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I Have No Competition (and other fairy tales)

Jan 06, 2009

One of the most common statements that I hear from businesses, especially those that have invented a product, is that they have no competition. Sometimes they're right, but most of the time, folks need to adjust the way they think about their product and the benefits it provides to the consumer.

 

A consumer will look at your product and try to determine what needs it meets for them. In the case of the zip tie shoelaces, a consumer is going to look at the other methods that she can use to accomplish the same goal. Even though there may not be another zip tie shoelace on the market, there are numerous shoe strings available, from cloth to woven to leather. In addition, some shoes use zippers or Velcro to secure them on the user's feet. These are all competition to the zip tie shoe tie... and your business plan needs to address how your product fits in this competitive landscape.

 

Investors, like your bank, generally define competition as any service or product that a customer can use to fulfill the same needs that the company fulfills. This can include similar products, substitute products as well as other options, such as homemade alternatives. When you plan for the success of your business, you need to take in to consideration all of the possible competitors.

 

Once you decide who else provides the same or similar benefit to what your product provides the next step is to carefully and rationally look at the strengths and weaknesses of both your product and the competition. Be honest. Just because you spent hundreds of hours inventing the zip tie shoe lace, do people really think that it's better than a shoe string? Check with consumers (and not family, but people who will give you an honest opinion). Compare pricing, ease of use and make a list of where you excel and where you fall short. An honest look at both your product and the competition will help you understand how viable your invention will be in the marketplace and will help guide you in selling the product to consumers.

 

Having competition is not necessarily bad. In fact, an investor may view a statement of "I have no competition" with some concern. It may mean that there is no demand for what you are offering. If there are few or no competitors, there may not be a large enough customer base to sustain your company. However, if you have competitors and if you can show that your product or service has significant advantages in design, usability or price, then investors are more like to want to fund you.

 

A little competition is a good thing...so make sure that you do a good job of understanding yours. Do you have any examples of unexpected competition?

Posted By: Michael Lambert



Tags: Competition
Category: Strategy

Mike Lambert

Mike Lambert is the manager of the Wyoming Market Research Center in Laramie, WY.


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