Why does a customer purchase (a license) of your product? More likely than not, the primary reason for doing so may boil down to
1. Getting something new e.g. increased productivity or increased efficiency or increased resources
2. Overcoming a risk e.g. miscommunication or failing to meet statutory requirements
However, your product may not be the only solution available in the market to satisfy the customer's primary requirement. If your product is not so well-known, it has to compete with leading products in the market in the particular category. If your product is the market leader, it may have to compete with products catering to specific niche markets. Even if yours is a one of a kind product, there may be a proven manual system that it has to compete with.
When the customer evaluates or first uses your product, it is no leap of imagination to think that s/he would be actively comparing it with its competitors. If you test software, you can ill-afford to ignore your product's competitors. Software testing should include not only testing with respect to your organization's or customer's requirements but also testing to check how the product functions with respect to its competitors.
Knowing the product's competitors is not the prerogative of product managers alone. As software testers, we pretend to be customers using the product. Therefore, just like customers, we should be aware of the alternative products. Only then would we come to know about how our product functions on its own and how it functions with respect to its peers.