Positioning is often discussed as if it were a statement a company writes about itself. In practice, positioning depends on comparison. A brand is understood relative to the alternatives a customer considers acceptable for the job at hand, the budget available, the risk involved, and the situation in which a decision is made. Change that comparison set, and the meaning of the same product can change with it.

That is the strategic importance of competitive framing. The frame is not merely the list of companies that appear in a formal competitor slide. It is the set of substitutes, near-substitutes, and reference options that shape how buyers interpret value. A premium yogurt may compete with other yogurts in a grocery aisle, but for some occasions it competes with a protein bar, a breakfast sandwich, or skipping breakfast altogether. A project-management platform may compete with other SaaS tools during procurement, yet in many firms its real alternative is email, spreadsheets, and organizational inertia. A streaming service does not only compete against another streamer. It also competes against free ad-supported video, gaming, social platforms, sleep, and any other use of limited leisure time.

When marketers define competition too narrowly, they often create positioning that sounds clear internally but lands weakly in the market. They emphasize differences that matter only within a narrow category while missing the broader substitutions that actually determine demand, pricing power, customer acquisition cost, and retention. The result is often not just ineffective messaging, but flawed strategy.

## Positioning changes when the reference set changes

A product does not have a fixed meaning independent of context. It acquires meaning through contrast.

A bottled cold brew positioned against premium coffeehouse beverages might emphasize convenience, quality beans, and café-like taste. Positioned against energy drinks, the same product may need to stress natural ingredients, lower sugar, or a more adult consumption identity. Positioned against brewing coffee at home, it may need to justify a price premium through time savings, consistency, and portability.

None of those positions is universally right or wrong. Each depends on the customer’s decision frame.

This is why strategic positioning begins with a question that is more demanding than “Who are our competitors?” It asks, “What other solutions are customers willing to choose instead of us in a given buying situation?” That question usually expands competition beyond traditional category boundaries.

Harvard Business School professor Theodore Levitt’s classic warning in “Marketing Myopia” remains relevant because it focused on substitutes rather than formal industry labels. Railroads, he argued, suffered not because the need for transportation disappeared but because they defined themselves too narrowly as being in the railroad business rather than the transportation business. The point is not that every company should define its market as infinitely broad. It is that category labels can blind managers to the alternatives customers consider when solving a problem.

## Narrow categories often produce shallow differentiation

Many positioning efforts are built around feature comparison within an established category. That can be useful when buyers are already committed to the category and are making a relatively informed choice among similar offerings. In those situations, small differences in performance, service, or price architecture may matter.

But if customers are not yet committed to the category, or if they routinely switch across categories, internal category differentiation may miss the strategic problem. A meal-kit service can position itself as more flexible than rival meal-kit brands, but if many prospects are comparing it against grocery shopping, takeout, restaurant dining, and frozen prepared meals, then “better than another meal kit” may not be the most commercially relevant claim.

The risk is not only weak communication. It is also overinvestment in the wrong capabilities. Firms may fund product improvements that help in head-to-head category evaluations while underinvesting in the factors that actually drive adoption across substitute options, such as onboarding, distribution, availability, trust signals, integration, or pricing structure.

This is especially common in categories where managers are surrounded by competitors that look like themselves. Industry events, analyst reports, review sites, and pitch decks reinforce the visible peer set. Yet the customer may be operating in a much broader decision environment.

## Competitive frames differ by customer, occasion, and stage of adoption

One reason competitive framing is strategically difficult is that it is not stable. The relevant alternatives can vary across segments, use cases, and points in the customer journey.

A first-time buyer often sees a different set of alternatives than an experienced buyer. Someone considering a fitness membership for the first time may compare a gym not only with rival gyms, but with outdoor exercise, connected fitness subscriptions, YouTube workouts, and the option to do nothing. A committed gym user choosing whether to renew may compare mostly among similar facilities or class formats. The same brand therefore faces different competitive frames in acquisition and retention.

Occasion also matters. The economist and marketing scholar distinction embedded in “jobs to be done” thinking is useful here, even if the framework can be overextended. Customers do not buy products in the abstract. They choose solutions in context. Milkshakes may compete with bananas, bagels, or energy bars during a commute, while the same product competes with dessert items at another time of day. Clayton Christensen and colleagues popularized this way of thinking because it explains why conventional demographic segmentation often fails to capture substitution behavior.

Segment-specific frames matter as well. A small business buying accounting software may compare specialized cloud platforms. A microbusiness may compare those same tools against hiring a part-time bookkeeper or continuing with spreadsheets. An enterprise buyer may compare software not only on features but on integration, compliance, implementation risk, and vendor stability. The product’s “position” changes because the basis of comparison changes.

