Of course, there is always competition, whether it is direct or indirect, from established entities or emerging entrants. Studying your competition is a life long pursuit in the business context. It is not something you do sporadically. Throughout your venture journey, you will be required to look for emerging competitors as well as monitor existing product and service offerings from more established competitors. You will identify their strengths and weaknesses and consider how they will react to each and every one of your strategic moves. What some call competitive intelligence will be an ongoing process for you as an entrepreneur and business owner. These activities have always been important, but the need to keep up with your competitors is ever more critical in today’s business environment. There are many reasons for this including the existence of more “educated” customers and competitors with greater access to information about product performance. You probably already take advantage of the extensive and inexpensive information there is on products that you are interested in purchasing. Do you read all product reviews before you make a purchase decision?
Over a number of posts, we will describe a systematic approach to investigating your competition. The approach changes as your venture develops, expanding in both breadth and depth of investigation and monitoring activities. We break competitive analysis activities into three stages: venture idea-prescreen, business model discovery, and post venture launch. Within each stage, the level of competitor analysis expands as well as the amount of effort you will need to expend on these activities. For this post, we begin with the early pre-screen activity, as you weigh as to whether your venture idea is a good opportunity for you.
During the pre-screening stage, you can incorporate high-level investigation as to which firms are providing your target customer with problem solutions. As we have discussed in previous posts, you should be listing all the assumptions you have about your customer and the experience they are having with a certain problem and its solution. As part of this process, you should assume that there are solutions out in the market. The first step is to discover as many as you can through research on Internet and any early discussions you are having with your network. You will want to be armed with this list as you begin your customer discovery interviews, listening for which competing solutions are recognized, used, and purchased by your target customer.
What should this early competitor research look like at this pre-screen stage? We find it helpful to start with product or service level research. Begin with the most specific level of product offering and see what competitors are offering within the same segment, essentially the same product as you are considering. So if you are thinking about building a business that offers an organic milk beverage made from brazil nuts, are there any firms offering brazil nut milk? As a second level of analysis, you can look for competitors from a product category perspective, rivals that are offering organic milk products, in general. This list includes companies that offer organic cow milk, almond milk, and soymilk, as an example. From here, you can look for any competitive products that serve your target customers needs with similar attributes and features. In our example, this might include other healthy beverage alternatives, such as green tea drinks or vitamin infused water products.
At this stage, we suggest that you list all the competitors you can find that offer products from the above three categories, same product as your venture, within your product category, or offering products that fill customers’ needs more generically. For each competitor, list product name, brief description including features & attributes, and pricing information. Additionally, keep their website and other social media information readily available for future research and monitoring. We also like to categorize each competitor as either an established firm or new entrant. This designation will be helpful in developing your overall go-to-market strategy.
At the pre-screen stage, you do not have to overdo the research. You want to have insight into the current options that exist for your target customer prior to starting your customer discovery interviews and as you begin to develop your business model. Once you start to spend time with your target customers, you will be able to listen for their knowledge and experience with these products as they attempt to solve their problem. As you develop your business model, you will conduct a deeper dive into the competitive landscape.
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