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Theory

Who you really compete with

Define the market by what customers would do instead: free videos with an AI chatbot, a school teacher's lessons, or doing nothing at all.

~9 min read · 9 exercises · 250 points

Before you start

The rival on the slide

Still on Klasna's marketing team, starting row 1 of the plan: the situation. Uliana has spent a week on a slide about the large online school, the rival she sees everywhere in ads and search. But the sign-up form has asked families "what else did you consider?" for a year. In this lesson: who Klasna really competes with, when the market is defined by what customers would do instead.

Competitive alternatives: the market as the customer sees it

A competitive alternative is whatever the customer would do if you didn't exist, including doing nothing at all. The set of alternatives is your market as the customer sees it, which is often very different from the list of companies that look like you.

The cheapest way to find them is to ask at the moment of choice. Since September 2025 Klasna's sign-up form has asked "what else did you consider?". In a sample of 160 accounts the answers were: free videos with an AI chatbot 43, waiting or doing nothing 28, a school teacher's after-class lessons 26, a private tutor 18, a local tutoring center 15, a large online school 15, nothing named 15.

Answer
Accounts
Free videos with an AI chatbot
43
Waiting until spring, or doing nothing
28
A school teacher's paid after-class lessons
26
A private tutor
18
A local tutoring center
15
A large online school
15
Nothing named
15
Total
160

The top three together: 43 + 28 + 26 = 97 of 160 = 60.63%. Six families in ten weighed Klasna against options that never bid in an ad auction, so a team that only watches rival ads never sees most of its competition.

  • Do
    "What else did you consider?" asked at sign-up, then the whole table read top to bottom.
  • Don't
    "Our competitors are the schools that bid on 'exam tutor'."

    That lists rivals in one channel, not the customer's real options.

One rival is one row of the table

The rival that feels biggest to the team is rarely the one that most customers weigh you against. Before building a plan around a competitor, find its row in the whole distribution of alternatives.

Answer
Accounts
Free videos with an AI chatbot
43
Waiting until spring, or doing nothing
28
A school teacher's paid after-class lessons
26
A private tutor
18
A local tutoring center
15
A large online school
15
Nothing named
15
Total
160

Uliana spent a week on the large online school: its ads are everywhere and it tops every search. In Klasna's 160 sign-up answers it was named 15 times: 15 ÷ 160 = 9.38%, level with a local tutoring center and with families who named nothing. Free videos with an AI chatbot (43), waiting (28) and a school teacher (26) were each named more often.

That doesn't make the work useless. Fifteen families out of 160 is real, so the plan keeps a line on that school. It just mustn't let one visible rival set the whole situation row. Visibility in ads measures how much a rival spends, not how often customers consider it.

  • Do
    "The large online school: 15 of 160, one line in the plan."
  • Don't
    "They're everywhere in search, so they're the one to beat."

    Ad visibility reflects their budget, not your customers' choices.

Doing nothing is a competitor

The status quo, deciding to do nothing for now, is a competitive alternative and often the strongest one. It costs nothing today, needs no decision and feels safe. Its price comes later.

In Klasna's sign-up answers, 28 of 160 families said they nearly waited until spring or did nothing: the second-largest answer after free videos with an AI chatbot. No school advertises "wait", so a team watching rival ads never notices this competitor at all.

Beating it takes a different message from beating a rival. You don't claim to be better than another school; you show, honestly, what waiting costs: between October and May the gaps grow and the time to fix them shrinks. That has to stay true. Invented scarcity ("only three places left") or scare stories may move a parent once, then cost the trust the whole plan relies on.

  • Do
    "Between October and May the gaps grow and the weeks to fix them shrink. Start with one lesson a week."
  • Don't
    "Only three places left this autumn!" (when it isn't true)

    Invented scarcity wins one click and loses trust.

What each alternative does well, and where it falls short

You don't beat an alternative by pretending it's bad. Every alternative is chosen for something real; your chance lies where it lets the customer down. For each one, write two lines: what it does well and where it falls short.

  • Free videos with an AI chatbot: free, any hour, endless explanations. Falls short: nobody keeps a plan or notices when the teen stops.
  • Waiting until spring: easy, costs nothing now. Falls short: the gaps grow while the time before the exam shrinks.
  • A school teacher's after-class lessons: trusted, nearby, knows the program. Falls short: a group pace and a fixed slot.

