This chapter discusses the factors related to a customer analysis by segment, behavior, and wants and needs. It illustrates the two major components of competitive analysis: external analysis and internal analysis. External analysis concentrates on four market spheres: customers, competitors, industry, and environment. The chapter looks at each type of external analysis in turn to see how it contributes to shaping competitive strategies. The adoption of innovations is often governed by behavioral patterns of the consumer, with the features of the product taken for granted and playing only a minor role. Of necessity then, psychology, sociology, cultural anthropology, and other behavioral sciences serve as important tools for senior executives, marketing executives, and product developers. Customers are classified at all stages of the buying cycle: from end-use consumers to industrial and commercial buyers, as well as to intermediaries such as distributors, wholesalers, and retailers. Each stage represents a force within an industry that warrants investigation.