A key part of any marketing strategy is identifying the competition. This is particularly important for startups that are looking to gain a foothold by solving a problem or point of pain, or by offering something that makes life easier, more productive or profitable.
As startups look to position themselves within the competitive landscape, they need to not only know who’s out there but what consumers are doing or using to meet their needs.
A competitive analysis can be as straightforward as identifying rivals offering a similar product. In this situation, it means exploring what they do, how they market and sell their products, key benefits, features, pricing and customer service.
By having a good understanding of how rivals are operating, startups can get a better handle on the opportunities by offering a better, different or less expensive product. An example is 500px, which moved into the ultra-competitive online photo-sharing market.
Faced with players such as Flickr, Picasa, SmugMug and Photobucket, 500px has established a fast-growing presence by positioning itself as the place for a photographer’s best or most beautiful photos, while creating a user-friendly vehicle to upload and display photos.
In other situations, the competition can be less obvious. While there may be companies offering a similar product, consumers may be using completely different tools to solve their needs or problems.
A good example is online accounting. If you were Wave Accounting about to tackle the marketing with a new service a few years ago, you would not have marked down Xero as a competition but also recognized another huge “competition” was Microsoft Excel given many small businesses were using spreadsheets to do their accounting.
Finally, there are be situations where there is no or little competition because the product is completely new or addressing a problem/need in a different way. This can be more challenging because there may be a lack of awareness among consumers about the product or category, so education and marketing will be crucial.
I ran into this situation with Powernoodle, a Stratford, Ont.-based startup that provides enterprises with a platform to make more informed decisions and solve problems faster. Powernoodle’s product is similar to brainstorming and collaboration services but the real value is delivers is helping companies make decisions.
Armed with an in-depth knowledge of the competition landscape, startups can do a better job positioning, marketing and selling their products because they will know who’s out there and where the windows of opportunities exist.
(If you’re looking for marketing strategies, here’s how I can help.)
More: MaRS put together a list of resources (e.g. CrunchBase, YouNoodle, Techvibes) that can be used to do competition research. You might also be interested in a post I did a few months ago on why startups shouldn’t worry about the competition.