Competitive analysis is very much a secondary research method that we can perform online relatively quickly and comprehensively.
Competitive analysis is very much a secondary research method that we can perform online relatively quickly and comprehensively. It can be used for generative market analysis as well as generative product analysis. The analysis is absolutely crucial for any new business idea.
As we are defining our idea, we need to conduct research to paint a picture of the competitor landscape. We will likely start out with quite a wide capture of different players, and will then be able to zoom in over time as our other experiments guide us towards the exact customer segment and solution we will build. A detailed competitor analysis can help us communicate our idea to others as well as differentiate it from the competition. The analysis is a form of due diligence repeated over time, and is expected by investors or sponsors.
Initially 1-2 days, and then keep adding on and performing regular scans of the market.
The typical way to display a competitive analysis has been to plot performance on an X/Y graph with all the competitors located at the bottom left and your company at the top right. This method is typical when existing companies launch a new product into an existing crowded marketplace, and is therefore not as relevant for startups or existing companies looking to create new markets (true innovation).
Steve Blank suggests using a “petal diagram” where you plot your idea at the center of the slide. Highlight where your new customers are likely to come from (adjacent market segments) using a cloud around your company (as many as needed) and fill in each section with names of companies that are representative players in each segment. You can then try to identify which companies are private and note how much investment they received to identify which spaces are being perceived as “attractive” to investors. On top of this, you can note the current and projected market size of each segment to understand how big your new market could be.
After initial analysis, you should know three things: who your biggest competitors are, the basics of their company strategies, and how what you are doing (or will be doing) is different from what they’re doing. By understanding the market landscape, you are able to gather more clues about how you might approach distribution, positioning, and pricing.
Some tools you can use to extract competitor information are:
When doing competitive research on other web-based companies, here are a few additional tools you can use:
By understanding the key players in your space and adjacent segments, you will increase your domain knowledge around your business. If you can’t find any similar organization or research being conducted, it means you have not looked hard enough, as it is highly unlikely that no one in the entire world is working on the same or a very similar business idea. On the flip side, uncovering many competitors doesn't mean you should not continue. The discovery will help you to refine your offering and business model for a market that is growing overall.
A rising tide lifts all boats. Focus on being one of the boats, and don't worry about how to dominate the entire segment from Day One. Competitors can become key partners in helping each other get off the ground in a new market. They can also give you clues as to where you can gain initial traction in the market.