Goal : Understand the market landscape, the competitors and what are their product appeals. Identify your niche and differentiation points and research if your product can win the market.
“Know the enemy and know yourself; in a hundred battles you will never be in peril”, Sun Tzu.
Remember, you are new to the market. It is important to fully acknowledge who you are up against regardless the size in the market. Once possessing a firm grasp on both you and your competitors' strengths and weaknesses, you can have greater clarity in formulating strategies for your business.
For example, armed with knowledge of your competitors, instead of employing direct attacks against your competitors' strongest point which would be costly, you should focus on the competitions' weakness, which maximizes your gains while minimizing the use of resources. The result? A speedy entry into the market with stealth.
Bench marking against a proven model can help avoid repeating mistakes that your competitors have done and learn from their success, giving you a heads up in the business.
Answers to Discover
Doing competition analysis helps you gauge and find out answers to questions as follow :
- Who are your direct competitors?
- Who are your indirect competitors?
- What is the market size of your competitors? How popular are your competitors? For example, what do their social following/interaction look like?
- What are your competitors' product appeal? Why are these competitors successful? What do they do best?
- Where do they need to improve?
- What were the mistakes that they have done? (allowing you to avoid the same mistake and move faster)
- What were their most successful campaign?
- How do they acquire their customers?
- How do they create their brand experience for their customers? (observe the process of using competing services)
- What is your target market opinion of the competing services?
- What are the strengths and weaknesses of the competing services? (In terms of pricing, ease of use, turnaround time, accessibility of service)
- What are other potential substitutes for your product/service?
- What are the factors that can help you differentiate against competing services?
- How much effort is involved in getting the customer to part with their money? i.e. beating the “do nothing” competitor. One way to accomplish this is to reference the issues and time taken by industry to adopted a new innovation previously.
Select from below the questions that you would want to ask to validate your hypothesis. Always craft your questions around the hypothesis.
Here are some questions for your reference :
- Do you currently use any competing services or products to solve the problem?
- What do you like and dislike about the competing products or solutions?
- What is your opinion about the competing services? (pros and cons in terms of pricing, ease of use, turnaround time, accessibility of service)
- What do you think needs to be improved?
- How did you hear about the competing services you are currently using?
The takeaways that we should be getting after conducting competition analysis are :
- Know who are your competitors and their size
- Understand the strengths and weaknesses of your competitors.
- Know what are your differentiation points.
- Know what should be the primary value that you product should provide in order for your target audience to switch to you - in other words, know what it takes to convince them to switch from competing services to you.
Now that we have gone through all 6 types of validation, we will be looking into other questions that we should ask ourselves before choosing the right validation method to focus on in the next post.