Should I worry about competition?

Home > Marketing | 83,312 views | 7 minutes read
23-08-2017

Every entrepreneur believes to have created a unique product no one ever thought about before. A quick market research usually shows the opposite - regardless how innovative your product is, you most certainly have direct and indirect competitors on your market. Should you worry about it?

JulienRio.com - Devrais-je m'inquiéter de la présence de concurrents sur mon marché ?

Do I really have competitors?

Whatever your industry or market, you have competitors.

Traditionally, competition can be divided in two categories: direct and indirect competition.

If your product is truly unique, you may not have any direct competition. For example, the first microwave, the first iPhone, the first computer had no direct competitors.

But this is specifically where indirect competition comes in. All alternatives to your product are indirect competitors.

For example, the first microwave had indirect competitors such as the oven, cold food, or even restaurants. These three alternatives do not offer the same features or have the same purpose, but all of them respond to the same need (to eat) and a customer could decide to spend his money in any of them which would lead to a loss of opportunity for the company selling the microwave.

Similarly, we could consider the abacus to be an indirect competitor of the calculator, the pen to be an indirect competitor of the computer. Indeed, those do not have the same features, but both respond (differently) to the same needs.

Consequently, if you believe to have no competition, think again: what alternatives, even indirect, exist to your product?

 

JulienRio.com - Karena Belin WHub StartupsKarena Belin, Competition & Startup Expert, Co-Founder @ WHub, recommends:

If you cannot see any direct competition, check if you are not victim of two common pitfalls: 1) You have defined your market too narrowly - are you sure you can scale? Or worse: 2) There is actually no market at all –have you proto-typed or beta-tested your solution to validate interest/traction? "

 

 

JulienRio.com - Devrais-je m'inquiéter de la présence de concurrents sur mon marché ?

Is competition such a bad thing?

It might seem scary to have competitors. Worse yet, to see a new competitor arrive.

But is it really such a bad thing? While being on a saturated market (with more supply than demand) can be harmful, competition on its own is a good thing.

 

JulienRio.com - Karena Belin WHub StartupsKarena Belin, Competition & Startup Expert, Co-Founder @ WHub, recommends:

The magnitude of the impact of direct competition depends on your business and business model. If your competitive advantage is Technology based, potentially even IP protected by your competition, it obviously represents a way bigger hurdle (look at Google vs. Apple maps). Network based business models and design based competitive advantages are easier to crack (consumers can be part of multiple social networks and “taste” is very subjective). "

 

It confirms the existence of the market

It is especially true for innovative products - competition is important because it indicates that there is a need.

If you launch your product and you do not identify any competition, stop a minute to think things through. Why is there no competition? Is the product using a brand new technology and you simply have been faster than others? Is your idea so brilliant no-one had thought of it? Or... is it that, regardless of the quality of the idea, there is simply no market for your product?

Having competitors, even few, confirms the existence of a market and tends to indicate a need for the product.

 

JulienRio.com - Karena Belin WHub StartupsKarena Belin, Competition & Startup Expert, Co-Founder @ WHub, recommends:

" A gap in the market is not enough – there must also be a market in the gap! "

 

 

It simplifies education

Here also, this element is especially true in the context of an innovative product.

One of the biggest obstacles to innovation is market education. If you sell a phone, everyone knows what it is, how it works and what problem it solves. There is no need for market education.  

However, if you sell a truly innovative product, you will need to explain to your prospects why your product will help them, and how. This step is very difficult and requires lots of time and resources.

Having competitors makes this stage easier - except if your market is a very narrow niche, sharing it shouldn't be a big deal. Moreover, it will enable you to share the education effort. Each time your competitor will do promotion, acquire a new customer, write an article, he will actively participate in educating the market which will lead to his success as well as yours.

 

JulienRio.com - Karena Belin WHub StartupsKarena Belin, Competition & Startup Expert, Co-Founder @ WHub, recommends:

Changing consumer habits and behaviors is one of the most challenging tasks and is always underestimated – in the time and money it takes to be successful. I have learned this already in working for a large multinational FMCG company with plenty of resources available. Especially if your solution is “just” a vitamin (enhancing current experiences and needs), and not a pain killer (solving unmet needs and pain points). 

 

It improves your offer

It may be difficult to accept that other companies take part of your market shares, yet it is an important step towards improving your product.

By changing their pricing structure, improving their services, innovating, your competitors show you the way and provide you with precious information about market needs.

JulienRio.com - Devrais-je m'inquiéter de la présence de concurrents sur mon marché ? 

How to manage competition

Now that we have established that competition isn't such an evil and could even benefit you, what should you do about it?

Acquiring market intelligence through constant monitoring of your competition (innovations, prices, new services, etc.) will help you better position yourself on your market, evaluate your strength and weaknesses and improve your service offering.

Competition monitoring is an important element of an healthy business. Keep it in mind!

 

JulienRio.com - Karena Belin WHub StartupsKarena Belin, Competition & Startup Expert, Co-Founder @ WHub, recommends:

Ideally, you manage to turn potential competition into effective collaboration. It’s an art, a powerful one, as much as risky and rare one. If you are in the right place, you won’t stay alone. So stay ahead! Work like there is someone working twenty-four hours a day to take it away from you says Mark Cuban. Be faster, be different, stay unique! Benchmark, but don’t let others guide you. Even big players such as Facebook sometimes forget that rule (copying Snapchat features). A flower does not think of competing to the flower next to it. It just blooms. "

 

To go one step further I invite you to discover: "The key to successful innovation". 

 

Julien Rio.

Last update: 2017-11-17 Tags:

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