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False dichotomy. Looks and competitive reasons are only two of the factors that go into army selection. Background/theme and playstyle are also hugely important.

I pick my army on background and "looks." The army has to speak to me. I have played in tournaments on and off again since 1997, but Eldar have never spoken to me regardless of their effectiveness. I don't have any because I cannot imagine myself as one. I do have some Dark Eldar I got as part of the 3rd Ed box set that I maintain as an opposing force for Garagehammer, but that doesn't count...

As for the units I pick, it will come to a number of factors. Going to a tourney? Pure effectiveness. Going to a Saturday pick up game? What units haven't I taken recently?

Looks and Fluff, but also I like to share my interpretation of a faction. I have made three attempts over the years to get into the hobby and this last one seems to have stuck with the new GW. I loved the new Marines, so ditched my previous two starter armies and dove in with two split Dark Imperium boxes to get a solid core together. Wanted to have an army that was just fringe enough that it would be unique at my local store which is one of the larger ones around, but also mainstream enough to get at least some official support occasionally. I am a decent painter, but didn't want anything too extravagant. Flipping through the codex I ended up being drawn to the Black Templar's. I've expanded with a Repulsor, Redemptor, and a Chaplain, customized a few sergeant models to break up the monotony of the two DI Boxes and that got the main theme of the army pretty well set. To push the crusading knights theme, and a nod to the old Crusader Squad, and because I think they are so darn cool, I added a full squad of Rievers. For kill team I did another five Rievers in veteran heraldry with some heavy mods. I'm comfortable with the main line plus theme unit approach and like where the army is at for now. Only problem I got is I love the new Shadowspear box and I'm having a hard time justifying it in my army, because gosh darn it I didn't expect them to make a Librarian I'd like and yet here we are

Bit of everything except specific fluff ranks pretty low. And by specific fluff I mean anything more than the general feel/fighting style/looks of an army.

I care most about making my armies look good, primarily by paint job and good basing. Definitely in a single unified theme (I'm not a fan of allies). And maybe slightly in overall composition (a good amount of infantry, a few medium vehicles/monsters, 1 or 2 big vehicles/flyers/monsters - e.g. i would never do a pure knight or 7 flyers army).

I always try to field something competitive inside the above self imposed restrictions.

I have a Dark Angels army that I have collected for years and I spend lots of time painting it to a high standard. This means I forfeit some competitive edge but I'm ok with that.

I have just started collecting a competitive Tyranids army. While the army as a whole looks good I'm using lots of quick techniques so I can get to playing it and change up the units for tactical reasons. EG I can paint up 20 genestealers in ~ 6 hours. The play style is suitably different to my Dark Angels.

All of the above in varying proportions. I let competition inform some of my decisions but I've been around long enough to know what's hot now will be useless later. I guess fluff is my main reason of those listed.