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4. Know your competitors

Insight into your competitors will help you strategically position your business offerings to minimise direct competition, either by choosing vulnerable competitors or by pitting strength against weaknesses.

Typically, your competitors will fall into one of the following three categories:

  1. Direct competitors: businesses offering identical or similar products or services as you, to the same customers via the same market channels.
  2. Indirect competitors: businesses offering products and services that are close substitutes. These competitors usually target your market with the same or similar value proposition, but deliver a different product.
  3. Future competitors: existing businesses that are not yet in the marketplace but that could enter it at any time.

Once you have identified who your competitors are, it’s time to understand how they operate and compare their business and product/service offering with yours. This will help you understand where you are positioned comparatively within the market. You are better positioned to uncover opportunities for innovation in global markets when you spend time identifying where unmet and unarticulated needs exist - this is often referred to as ‘white space’ mapping. This approach is often adopted by companies looking for high growth offshore opportunities or looking to explore strategic diversification.

Tip

When evaluating your competitors, consider the following questions:

  • What is the nature of the business?
  • What are its core strengths?
  • What are its weaknesses?
  • What is its marketplace strategy in terms of scope, positioning and goals?
  • What is the competing product/service, its purpose and functionality?
  • How much does it cost?
  • What is its target market?
  • What is the market entry strategy for the competing product/service?
  • What is its market share and level of sales?
  • Where does the competing product/service and business rank among other competitors?
  • What is the sales volume of the competing product/service?
  • What packaging/presentation, advertising and promotion techniques do they use?
  • What delivery method(s) do they use?
  • Do they provide after service support, and if so, what?

News articles, industry journals, analyst reports, the company’s website, marketing collateral, and company reports are good sources of information.

As a startup, you should look to review this step every quarter, in order to stay up-to-date with current and emerging competition.

Design thinking and digital canvas company, TUZZit, has put together a Porter’s Five Forces Canvas to help companies better understand the strength of their current positioning in market. This canvas can also help companies determine how best to increase their strategic advantage over their competitors.


Case study

Hivint


"We actually found this whole market segment that we hadn’t anticipated would actually be there. As a result we changed both the product and our pricing model to service this new part of the market."
Nick Ellsmore, Co-Founder

Co-founders, Nick Ellsmore and Craig Searle, started cybersecurity consultancy Hivint in 2015 to address the lack of collaboration and information sharing by organisations on cyber threats and associated security challenges, “We wanted to build a security consulting firm which at its core offered information reuse and enabled collaboration to provide a ‘multiplier’ to the value of our standard services” explains Ellsmore.

Hivint soon developed the platform Security Colony targeting the international market and subsequently expanded its operations into the US with the support of Austrade’s Landing Pad initiative. Based out of San Francisco, Security Colony now enables organisations from all over the world to collaborate and share information relating to their own experiences with cyber security. “It’s a software-as-a-service platform where we share the material that we develop through the security consulting business in Australia. As a security manager, imagine if you had access to the security consulting output from hundreds of your peer organisations: Security Colony makes that a reality,” says Ellsmore.

Hivint undertook an assessment of the competitor environment prior to its international expansion, and it was this process which uncovered a gap in the US market, “What we actually found when we went to do our competitive analysis and began talking to our customers, was that the landscape was kind of peculiar. The main alternatives that organisations were engaging weren’t other competitor solutions, they were either not solving the problem at all, doing a ‘best efforts’ job themselves or just googling and hacking away at a template of unknown origins or quality” explains Ellsmore.

The process of undertaking a competitor assessment ultimately afforded the team an opportunity to offer their product to fill this market gap “We realised through this process that we would be selling less against direct competitors and more against organisations attempting to develop their security policies themselves” says Ellsmore, “The other interesting part was that it identified some specific use cases in the US market. We actually found this whole market segment that we hadn’t anticipated would actually be there. As a result we changed both the product and our pricing model to service this new part of the market.”

The Landing Pad initiative provided Hivint with the opportunity to focus in on their international aspirations, “Part of the intent with the Landing Pad initiative and heading to San Francisco as part of that, was to get the space and time that we needed to do international market research, understand the customers and generally go through all of those exercises that we just didn’t have the time to do because we were so busy running the Australian consultancy business” explains Ellsmore. However, the co-founder suggests nothing is better than face-time with your customers, “It’s definitely important to understand who your competitors are and where their strengths and weaknesses are. That said, I’m a bit old school in that I think you can’t beat getting out into the market and speaking directly with your customers.”

International expansion has also had a positive impact on Hivint’s domestic growth, “Entering foreign markets can really help you in the domestic market in Australia. One reason for that is that it will markedly accelerate the speed at which you improve your product because you are receiving different feedback from a market that is realistically much more brutally honest than the Australian market often is. Also, in Australia there is still to some degree of a perception that if something is from overseas or has been proven overseas, it’s probably better. So by having a couple of success stories abroad, it can actually be a great way of accelerating your business back home."