Competitive research is integral to any startup business plan. It demonstrates that there is a demand for the product or service to be launched and that other existing solutions meet this demand inadequately. Deep understanding of the competitive landscape enables a startup to really hone in on its unique value proposition as well as formulate its own go-to-market strategy.
In this article and the corresponding video, we recommend considering the following six facets of competitive research in order for any company to gain and maintain its competitive advantage:
Pricing your product or service correctly is very important. A price is a reflection of your product’s market positioning and of the value your solution provides to your customers. To price your product, you have to consider if your product is premium, value, or in the middle as well as to take into account your cost structure. Understanding pricing and market positioning of competing products helps you make this decision in a more informed manner.
2. Marketing Strategy
It's very hard to formulate a clear go-to-market strategy for an early stage company with no brand awareness, no customers or users, and no product on the market. The reason is that there is no data substantiating which strategies to pursue. This is exactly where competitive analysis comes in. The marketing strategies your competitors use to bring their products to market, and more importantly, the success or failure of those strategies, can give you the necessary intel and inspiration when formulating a marketing strategy for your company. We further recommend looking at other industries because marketing is industry-agnostic, and you can learn a lot from companies across the board.
3. Access to Capital
Some startups are better capitalized than others, and this, of course, has an impact on their pricing and marketing strategies. A well-capitalized company can afford to price their products lower initially or launch a big advertising campaign, whereas a company with limited funds is forced to pursue more creative methods of getting the word out. Considering how much capital your competitors have access to helps you properly interpret the information about how they price and market their products.
4. Customer Segments
A customer segmentation analysis is an important part of any competitive research. It’s important to know who your competitors target so that it’s easier for you to find your niche and differentiate your offering.
5. Value Proposition
Comparing the features and benefits of competing solutions to those of your product is an obvious step to doing competitive research, but an important one. This step helps you to fine-tune your value proposition and to come up with a comprehensive list of differentiators that demonstrate clearly why your solution is superior to others.
6. Recent News
The world of startups is always changing. To keep up with the latest trends and tactics, it is vital for startup founders to stay current on the recent news of their industry. Current news can give a fresh perspective, inspiration, and a glimpse into what others are thinking. They are an essential tool to help you stay ahead of your competition.
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