question 6In Founder C's worked example, clinic handouts were classified as what?
- Question 7On Founder C's matrix, which criterion did no alternative meet well?
- Question 8Why did Founder C conclude that a workshop would need to work alongside relatives rather than replace them?
- Question 9According to the lesson, how should a gap found in the matrix be treated?
- Question 10What is the lesson's correction to treating competitor analysis as a one-time slide?
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