Strategic Groups: Why Not All Competitors Play the Same Game or Earn the Same Success

It's easy to look at a group of competitors and think they're all essentially doing the same thing. But under the surface, industries often organize themselves into 'strategic groups'—clusters of companies or individuals who play by different strategies, aiming for different customers, or using distinctive resources. For example, in the car industry you might see luxury brands, economy brands, and off-road specialists, each with their own unique strengths, customer expectations, and challenges. This explains why a premium automaker rarely wants or manages to compete in the low-cost commuter segment: their existing systems, brand identity, and profit expectations just won’t fit.

Moving from one group to another is usually much harder than it seems. A famous coffee brand trying to pivot into discount, ready-to-drink cans often finds the cost, culture, and customer perception barriers too high. The same goes for a budget airline attempting to go premium overnight; they face technology, staff training, and brand credibility gaps.

When you map out these strategic groups and understand the real 'mobility barriers' between them, you uncover hidden patterns of rivalry and profit. Some groups are well-protected and enjoy years of stability, while others are crowded with imitators and constant churn. Analysts and business leaders use strategy maps to avoid futile battles and instead double down where they have enduring strengths. This approach minimizes wasted effort and helps spot the rare opportunities to create new groups—think Tesla in autos, or niche craft breweries in beer. It's a systems thinking approach that reveals value in places outsiders overlook.

First, write down a list of your main competitors and sort them by their overall strategies—are they more about price, quality, innovation, or a unique customer group? Next, sketch how they cluster together and label what ties each group together. Now, take a few minutes to consider how tough it actually is to move between these groups—are there barriers like brand image, technical skills, or relationships that keep competitors locked in their lanes? This exercise will give you new clarity about where to play and how to win.