For strategy, this means a single universal positioning statement is often less useful than a structured understanding of the major competitive frames that matter by segment and buying situation. That does not mean creating dozens of contradictory brand identities. It means identifying which frames deserve investment and which tradeoffs follow.

## The frame influences what counts as value

Competitive framing changes which benefits matter, what costs are visible, and how price is interpreted.

If a software product is framed against enterprise suites, a lower price may signal efficiency and speed. If it is framed against free tools, the same price may feel like a major adoption barrier. If an airline is framed against other airlines on similar routes, on-time performance and loyalty benefits may matter. If it is framed against driving, total trip time, baggage hassle, airport distance, and parking economics become central.

This has major implications for pricing strategy. Pricing does not operate in a vacuum. Customers compare not only prices but total cost of adoption, switching effort, learning time, coordination burden, and perceived risk. In many B2B markets, a nominally expensive product can be competitively advantaged if it reduces labor cost, lowers compliance risk, or speeds execution. But those benefits only matter if the product is framed against the right alternatives. If prospects mentally compare it to a cheap standalone tool rather than to the full cost of manual work or fragmented systems, willingness to pay will be lower.

The same principle applies in consumer markets. A grocery private label may look low-margin when compared item by item against national brands, but for budget-constrained households it can function as a basket-level savings mechanism. A premium home cleaning product may command a higher price not because it is chemically superior in every respect, but because it is framed against time, convenience, and confidence in use rather than against unit cost alone.

Positioning decisions therefore interact directly with revenue quality. They influence not only conversion but price realization, discount dependence, and the long-term ability to defend margins.

## Defining competition narrowly can hide substitution threats

Substitution threats often emerge from outside the category a company monitors most closely. That is one reason strong incumbents can appear healthy by industry metrics while losing relevance in customer terms.

The history of media provides repeated examples. Newspaper publishers did not lose only to other newspapers. They lost classifieds to digital marketplaces, local listings to search, attention to social feeds, and ad budgets to highly measurable digital platforms. The substitution was not simply one publication replacing another. It was a broader reallocation of audience time and advertiser spend toward more efficient or more engaging alternatives. The Interactive Advertising Bureau and major industry reporting over the past two decades have documented how digital formats steadily captured a larger share of advertising expenditures, but the deeper strategic point is that the competitive frame changed. Advertisers were no longer deciding among newspaper titles alone. They were choosing among search, social, online video, retail media, and other channels with different economics and measurement properties.

Retail offers similar lessons. Department stores historically tracked one another closely, yet their strategic pressure increasingly came from off-price chains, ecommerce marketplaces, specialty retailers, and direct brand commerce. A retailer that defines competition only as “stores like us” risks underestimating how customers substitute across formats when balancing convenience, assortment, delivery speed, return policies, and price transparency.

In financial services, banks do not only compete with banks. They compete with fintech apps, card networks, buy now pay later providers, payroll services, and in some cases with customer decisions to hold more cash or reduce discretionary spending. In transportation, public transit may compete with ride-hailing, cycling, remote work, and mixed-mode commuting. In higher education, a degree program may compete not only with peer institutions but with boot camps, employer-based training, certifications, and the decision to defer enrollment.

None of this means category competitors stop mattering. It means they are rarely the whole strategic picture.

## Why organizations still fall into narrow competitor definitions

If broader substitution is so important, why do so many firms continue to define competition narrowly?

One reason is data availability. Organizations usually have better information about visible category peers than about diffuse substitutes. Market share data, shelf audits, analyst reports, and CRM loss reasons often reinforce direct competition. Substitute options may be fragmented, untracked, or absent from standard dashboards.

Another reason is organizational structure. Product teams, sales teams, and channel teams are often organized around category assumptions. Retail buyers, procurement processes, analyst coverage, and investor narratives all encourage firms to think in established industry boxes. Strategy conversations then inherit those boxes even when customer behavior does not.

A third reason is comfort. Narrow competition makes positioning easier to articulate. It is simpler to claim “faster than Brand X” or “more premium than Brand Y” than to confront the messier reality that many prospects are comparing the offer to habits, workarounds, adjacent categories, or inaction.

Yet the cost of that comfort can be significant. It can lead to incorrect market sizing, misread churn drivers, poor pricing, overconfidence in differentiation, and media investment aimed at the wrong decision triggers.

## Competitive frames should guide segmentation and targeting

A useful way to treat competitive framing strategically is to connect it to segmentation. Segments are not just groups with different demographics. They are groups that differ in needs, behavior, economics, or context in ways that affect which alternatives they consider and why.

