When you have a new startup idea, it’s essential to understand the competitive landscape of the market you’re considering entering.
First and foremost, the existence of direct or indirect competitors is a validation that there is a market for your idea, which is a good thing. If there aren’t any, it’s imperative that you seriously test your assumption that there is a market need for your offering.
Second, competition research is your opportunity to avoid reinventing the wheel. Even though startups by definition are innovative, too much innovation is your enemy. To be successful you need to reduce your risk as much as possible, and the best opportunity to do this from the start is to learn from your (future) competitors.
By researching companies active in your market or niche, you can identify market gaps, avoid common pitfalls, and most importantly of all – refine your unique value proposition so that your idea has a chance to stand out in the competitive landscape. Consequently, it’s not surprising that competition research (as a big part of the wider market research) is one of the most crucial steps in the discovery startup phase.
Here are 10 tips on how to do competitive research more efficiently and effectively:
1. Identify Direct And Indirect Competitors
First, start by listing your direct competitors – companies that offer similar products or services targeting the same audience. Tools like Crunchbase, Google, and industry-specific directories can help identify potential competitors.
Then, continue by considering all possible indirect competitors who provide alternative solutions to the same problem. These are not necessarily businesses, you should just list all popular solutions to the problem you are addressing that people are currently using. How cheap, convenient, and effective are these solutions?
This information is crucial in order to gain an accurate assessment of the value your solution would offer.
2. Analyze Competitor Offerings
Evaluate the products and services your competitors provide. Look at pricing, features, and differentiators. Read customer reviews on platforms like G2, Capterra, or Trustpilot to understand user pain points and what customers appreciate about the existing solutions.
3. Assess Market Positioning
Study how competitors position themselves in the market. Analyze their brand messaging, target audience, and marketing materials. This can help identify differentiation opportunities for your startup. The websites, social media profiles of the companies/brands you are researching, and tools like SEMrush and Ahrefs can provide insights into their digital positioning. Look at the type of content they produce, engagement levels, and SEO strategies
4. Study Pricing And Monetization Models
Understanding your competitors’ pricing strategies is crucial. Analyze whether they use a subscription model, freemium plans, or one-time purchases. Competitive pricing analysis can help you determine if your startup should offer a lower-cost alternative or a premium service with additional value.
Try to test your expected cost structure for providing your solution and see if/at what volume you’ll be able to match the prices existing in the market.
5. Examine Customer Feedback And Reviews
Customer reviews provide unfiltered insights into competitor strengths and weaknesses. Analyze feedback on Google Reviews, Reddit, and industry forums. This helps in identifying gaps your startup can fill and common complaints to avoid.
6. Track Competitor Marketing Strategies
Observe how competitors acquire customers. Look at their advertising, partnerships, and promotional tactics. Use tools like Facebook Ad Library, Google Ads, and LinkedIn Campaign Insights to assess their marketing strategies and budgets.
7. Investigate Competitor Funding And Growth Trajectory
Check if competitors have received funding and how they have scaled. Platforms like PitchBook, AngelList, and Crunchbase provide funding data that can indicate market demand and investor confidence in the space. If you can find the fundraising pitch deck this is a great tool to get a behind-the-scenes look at how the competitor presents and thinks about their own offering as well as the market.
8. Identify Operational Strengths And Weaknesses
Research competitor hiring trends, supply chains, and operational efficiencies. Glassdoor and LinkedIn can provide employee insights, while earnings reports (for public companies) may highlight business challenges.
9. Conduct User Interviews
Talk to at least a couple of people who are customers in the market you are researching (and planning to target). Ask them about the solution they are using themselves and why. Ask them if they are aware of the existing offering on the market and of their opinion of the offering.
10. Use SWOT Analysis To Summarize Findings
Summarize your research with a SWOT analysis – strengths, weaknesses, opportunities, and threats. This structured approach helps you clearly define where your startup can compete and how it can stand out and succeed.
Read the full article here
