To date, we have covered the following steps in our systematic approach to entrepreneurship:
- Conducted market segmentation, selected a beachhead, and calculated Total Addressable Market
- Conducted primary market research
- Defined the End User and identified a Persona
- Completed a customer Full Life Cycle Use Case
- Developed a High Level Production Specification for iteration with the customer
- Quantified the Value Proposition
This the first time we’ve taken a look at the competition. Why wait until now? In order to be successful, we must first prioritize and focus our efforts on knowing our customer better than anyone else. The time to start thinking about the competition is after you understand your customer
When it comes to the competitive landscape, who is your #1 competitor? If you are a startup, or growing your business to cross the chasm to the mainstream, your biggest competitor will be status quo. People don’t like change. It’s takes less energy, is less disruptive, and many times seems safer to keep doing what you’re already doing than it is to change. This is why understanding the customer’s deep pain and sense of urgency are critical to move them towards overcoming status quo and taking a step of action to try or buy your product or service.
Differentiation and value in the eyes of the customer is about competitive positioning, not competitive advantage or just identifying who the competition is. Competitive advantage is about sharing why your product or service is better than your competitors. Identifying the competition is about knowing who else provides a similar solution. Competitive Positioning is different. Competitive positioning is about helping the customer understand where you fit in comparison to the competition. Competitive positioning helps the customer quickly analyze and differentiate why yours is a better solution.
Your biggest competitor is status quo, a customer that does not take action.
Differentiation and value in the eyes of the customer is about competitive positioning, not competitive advantage or just identifying who the competition is. Competitive advantage is about sharing why your product or service is better than your competitors. Identifying the competition is about knowing who else provides a similar solution. Competitive Positioning is different. Competitive positioning is about helping the customer understand where you fit in comparison to the competition. Competitive positioning helps the customer quickly analyze and differentiate why yours is a better solution.
5 Steps to Charting Your Competitive Positioning
Step 1 – Know Your Customer
To develop your competitive positioning chart, you must first identify the top two paints points of your customer. These pain points, along with their sense of urgency, are the customer’s motivation for quickly finding a new solution. Your competitive positioning must align with the customer’s pain points so they perceive value in your solution to resolve their pain. Their pain can usually be measured in units of better, faster, cheaper, or easier.
Step 2 – Select Chart Axes
The customer’s two pain points become the two axes of your competitive positioning chart. Different competitors will use different axes to show their solution is the best option. Its critical you know the top two paint points, as perceived by the customer, so they see the greatest value in your solution.
Step 3 – Product Competitor
Next it will be critical to identity at least one “product competitor” to show the customer that innovation is inevitable and their current solution using the current market leader is going to become obsolete. So they will need a new and innovative solution, and you are the obvious alternative. You are showing your value, by comparing yourself to another product competitor that is using a similar disruptive technology. But you have a better solution. Their very existence gives credibility to the notion that now is the time to embrace this new discontinuity. Competition has emerged but we are the market leader with a better whole product solution.
Step 4 – Market Competitor
You will also need to identify at least one current “market competitor” where the customer is currently spending their allocated funding to address their pain. Your purpose in identifying a current market leader is to gain access to funds that are already being spent by the customer. This is the competition that your customer has been buying from for years. Their solution is limited. You are going to use a disruptive innovation to earn the right to their market budget.
Step 5 – Positioning
Differentiating your company against the competition is the single most important marketing communications decision made in the battle to enter the mainstream. Identify and positioning your company against the competition, more than anything else, represents a watershed moment in positioning. Positioning is the most discussed and least understood component of high tech marketing. The customer MUST know where you fit in the competitive landscape and must have a budget to re-purpose for this solution that you are trying to obtain from the entrenched competition. You don’t want to waste time educating the market to put aside money that might be used to buy your product in the future.
Positioning, first and foremost, is a noun, an attribute associated with the product versus the marketing contortions (verb) to go through. Positioning is the single largest influence on the buying decision. It’s a buyer’s shorthand to evaluate alternatives. Positioning exists in people’s heads, not in your words. What is their language? People are highly conservative about entertaining changes in positioning. Most effective strategies are ones that demand the least amount of change. Make your product easier to buy, not easier to sell.
Mike McCausland
Founder and CEO, Leadership Institute For Entrepreneurs