For example, a company selling home security may find that one segment compares professional monitoring services mainly against rival monitored systems. Another compares them against self-installed devices and neighborhood watch habits. A third compares them against moving to a different neighborhood. These are not minor messaging differences. They imply different value propositions, sales models, distribution needs, price points, and proof requirements.

The strategic choice is not to address every possible frame equally. It is to identify which customer groups and use cases offer attractive economics and where the company can compete credibly. Narrower targeting can be advantageous when the firm’s capabilities align with a specific frame. A specialist B2B provider may deliberately target buyers who already recognize the need for category-specific software because those customers have higher willingness to pay and shorter sales cycles. Broad targeting may be warranted when the real opportunity lies in category expansion and the company can afford the cost of educating customers whose main alternative is nonconsumption.

That decision affects resource allocation. Winning against direct category competitors often requires product superiority and sales enablement. Winning against nonconsumption or adjacent substitutes may require more investment in education, onboarding, trial design, partnerships, and proof of return on investment.

## Positioning against nonconsumption is different from positioning within a category

Some of the most consequential positioning choices arise when a company is trying to convert customers from doing nothing, doing something manually, or using an improvised workaround.

This is common in emerging software categories, preventive healthcare, professional services, insurance, and many premium consumer goods. The immediate strategic challenge is not stealing share from a known rival. It is making the category itself feel necessary or worthwhile.

That requires a different kind of positioning. The brand must define the problem before it can differentiate its solution. It often needs stronger reasons to believe, lower perceived switching costs, and a clearer economic argument. Freemium models, free trials, guarantees, starter products, channel partnerships, and implementation support may matter more than comparative feature claims.

HubSpot’s early growth in marketing automation is often cited in part because it invested heavily in inbound education, not just product promotion. The broader strategic lesson is not that content marketing is inherently superior. It is that when the main alternative is status quo behavior, market education can be economically rational despite delayed payoff. Positioning must first shift the frame from “Do I need this?” to “Which version should I choose?”

That is a fundamentally different challenge from competing in a mature category where buyers already accept the purchase logic.

## Distribution can change the competitive frame before marketing does

Channel strategy often shapes competition as much as communications do. Where and how an offering is encountered determines what it is compared against.

A brand sold through specialty retail may be evaluated against expert-curated premium alternatives. The same product sold on a mass marketplace may be judged against a much broader field where price transparency is higher and feature-level comparison is easier. A software product sold through enterprise procurement enters a formal comparison set with governance, security, and integration criteria. The same product adopted bottom-up by teams may initially compete against convenience, speed, and low friction rather than enterprise standards.

This matters because distribution is not merely a route to market. It is part of positioning. Placement affects the customer’s frame of reference, perceived legitimacy, and willingness to pay.

Consider private-label brands. Across grocery, club, and mass retail, store brands have evolved well beyond generic low-price substitutes. Circana and other retail measurement firms have documented the sustained strength of private label in many categories, particularly during inflationary periods when shoppers reassess value. But private label performance differs by retailer and category partly because the competitive frame differs. In some contexts, the frame is “good enough at a lower price.” In others, especially in premium or fresh categories, the frame can become “smart quality selected by the retailer.” Assortment strategy, shelf placement, and retailer trust alter the meaning of the offer.

For marketers, the implication is straightforward: a positioning strategy that ignores channel context is incomplete.

## Acquisition metrics can mislead when the wrong competitive frame is assumed

Competitive framing also affects performance measurement. Many acquisition systems are optimized around visible rivals and bottom-funnel demand capture. That can make them appear more precise than they really are.

Search marketing, review-site spending, and comparison-oriented media can perform well when prospects already know the category and are choosing among providers. But if a large share of potential growth depends on changing the comparison set itself, those channels may mostly harvest existing intent rather than create new demand. A firm may then overinvest in direct-response programs because they look efficient in attribution reports, while underinvesting in the brand, distribution, or education required to expand the viable market.

This does not make demand capture unimportant. It means marketers need to ask what exactly is being captured. If paid search converts shoppers who would otherwise have bought a substitute, it may be strategically powerful. If it merely intercepts brand-aware category shoppers at rising cost while the broader substitution threat grows unchecked, the apparent efficiency can be misleading.

This is one reason companies often discover that customer acquisition cost rises as they scale a mature channel. The most reachable prospects are exhausted first. To continue growing, the company must either reach less efficient audiences or change how the category is understood. That second task is fundamentally strategic.

## Retention often reveals the true competitive frame

Churn analysis is one of the best places to detect mistaken competitor definitions. Customers may tell a company they are leaving for “price,” but the underlying substitute can vary widely. They may be switching to a lower-cost direct competitor, returning to manual methods, consolidating with another vendor, reducing usage because the category is less important than expected, or moving to an adjacent solution that bundles enough of the same benefit.

