Competition

Competitor types

Direct competitors

Direct competitors are those competing for sales with similar products and target customers. You should pay particular attention to those with the following factors:

• Have a significant market share.

• Show major market growth.

• Are winning a lot against you.

Replacement competitors

It is most important to be aware of competitors with new solutions. Consider where emerging solutions will replace yours. For example, where Blockbuster’s DVD rental business was replaced by Netflix’s video streaming. You may need to completely change your approach. Do this while you still have sufficient revenue. These competitors may be small and targeting niche markets. You may find no competitors meet this criteria.

Competitors to monitor

When you lose a sale, it is important to understand if it was from your target customer group. A competitor product may be targeting and meeting the needs of a different group. For example, you target customers who want an advanced use case and are prepared to pay a premium for it. Whilst your competitor targets customers with a basic use case at a lower price. Losing a sale to this group should not be viewed as a problem. You may still want to monitor these competitors even if you don’t respond to them.

Monitor other competitors that:

• Have high levels of innovation that you can copy.

• May be growing and eventually start to compete with you.

• May be looking to pivot into your market.

When trying to get a job done, a customer may have a number of options. These aren’t always with the same type of product. For example, you could take a train, drive or fly when travelling. Where a competitor's alternative solution offers strong competition, it is advisable to monitor them.

An important warning

It is vitally important not to compete with competitors with a different target customer group. Although it could be tempting to rush this section as “it is obvious”, please don’t. It will be the foundation of later competitor analysis and should impact your strategy.

Modelling competitors

The Competitor Threat Analyser Canvas contains the information you need to understand competitors.