At a young age I started a lemonade stand on my driveway trying to sell good old fashioned Southern lemonade to anyone who happened to walk or drive by.
Desperate for money and any sense of independence, my brother and I were quite hopeful about our endeavor and thought we would make so much money. The idea that maybe we’d have to compete with other kids on the block never even crossed our minds.
Then, in the dead of summer, we discovered many other young kids had the same fabulous idea for a lemonade stand. Three other stands started up within a block of us.
We still sold some lemonade, probably like five cups within two hours, which was so cool to an 8-year-old. Looking back, I realize that we should’ve set our lemonade stand apart from the others, perhaps by also offering cookies or different types of lemonade.
The moral of the story is: No matter what kind of business you have you MUST think about your competitors. The article “How to Write a Great Business Plan: Competitive Analysis” lays out the different types of competitors and how to differentiate between current competitors and potential ones.
Before you even start business or have your app go “live” you should have a breakdown of each one of your computers to make sure you are putting out a product that will be successful in its market and differentiates itself from the other products that are similar.
Some tips for researching current competitors are:
- Find their weaknesses and strengths.
- Find their basic objectives.
- Understand what marketing strategies they use and if they work.
- Can you take market share from them and how will they respond if you do so/when you enter the market?
- Check you their websites and social media platforms.
- Visit their locations.
- Research their marketing and adverting campaigns and analyze whether they are effective.
All in all, get to know every facet of the company and compare yours to theirs to see where you can effectively differ from them so you are more successful and don’t make the same mistakes.
The tips for potential competitors is a little different because you can’t do research on something that doesn’t exist yet. But all in all, get to know the market and the industry you will be involved in. Research whether some companies are thinking about expanding into your market. What can you do when new competitors do join the market?
Your focus should be on primary competitors but also keep in mind secondary competitors. Primary competitors are going to be the most similar to your product, like Lyft is to Uber. Secondary competitors are going to be similar but not exact, so like how the bus is to Uber.
While it’s important to keep in mind what competitors you have, it’s also important to understand how a market can develop or evolve. For example Whitney Wolfe discussed in a podcast within NPR about how she helped develop the Tinder app but when she decided to leave the company she had to think of something that would be even better than Tinder.
Bumble is within the realm of “dating apps,” but it’s totally different from Tinder because it has a different audience since its directed toward and caters to women.
The point is Whitney knew what was missing in Tinder and things users were getting frustrated with and didn’t like about Tinder. Therefore, she went out and changed that and found an opening in the market and a large audience.
Never lose hope just because there are already successful products or competitors in a market, if you are unique and understand the weaknesses of those products you can make yours even better and find an audience.