Right and wrong ways to position a startup relative to competitors

The two most significant mistakes in positioning relative to competitors are to pretend that they are not there and go to the opposition with the words that all competitors are idiots.

These errors affect both the further positioning in the market and the offers to the buyer, that is, the startup strategy.

We will analyze the common mistakes of startups.

1. There is no competition . Here are a few phrases of startups and how investors perceive them.

• “I have no competitors” - even if you have no direct competitors, that is, indirect ones from “do it yourself” to other alternatives. And if you have not considered them, then you do not know the consumer.
• “Nobody does it the way we do” - of course, it’s clear that you are going to position the company with something unique, features, culture, prices, a sales strategy, etc. But unique in no way means lack of competition!
• “There is no competition, because this problem has never been solved with the help of software!” - yes, that sounds good, but also means that you will have to force conservatives to believe in software, which is rather a risk factor rather than an advantage. Fighting the status quo.
• “There is no competition because people don’t understand that this problem exists” - if they don’t know that they are in pain, then your sales process will be very difficult. Expensive, challenging and time consuming.

If you are trying to use these arguments, then these statements will make at least some sense in terms of business strategy:

• “We rely on a specific niche that no one has really set their sights on. There are similar competitors A, B and C, but they do not aim at this niche because of this, and it will be difficult for them to switch to it because of this. In addition, it is possible that we can be partners or sell A, B or C precisely because the idea is similar, but outside their current area of ​​activity. ”
• “We found out that the niche is too small for the giants to pay attention to it, but large enough to create a company. For example, Microsoft’s size does not allow it to go into a niche where the market is less than a billion dollars. And we think that you can create an excellent business in the market of one hundred million dollars. But if we succeed, then we can be interesting for them to buy in the future. ”
• “Our customers have traditionally solved this problem on their own or did not solve it at all. However, the combination of new technology and a new vision of the problem at the right time, which has just arrived, can change this situation. ”

2. Identifying yourself through a competitor

Your company is determined by its own strengths, values, consumers and products, and not through comparison with competitors. You need your own strong position that will be clear and precise even if there are no competitors.
Here are a few erroneous statements and reactions to them.

• “We combine the best features of our competitors, let them show us success” - learning from the mistakes and success of competitors is good, but “something better” is not a concentrated position. Each company has its own USP. Things that you think are not the best may be the best for their particular market. It is unlikely that the “best set” position is a good strategy for a market where customers agree with you and therefore use the services of competitors. Not the fact that you can make them switch to you without any differences.
• Add feature. A graph in which each row corresponds to functionality, and one column is provided for each of the 6 competitors. And Oh, for your company all the checkmarks are ticked! Like you still have the same plus here is such a thing. All this lies and everyone sees it. You have no chance to reach the last tick, you will die on the first few things.
• "We are the same as X, only we are Y." Do you do this in the hope that you can occupy more market than X? But X has a huge advantage over you, because he is the first. No need to leave your fate to the discretion of third parties.
• “We are the same as X, only cheaper” - becoming cheaper can only be a strategy when this is not the only advantage. It’s too easy for your competitors to simply lower prices. In addition, most consumers still do not focus on the small difference in price, but on the essence of the product. This way you will get only the smallest and most desired audience.

If you want to make your strategy competitive, but don’t want to lose your personality, try the following approaches:

• “We focus on the segment, which is defined by X, Y and Z. We talked with 20 consumers who identified at least two of these criteria as important and they agreed that only we offer the solution to the problem they need, and the competitors do not have such a suitable solution. "
• “Our company concentrates on the values ​​of X. Note that each player in this market concentrates on different segments, this can be seen both from the set of functions, and from the pricing, as well as advertising policy. We also focus on a certain niche. Our offer fully covers this niche and does not overlap with competitors. It will be difficult for them to switch to this niche, because they will have to change the product, price and strategy. This is the risk that we are ready to accept. ”
• “We are going to competitor X. We know that he has many advantages. Recognition, relevance, understandability and functionality. However, they have not released anything new in the last three years and we know that their customer base is decreasing. In addition, they are known for their shortcomings A, B and C (low speed, requires installation, expensive, poor technical support). We see a serious opportunity in these problems, with which consumers can not do anything, because they have no choice and, moreover, the last three years have shown them that it’s useless to hope for X. "

* This is a free translation of an article by Jason Cohen, a business angel and founder of Smart Bear Software.