Competitor mapping

In the world of B2B services, we are often taught to view competitors as enemies to be defeated. However, according to strategy giant Michael Porter, not all rivals are created equal. In fact, having the right kind of competition can actually make your firm more profitable and your strategic position more secure.

The trick is to understand the difference between a "good" and "bad" competitor and how to respond to them so that you're moving away from reactive firefighting and toward proactive market leadership.

What exactly is a "good" competitor?

A "good" competitor isn't a weak one; it’s a rational one. These are firms that play by the rules of the industry. They understand their costs, they set prices for an appropriate profit margin, and they have realistic goals for their market share.

Most importantly, a good competitor helps "set the floor" for the industry. Because they won't work for free, they prevent the service from becoming a commodity. They accept their niche, leaving room for you to dominate yours. Conversely, a "bad" competitor is irrational, they might under-price a project just to "win" it, even if they lose money, which eventually poisons the well for everyone else.

How to Map Your Competition

To use this in the real world, you need to map your rivals based on their behavior rather than just their size. Create a simple four-quadrant map based on two axes: Rationality and Strategic Fit.

The Vertical Axis: Rationality (Behavioral Consistency)

This axis measures how much a competitor understands the industry "rules" and their own internal economics.

High Rationality: These firms understand their cost-to-serve. They won't take a project that results in a loss just to "keep the lights on." They have predictable goals (e.g., a 20% margin) and they make logical moves that prioritize long-term stability.

Low Rationality: These firms are often driven by desperation or a lack of data. They may price services blindly, react emotionally to losing a pitch, or pursue growth at any cost, even if it destroys their own profitability.

The Horizontal Axis: Strategic Fit

This axis measures how directly a competitor’s goals and target audience overlap with your own.

High Strategic Fit (Complementary/Niche): These firms have a narrow focus and target audience that differs from yours. While they are in the same industry, they target different client types or solve different problems. They aren't a threat to your core audience. 

Low Strategic Fit (Aggressive/Direct): These firms want exactly what you want. They target your specific client base/target audience, use similar marketing, and are in direct "head-to-head" competition for the same pool of revenue.

Categorisation

There are various categories of competitor (NB: these don't map to the four-square-grid). 

The Stabilisers: These may compete in the same markets, but are high-quality, price-stable, and predictable.

The Maverick: These rivals are unpredictable. They might jump into new niches suddenly or experiment with wild pricing.

The Desperate under-cutter: These lack a clear strategy and compete almost entirely on price because they don't understand their value.

The Niche specialist: These firms stay in their lane. They are good competitors because they don't try to steal your core clients.

The Niche Pest: These are irrational but they don't want your clients. They might be small, local firms underpricing their own small niche. They are an irritant, but they don't threaten your core strategy. 

What to Do with This Map

Once you’ve mapped your rivals, consider your strategy. 

1. Coexist with the "good" ones. If a rational competitor raises their prices, don't use it as a chance to undercut them. Instead, use it as "cover" to raise your own margins. When both leaders in a market act rationally, the entire industry becomes more profitable.

2. Insulate against the "bad" ones. When a desperate under-cutter enters a pitch, do not follow them down on price. Instead, pivot the conversation to risk. Highlight the credibility and qualities of your service, the things that can’t be seen but matter most, like long-term reliability and deep expertise. Let the "bad" competitor win the low-margin, high-headache clients; they will eventually exhaust themselves.

3. Use rivals as a contrast. Use your good competitors to explain your own brand. If your rival is known for "method A" and you use "method B," you can explain the difference to a client without badmouthing the competition. It frames the choice as a matter of "fit," which feels much more professional to a B2B buyer.

Summary

Strategy is as much about who you don't fight as who you do. By identifying the good competitors in your space, you can focus your energy on true differentiation rather than a race to the bottom.