Right and wrong ways to position a startup relative to competitors

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

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

Let us examine the common erroneous positions of startups.
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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 “I will do it myself” to other alternative options. 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, functions, culture, prices, sales strategy, etc. But unique in no way means no competition!
• "There is no competition, because this problem has never been solved with the help of software!" Fighting the status quo.
• “There is no competition, because people do not understand that this problem exists” - if they do not know that they are in pain, then your sales process will be very difficult. Dear, difficult and time consuming.

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

• “We rely on a specific niche that no one has ever really aimed at. There are similar competitors A, B and C, but they do not aim at this niche because of that, and it will be difficult for them to switch to it because of this. In addition, it is possible that we will be able to be partners or sell A, B or C precisely because the idea is similar, but outside their current field of activity. ”
• “We found that the niche is too small for the giants to pay attention to it, but large enough to create a company. For example, the size of Microsoft 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 a great business in the market of one hundred million dollars. But if we succeed, we can be interesting to buy them in the future. ”
• “Our customers traditionally solved this problem on their own or did not solve it at all. However, the combination of a new technology and a new vision of the problem at the right moment, which has just arrived, can change this situation. ”

2. Defining yourself through a competitor

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

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

If you want to make your strategy competitive, but do not want to lose your individuality, try the following approaches:

• “We are focused on the segment, which is determined by X, Y and Z. We talked to 20 consumers, who identified at least two of these criteria as important and they agreed that only we offer a solution to the problem they need, and the competitors do not have such a suitable solution. "
• “Our company concentrates on the value of X. Notice that each player in this market concentrates on different segments, this can be seen from the set of functions, and from the pricing and advertising policy. We also concentrate on a specific niche. Our offer completely 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 we are prepared to take. ”
• “We are going to rival X. We know that he has many advantages. Recognition, izmestnost, clarity and functionality. However, they have not released anything new over the past three years and we know that their customer base is declining. In addition, they are known for their shortcomings A, B and C (low speed, installation required, expensive, poor technical support). We see a serious opportunity in these problems, with which consumers cannot do anything, because they have no choice and, moreover, the last three years have shown them that it is 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.