Every product has competition. Depending on your industry the field may be crowded and full of competition or dominated by only a few major players. Regardless, it is important to have a thorough understanding of your competition. Your competitors shape the landscape for your industry. Understanding the competition will help you identify opportunities and better understand your target market. Read on to find out why it is critically important for the success of your product to thoroughly understand your competition.
You Need To Differentiate Your Product
Many industries have become intensely competitive. Now more than ever it is important to differentiate yourself among the competition. Strong differentiation can make for a very effective sales tool for your product to gain market share. One of the most frequent questions that is likely to come from prospective customers is – how is your product different than company X? You need to be ready to answer this question, but before you can, you need to know many details about your competitors. How do your competitors’ products work? How similar are their products to yours? Exactly how is your product different? Depending on the responses to these questions you may have some work to do in the product development department. Regardless, do the homework and be prepared to speak intelligently when answering these questions for prospective customers.
You Need A Go-To-Market Strategy
One outcome from a competitor analysis should be a map of the verticals and segments in your industry and which companies are targeting them. This will help you identify where the opportunities are. Are your competitors focused on specific industries or companies of a certain size? There are many ways to carve up an industry into segments. The better your research is in this area the better you will understand the competitive landscape. These exercises are incredibly valuable for uncovering new, untapped segments in your industry that can be a goldmine for your sales efforts.
You Need To Position Yourself Within The Market
Successfully positioning yourself within the market can only be done if you know where your competitors are currently at. If you identify segments or verticals then blindly march forward with a marketing strategy you risk wasting a ton of money. Prior homework to identify who is spending what to make noise in certain areas can provide a ton of valuable insight. For example, your competitors may have focused in an area you wanted to target. If they have, you may not want to target that segment the same way or at all. Perhaps there is an opportunity to target a similar segment either more narrowly or broadly. Regardless, you won’t know where the opportunities lie to successfully position yourself within the industry until you’ve conducted a thorough competitor analysis.
Does Your Product Cost Too Much Or Too Little?
Setting appropriate pricing for your product can be tricky. However, comparing your competitors product features to their price is one way to get a baseline for what you can expect. If your product costs twice as much as your competitors and you have half the features you can probably expect to lose some business. On the flip side, if you have a more compelling offering and are undercutting the market by too much you may not just be leaving money on the table you may be confusing prospective customers. They may think something is wrong with your product! Make sure this doesn’t happen. Get the competitor analysis done.
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Stay On Top Of Industry Trends
Talk to the folks over at BlackBerry or Circuit City about the importance of staying on top of industry trends. Enough said? Certainly enough for me. Unless you want your business to go the way of the Dodo bird it’s critically important to stay on top of what’s hot in your industry. I’m not just talking macro scale, you want to know when your competitors are repositioning themselves within your industry. Such a thing rarely happens overnight. If you’re prepared for the shift long before it happens you can know ahead of time how the landscape will shift so you can re-position accordingly, if necessary.
Great product management includes staying on top of your competitors. There is almost an infinite amount of value to be gained from researching the companies you are competing with. In fact, you should make competitor research a regular activity. Start with once a month or quarter to stay on top of the high level areas and go from there. You’ll be surprised by just how much you’ll learn. Look for our next installment about exactly what to look for when researching your competition.
If you’d like to learn more about product management or talk more about the services I offer as a product management consultant please visit the services section of our website at NxtStep Services or reach out to me directly at sean@nxtstep.io. Keep disrupting.
