Competitive Analysis Tree
Author: Pascal Zoleko
Sometimes, when we (Flexudy Education) are not busy creating services to improve the quality of education and research we write blogs about ideas that cross our minds. Today we will talk about CATs. Not about the cute ones, but about Competitive Analysis Trees.
To illustrate how CATs are used, let’s take a look at the classic AirB&B pitch deck first. If you are not familiar with the competition analysis, don’t worry, it’s super easy. If you look at the picture on the left, you can see that going down means expensive, while going up means affordable (or less expensive). Finally, moving left means “hotel” transactions are offline, while moving right means transactions are online (probably over the Internet). AirB&B therefore tries to show that they are very affordable compared to their competitors and that transactions are carried out online. In other words, AirB&B claims that they are better than their competitors in terms of affordability and the way transactions are conducted.
But wait a second. What if AirB&B is better, for example in terms of quality and application speed? You would need a 4-dimensional map (which is probably hard to draw) or you could use a radar char which I think is sometimes hard to read.
Radar charts are actually pretty cool, but they can get messy if you want to put all your competitors on the radar. And because we don’t like messy, we decided to make our competition maps a little bit differently. This is where binary trees come in handy. In fact, binary trees are not new. This concept is as old as a hill, but to the best of our knowledge they are not normally used for competition analysis in pitch decks.
Let us use our competition analysis tree to analyze the competitors of AirB&B. (The graphics are suboptimal, but you get the point). We argue that this representation provides a clear path that explains why one customer prefers a product or service over another. If you really think about it, that’s what a competitive analysis graph is all about (why a potential customer prefers one product over another). Since this decision path to a product or service can be infinitely long, other dimensions or characteristics (e.g quality) can easily be added (see image below).
In conclusion, there are many types of charts out there to perform competitive analysis. We are not claiming that CAT is the best way to do it, but it might help investors and your audience better understand a customer might select a service over another.