Show that you track competitors systematically but decide based on your users' needs. "We chose not to copy X because our users need Y" demonstrates strategic confidence.
Best answers show systematic tracking (feature matrices, positioning maps) combined with strategic filtering. Strong candidates monitor competitors but make decisions based on their own user needs and vision. They distinguish between competitive parity features and differentiators, and know when to follow versus lead.
Tests strategic independence. Reactive PMs build whatever competitors build. Strong PMs use competitive intelligence to inform, not dictate, their roadmap. Ask: "When have you deliberately ignored a competitor feature?"