These lines are hypotheses, not facts. Klasna's team wrote them from its own view; families may see the gaps differently. Check them in customer interviews before any of them becomes a message (the Customer Development course shows how to ask without leading).

  • Do
    "Hypothesis: parents choose the teacher for trust, and leave over the fixed slot. Check in five interviews."
  • Don't
    "Free videos are useless, everyone knows that."

    They're chosen for real reasons; dismissing them hides where you can actually win.

AI: a competitor and a tool at once

The same technology can be your competitor and your tool. Free AI chatbots are an alternative to a tutor; Klasna Club uses an AI practice partner inside its own offer. Both are true, and the plan should say so plainly.

The consequence for marketing: "we have AI" can't be the reason to choose Klasna. A reason to choose you must be something the alternatives can't easily offer, and AI is offered free by chatbots and soon by every rival.

Leo's worry ("why pay a tutor in five years?") deserves an honest answer rather than a slogan. Some families will choose the chatbot, and that's fine. Klasna wins where the job is more than an explanation: a deadline, a teen who needs someone to answer to, a parent who wants to see progress. AI can make that job cheaper or better behind the scenes; the job itself is the reason.

  • Do
    "Practice with the AI partner between lessons; your tutor checks what you practiced."
  • Don't
    "Choose Klasna: now with AI!"

    Soon every option says the same, so it decides nothing.

Competing with free

A paid service can compete with a free alternative when it does a job the free one doesn't. Price is only one part of what customers weigh; the other part is what they need done.

Free videos with an AI chatbot explain a topic well. What a family with an exam-year teen often needs is more than an explanation: a plan to the exam date, someone the teen answers to each week, a parent who can see progress. That job is where Klasna can win, and it's not a price war Klasna could ever win against zero.

Two honest consequences. First, some customers will rightly choose the free option because an explanation is all they need; the plan should accept that rather than chase them. Second, the message has to name the job ("someone keeps the plan and checks the work"), not attack the free tool.

  • Do
    "A chatbot explains; your tutor keeps the plan to May and checks the work every week."
  • Don't
    "We'll cut prices until we're close to free."

    A price race against zero can't be won.

Read the blanks as unknowns

When you read a distribution of answers, treat blanks and "nothing" as unknowns, not as good news. A missing answer has several possible causes, and the plan shouldn't pick the flattering one.

In Klasna's 160 sign-up answers, 15 accounts named no alternative. Maybe those families really looked nowhere else. Maybe they skipped an optional question, or the parent filling in the form didn't know what the teen had tried. Each cause means something different for marketing, and the table can't tell them apart.

Answer
Accounts
Free videos with an AI chatbot
43
Waiting until spring, or doing nothing
28
A school teacher's paid after-class lessons
26
A private tutor
18
A local tutoring center
15
A large online school
15
Nothing named
15
Total
160

The honest move is to keep the row, label it "unknown", and turn it into a question for customer interviews: "Before Klasna, what did you try or think about?" The same rule protects the rest of the table: the large online school's 15 answers stay a line in the plan, not the whole plan, and the blank 15 don't quietly become "loyal" families.

  • Do
    "15 named nothing: unknown. Ask in the next five interviews what they tried before."
  • Don't
    "15 families had no alternative, so they're loyal to us."

    The flattering reading of missing data.

The market in one sentence

A useful market definition names the customer and their real alternatives in one sentence. That sentence tells the team what to watch and what to beat.

For Klasna's exam side: "families of exam-year teens who would otherwise use free videos with an AI chatbot, wait until spring or pay a school teacher." It comes straight from the sign-up answers, where those three options covered 97 of 160 accounts.

Compare the weaker versions. "Online tutoring in Ukraine, where the large online school leads" defines the market by one rival. "Everyone aged 10 to 17" is an age band with no alternatives in it. "Anyone who searches for 'tutor'" is a search habit, one channel's view.

How it fits together: alternatives come from asking customers, the whole distribution beats one visible rival, each alternative gets a strength and a gap to test, and the result is one market sentence. The next lesson reads the rivals you do name from public sources, ethically.

  • Do
    "Exam-year families who'd otherwise use free videos with a chatbot, wait, or pay the school teacher."
  • Don't
    "Our market: online tutoring, led by the large online school."

    One rival defines nothing about what most families do instead.

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