First, throw out the wrong ideas.
As mentioned in Chapter 1, only by getting a full understanding of the market and the customer’s needs can you spot the gaps and missing parts of the equation.
Competitors help us build better products! As strange as it sounds, this is a fact that many people ignore, especially in the product and entrepreneur realm. “Competitors” seem to have this “anti-Silicon-Valley” feel. Talking and paying attention to your rivals is “old school” or “not the way things are done anymore.” This is a damaging thought pattern.
Competition in the market is a massive learning opportunity. Hiten Shah (founder of UseFYI, Kissmetrics, CrazyEgg…etc.) summarizes it in a way that resonates with me when he said: “Your job is to understand your competitors better than anyone else. Ignoring competitors is the same as ignoring customers.” Let’s talk about what we can get out of it.
“Your job is to understand your competitors better than anyone else. Ignoring competitors is the same as ignoring customers.”
– Hiten Shah (Kissmetrics, CrazyEgg, UserFYI)
Why do Product teams need to pay attention to competitors?
Here are the top reasons why product managers and entrepreneurs need to pay attention to their competitors and market:
Let’s explore this at a high level in the following sections.
1. Create and discover your own space in the market.
In Chapter 3, we will dive into this in full detail. The key to developing your own space in the market is to find innovation opportunities within it.
It is about creating and capturing uncontested market space, thereby making the competition irrelevant. The first step to do that is to understand the market so that you can accurately map the space.
Cirque du Soleil is a famous poster-child of stepping into an ailing market and creating a brand new type of Circus, one that showcased human achievement and abilities instead of animals. Netflix changed the way people rented movies; Quicken changed the way taxes were done; Starbucks brought “bistro-style” coffee to mass markets. Tesla changed the mass market from perceiving electric cars as “nerd mobiles” to a luxury icon.
Alex Iskold, Cofounder of 2048 Ventures
“Understanding the competition is critical, because the opportunity may actually not exist…No matter how you look at it, saying you have no competitors is not a good thing.”
2. Insights into language, locations, and targeting that work.
This is best illustrated with an anecdote.
One day I was sitting with my team and was talking to them about building a feature that we will call “x.” I thought “x” was a great name for an element in a newer market we were breaking into. The term had been used in parallel markets for years, and I thought it would be an excellent transfer to this new space. Then one of my team pipes up with something we had overseen. “Company A and company B have been using that term for years to describe something completely different, and it has become common. If we use it, then we may risk confusing our future customers.”
They were right and after some more research, we found some unique language to describe our new unique offering.
This was true of just a piece of language, but the same story is true in many ways. With competitive intelligence, you can see what positioning, communication, and targeting is resonating with potential future customers, and view how that changes as customer needs evolve and technology improves.
Learn more about this in Chapter 5.
3. Get validation that you are moving in the right direction.
When you look at your competition, you can see the health and needs of your market very clearly. If you are in a space that no one else is in, then you are either not (a) looking for them, or (b) there is no opportunity. In Chapter 3, we will touch more on creating and discovering your own space in the market.
Competitors will show you where there is a demand, and also go beyond that. They can also explain what you need to do to succeed. What you need to have and what you need to spend your time on is building a better product that offsets those competitive advantages that other market players may have against you.
Apoorva Mehta, Founder Instacart
“Competition has shown us there’s a demand for our services… Competition combined with having a better product means we’re going to succeed.”
You don’t need to know everything about competitive intelligence to succeed. In the following chapters, we will explore more about the discovery, strategy, and tactical applications of competitive intelligence.
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Detect changes in your Rivals.