Knowing your competitive landscape helps you explain how your product or service is better than existing solutions or good enough to switch customers from competitors or the status quo. You need to show a variety of stakeholders how your innovation is a better approach to pain relieving, gain providing, and the best problem-solving innovation. Studying your competitors lets you know who is trying to get your customers, how your innovation is unique, and how your competitors attract their customers – price, features, market entrenchment or something you never imagined before you looked closely.
The Innovation Institute’s First Gear program recently convinced over 25 project teams that innovation alone doesn’t guarantee a victory in the marketplace. It’s important to learn from competitors' successes and failures.
A competitor is any service or product that customers can use to fulfill the same needs that your innovation wants to satisfy. There are direct competitors and indirect competitors. Competitors are direct, if they offer the same type of product (e.g., any cell phone), and indirect, if they offer alternative products that get the same job done (e.g., landline phone, letter, email). Your prospective customers may be resistant to change how they do things or may not understand the benefits of your service, “status quo” could be a competitor along with other more obvious market competitors.
Studying the competitors allows you to map out exactly which innovations threaten your customer base and success. Also, it allows you to understand what makes your innovation unique so you can demonstrate strong competitive differentiation to your potential customers and enter the market.
You may learn from competitors’ mistakes and successes, develop a better sense of pricing, and shape product development based on market potential. It’s a free source of education before you invest too much time and money.
You may know the name of the competitor or a product that they make, but how do you learn more? If a competitor company is publically traded, annual reports and analysts presentations are a great source that are often found in the investor relations section of company websites. Industry archives, market research, and other detailed reports are also available through sources like Morningstar Research and Frost & Sullivan. You can attend industry conferences and trade shows to learn about a lot of competitors in a short period of time. Talking to customers or potential customers about how they address the need that your innovation is hoping to address much better, may reveal much about your competition.
Start with the basic information like name, location(s), company website URL, product brochures, price lists, customer lists, revenues, funding/investors, growth rate, mission, and markets served. Then you will want to understand their strengths, weaknesses, and strategy. These are more difficult to discern and will require some judgment on your part or insights from customers. The career trajectory of current or former key employees may reveal guidance on the company’s future plans and the names of people to talk to.
Need help figuring out who you are up against? Apply to the Spring 2016 First Gear cohort today, or check out other Innovation Institute programs.
Tell us what sources you have found most helpful to learn about competitors in the comment section below. We would love to hear from you.