Those are not equivalent problems. Each points to a different competitive frame and therefore a different strategic response.

If churn is driven by direct feature gaps, product development may be appropriate. If customers revert to spreadsheets after onboarding, the issue may be implementation burden or weak habit formation. If consolidation into broader platforms is rising, the firm may need stronger integration, vertical specialization, or partnership strategy. If customers downgrade due to budget scrutiny, packaging and price architecture may matter more than list price reduction.

Retention strategy becomes stronger when companies analyze not just who churned, but what the customer chose instead and what that alternative represented in the customer’s economics. The same applies in subscription consumer businesses. A cancellation from a streaming service may reflect dissatisfaction with content, but it may also reflect rotation behavior, where customers cycle among services depending on programming windows, household budget, and time constraints. In that case the strategic issue is not only product appeal. It may involve release timing, bundling, annual pricing, or portfolio design.

## Portfolio strategy can address multiple competitive frames

Not every company should respond to changing competitive frames with a single brand and single offer. In some cases, a portfolio approach is strategically stronger.

A company may need an entry-level product to compete against nonconsumption or low-cost substitutes, a mainstream offer for category buyers, and a premium tier for customers comparing on performance and service. This is not automatically an argument for more SKUs or more brands. Complexity has real costs. But where competitive frames differ substantially across segments, portfolio design can allow a firm to participate without forcing one position to do incompatible work.

Automakers have long used portfolio structures this way, with brands or trims serving different price tiers and substitution sets. Consumer packaged goods companies often do the same across premium, mainstream, value, and specialized benefit segments. In software, product-led entry tiers can coexist with enterprise packages because the buyer’s comparison set changes as organizational complexity increases.

The strategic question is whether a portfolio element expands reach profitably, defends share, supports customer progression, or protects pricing integrity. If it simply adds overlap and internal cannibalization without changing the competitive frame in a useful way, it may weaken rather than strengthen the business.

## How marketers can identify the right competitive frame

The practical challenge is evidence. Marketers need a view of competition grounded in customer behavior, not just industry convention.

Several kinds of evidence are useful:

– Loss analysis and win analysis that document what customers actually chose instead, including nonpurchase.
– Search behavior that reveals adjacent needs and substitute categories, not just brand terms.
– Qualitative research focused on decision journeys, occasions, and workarounds.
– Usage and churn data that show whether customers replace, supplement, or abandon prior solutions.
– Channel data indicating where comparison occurs and which reference prices shape evaluation.
– Pricing research that tests alternatives beyond the immediate category.
– Customer support and sales-call transcripts that reveal perceived substitutes in customers’ own language.

The strategic aim is not to produce an exhaustive universe of every possible substitute. It is to determine which alternatives materially affect demand, pricing power, and retention in the segments the company cares about most.

Frameworks can help, but only if used carefully. Porter’s five forces can sharpen thinking about substitutes, but it does not tell a company which substitutes matter most by use case. Perceptual maps can visualize relative positioning, but they can become misleading if the axes reflect internal assumptions instead of customer tradeoffs. Jobs-to-be-done interviews can uncover overlooked alternatives, but they may underplay organizational buying constraints in B2B settings. The value comes from combining tools with judgment.

## Strategic implications for marketing leaders

For senior marketers, the central implication is that competitive framing is not a messaging refinement. It is a strategic input into where to compete, which customers to prioritize, how to price, where to distribute, and what capabilities deserve investment.

A narrow frame can produce the illusion of a strong position because the brand looks distinct within a tightly bounded category. But if customers are making broader comparisons, that distinctiveness may have little economic value. A wider frame can reveal harder truths: the need to justify the category, the pressure of free substitutes, the role of switching costs, the limits of current channels, or the vulnerability of a premium price.

That broader view also improves resource allocation. It helps organizations decide when to invest in demand creation versus demand capture, when to build category education versus comparison advertising, when to defend against direct rivals versus substitute behaviors, and when a channel or portfolio change is more important than a communication change.

The best positioning work therefore starts with market reality rather than brand aspiration. It asks not only how the company wants to be perceived, but against what alternatives customers are likely to judge it, in which situations, and with what economic consequences.

Competitive frames change the meaning of products because customers do not buy in a vacuum. They choose among available ways to solve problems, manage tradeoffs, and allocate limited money, time, attention, and risk. Marketing strategy becomes stronger when it recognizes that truth early. Positioning is more persuasive when it reflects the actual comparison set. Competitive analysis is more useful when it includes substitutes beyond the familiar category. And growth decisions become more grounded when marketers understand that the most dangerous competitor is often not the one that looks most similar, but the one that changes what the customer thinks the choice is really about.