Strategic Group Map

Place competitors on two axes that customers care about, see who clusters with whom, test whether an empty space is an opening or a graveyard, and choose where to stand.

Mixed research: the idea of strategic groups (Caves & Porter, 1977) is widely taught, but whether belonging to a group predicts performance is contested. The map itself is a practitioner tool (Meilich, 2019, reviews how maps are made). Scores from 1 to 5 are your judgment.

Use it when:

• You position a new offer or enter a market and need to see how rivals have chosen to compete.
• A new competitor appears and you need to know who it really threatens.
• Price pressure or slow deals suggest you sit in a crowded spot.

Skip it when:

• You do not yet know how attractive the industry is: start with 7.2 Industry Structure Page.
• You want the customer's own view of the market: use 6.8 Positioning Map, which asks customers, not you.

The idea of strategic groups extends the logic of entry barriers inward. Caves and Porter (1977) argued that the barriers protecting an industry from outsiders have counterparts inside it: mobility barriers that keep firms in one cluster of strategic choices from moving into another. That is why a position can stay profitable with competitors in plain sight.

The mapping is a practitioner tool, and the evidence behind the theory is mixed. Whether a group reliably predicts performance remains contested, so treat the map as a way of seeing the structure of choices, not as proof that one group is the place to be (Meilich, 2019).

That reading discipline shapes the steps. Step 2 warns against axes that move together, because a map whose dimensions are secretly one dimension shows clusters that do not exist. Step 4 asks whether an empty position is untried or tried and rejected by customers, and what stops rivals from moving into your target. Step 5 forces the conclusion: name the position, the rival and the credibility. A map pays for itself only if it changes where you stand.

Include direct competitors, indirect ones and the most common substitute, including doing it yourself.

Strong answer: five to eight names with a type and a customer each, such as "Online retailer: direct, price-led shoppers". A list of only the three you fear is not a market.

Illustrative example: the market, the scores and the firms are made up.

A mechanic plans a bicycle service business for daily commuters in Gothenburg.

Axes: X = how much of the commuter's need is served (single sale to a full service plan); Y = service speed (slow to fast).

Reading: the chains cluster low and slow. The repair shop and the specialist sit mid-map and serve other customers. The top right is empty. Is it empty because nobody tried? The test is three employers who offer bike benefits: if two will sign a service plan, it is real.

Mobility barrier: the chain stores would have to rebuild how they staff and price workshops.

Positioning: "Commuter bikes serviced in 24 hours, fixed monthly price."