In the book, Blue Ocean Strategy, the authors argue that if you focus on an underserved customer and make a product for that customer that truly meets the customer’s need, there is no need to focus on the competition because your unwavering focus makes the competition irrelevant.
While it’s a valuable point and true to some extent, the reality is that customers usually make purchasing decisions on a comparative basis, considering all options and determining which solution best fits their priorities.
This module is about identifying and analyzing your competition, and it includes some useful tools to help you do so effectively.
Conducting Competitive Analysis
Whether you feel like you have competitors or not…you do.
There are many ways to identify key competitors in your industry, but Google and Amazon will likely be where you begin your research.
(1) Identify Your Competitors
Start with a simple search for your business name, product ideas and overarching business idea.
Your goal at this stage is to cast a wide net and get a comprehensive view of the competitive landscape.
(2) Categorize Your Competitors
As you find competitors, you’ll want to categorize them from direct competitors to those you still need to keep on your radar — like indirect competitors.
Direct Competitors: solve the same problem for the same customer with the same product (or similar).
Indirect Competitors: solve the same problem for the same customer but in a different way. Or they solve the same problem in a similar way but for customers in a different industry or vertical.
(3) Examine Your Competitors
From there, explore your competitor’s footprint, customer experience, market positioning, pricing, and more by looking into:
Website/app, content, and social media
Support threads, help forums, online communities
Marketing and advertising activities
Identify how your competition positions itself:
What are customers really buying from your competitor? Are they going for price? Experience?
How is your competition differentiating their product from their competition? What features and benefits do they highlight the most in their marketing messaging and activities?
In your competitor’s opinion, what makes their product or service unique?
A great resource you can use to dig up information on your competitors is SimilarWeb.com.
SimilarWeb.com helps you to understand your competition and analyze their positioning and strategy. It’s free, but you’ll need to create an account in order to use it.
For example, for an HR platform idea, BambooHR may be a competitor.
So you’d enter BambooHR’s website into SimilarWeb.com and you can then analyze their website performance, marketing channels, keyword strategy, etc.
You can also do research to determine what keywords you should be targeting for your business:
(4) Helpful Hacks For Competition
Sign up for their newsletter or subscribe to their blog: Understand your competitor’s business and communication strategy, and what types of content they are covering and at what cadence.
Follow them on social media: Get a feel for how they speak to and serve their customers, who their affiliates and partners are, and how their customers engage with them.
Purchase a product: Check out the product itself, but also note the customer journey post-purchase, including the time it takes to ship, the delivery method, how the packaging looks, and any post-purchase support and communication.
Put an item in your cart and abandon the checkout process: Monitor whether or not they send an abandoned cart email series and note what language and structure they use for their emails.
Request a demo (or a call): Take notes on every step. Do they require filling out dozens of fields for you to talk to sales? Will they refuse to hold a demo if your company is “too small”? Are their meeting times convenient (time zone)? How long does it take them to reply? What is the post-demo follow-up communication?
Chart Your Competitive Position
The Competitive Positioning Chart helps you analyze how much better you are in regards to your competition. It can also highlight areas of weakness. It is the link between your Core and your customer’s priorities.
In the Competitive Positioning Chart, you show visually how well you fulfill your customer’s top two priorities versus how well your competition does so. The goal is to show that your Competitive Position leverages your Core and that your product satisfies your customer’s priorities far better than existing or logical future products. If both of these are not true, you may need to revisit your market selection or your Core.
How to Chart Your Competitive Position
This is a pretty simple and logical step. The key is getting the right information from your primary customer research and then returning to your customer to validate your position.
Start by identifying your customer’s top two priorities (you are assuming that these two priorities are all that matter).
Your product features are probably great, but they do not dictate your customer’s priorities.
Then create a simple graph matrix with Priority #1 on the x-axis and Priority #2 on the y-axis. On the half of the x-axis closer to the origin, write the negative state of this priority (e.g., if the priority is reliability, then you would write “low” here). On the other half of the x-axis, write the positive state of the priority (e.g., “high” for reliability). Repeat this process with Priority #2 on the y-axis.
Finally, plot your business on the graph along with your competitors (current and future). Also include the customer’s “status quo” option (even if it’s “do nothing”).
You’ll end up with something like this:
If you’ve conducted good primary market research, your business should be positioned in the top right quadrant of this graph, at the high end of the positive states of each priority.
Then review this chart with your target customers for feedback, and refine it as needed until the chart accurately describes your product and the competition relative to your customer’s top two priorities.
The Toughest Competitor of All: The Customer’s Status Quo
Often, your largest obstacle will be convincing customers to make a change from their status quo — whether that be using a competitor’s product or using nothing at all.
Competitive Research Never Outweighs Customer Validation
Understanding your competition and beating your competition is important, yes. However, at the end of the day, your main priority should be to deliver a product that meets the customer’s needs, which you can only do by talking to and working with your customers. Focus your energy there.
(1) Go through steps 1-4 with at least one competitor. What are your findings?
(2) Chart your Competitive Position. This is a quick way to validate your product against your competition, including your customer’s status quo, based on your customer’s top two priorities. This is also an effective way to communicate your value proposition to the target customer in a way that should resonate with them.
Be prepared to share with the group in the live session.