Competitive Positioning Archives

As we build (software) products, the competition is something that we need to stay ahead of, but how?

Especially building products for different markets, you always have others building similar products for probably same or different markets. There are already established products that you have to compete with, there are other products that are getting built as you build your product, there are new technologies that throw up new opportunities or challenges that will help new products to build that could surpass yours.

How it’s different from services ?

In services business, you just have a few competitors that you are competing for “a customer”. You know what this one customer is looking for and its often not very difficult to create a competitive strategy. But in case of products, it’s a huge challenge to identify first of all who could be your competitor and if you are lucky to identify all of them, how your products stand out in the market, not just a customer.

So what you need to know to stay ahead of competition ? I try to share couple of key elements that I have focused on in this area, as part of building software products : Research and Communication

Competitive Research:

As software product leaders or product managers, one of the key activities that we need to be focusing on is Competitive Research. This cannot be optional and has to be mandatory task with clear deliverables. If you are lucky, especially working with larger enterprises, there are focused research colleagues who track and share insights about competition. If not there are external agencies that you can engage who can research a bit and share insights about competition. But personally I feel that as the product owners, its best for product leaders or product managers to be closely doing their own research as the expertise that you carry or the interest to get your products successful lies with you.

Tools, Tips and Techniques for Competitive Research:

Don’t cross legal boundaries – while researching your competition, one of the most critical and important aspect of what you can find out should be based on publically available information and within the legal boundaries of access. This is super critical, while it’s a no brainer, its best to understand legal guidelines laid out by company and if you are startup, better to get some legal advise or attend a course to understand the Dos and Don’t
Competitors website – Thanks to internet, there is already enormous information available about the competition, especially if you are looking at existing established products. Checking the websites of the competition helps a bit, taking at their value proposition and what customers are talking about the products are very important.
Social media – This is an interesting channel in last few years where we get lot of information about the competition. From youtube, linkedin, twitter, we can follow and understand what the competitors are doing, what leadership in the competition are doing as well as some of the key stakeholders involved with the competition are saying. From whom they are hiring, which location they are talking from and tit bits are very valueable information you can know about the product
Community and Blogs – Another great channel to understand competitors is through communities and blogs written by users, partners and employees about the competitive products. There are forums where products are discussed and there are blogs that are written that helps get an informal view of the products
Analyst – IT industry analyst are a great source of information to understand competitors and their strengths and weakness. Its always better to understand different perspectives of the industry analyst. Your product may still not be in the overall review in the space, but you may want to analyze the market potential through whats being said about the analyst reports.
Partners website – partners or implementors of software website is key source of information for research. This helps us to understand products better as partners are typically very close to the products and often share some details. Typically a demo of the product posted by partner is often more detailed and really very helpful
Knowing and following competitor key people – one of the opportunity we have with internet is to know the people better. From a competitive research perspective, one of the important aspect would be to know and follow the key people who are involved in the competition. It could be the CEO of that company, few of the key technology folks there who are involved in the solution area. This gives a great perspective on what they are trying to do and help understand whats in store
Involving in sales cycles – One of the best way, especially if your product is already out, is to involve in sales cycles. Talking to sales /presales as well as customers. You definitely get insights on how your competitor products is addressing the problems. This can also be done by listening to sales calls as well as just being part of some of the meetings or conference calls. Sometimes customers give you direct feedback on how your products fare and at other times you may get indirect inferences. Participating and contributing in some of the win loss analysis can help take back some of this information.

Having done the research, what do we do with this information to use this effectively as you build your products. While you can have a structure way to incorporate this information into your knowledge base, the important aspect of sharing and communicating this information. Often I have noticed that we share one set of information for different stakeholders, which may be not a good approach.

Prepare and Share

1. Sharing with Sales and Field : Sales organization in your company would like to know exactly how your products are better from your competitors products. What is the key value propositions and some differentiations. This could be addressed at different levels, at the overall product strategy level, on product feature /functionality and the fit with respect to solving key business problem in a better way, and based on customer usage. How competitive fud can be resolved with a capability that exists or likely to addressed in the road map.

The communication here needs to be very broad based, especially if you are selling to different markets or user base. Some information of the regional competitors may also be very useful

2. Sharing with Development : Product Development including product managers are very emotional and close to their products and its often difficult for them to digest to hear that the competitive products are better than your products. But here the communication and comparisons should focus on where the products are weaker then competition, don’t have to be highlighting the strengths but focus on where differentiations can be fulfilled, or how products can catch up with competition. Even an equally good product could be very successful due to other considerations such as price, market and geography focus, as well as mere ability of sales people. So its important to compare and highlight lagging product areas, and get to focus on competitive catch ups or differentiations. Some of the information collected from Analyst could be very useful as it could lead to good insights of competitive products. All of this information also helps in prioritizing backlogs.

3. Sharing with Top Management: Assuming you are not the founder, its important that competitive insights are regularly shared with top management in order for them to get a feel of specifics that competitors are doing in this area. This will help getting the attention for investment into those areas, potential acquisitions as well as help them engage better in their customer/investor interactions.

Competitive Research and Sharing is a key activity that needs good time investment to stay ahead in the race as make Software Products.

Share your thoughts on other

Have you put a lot of time and effort into making your website rank higher, or invested in advertising on search engines, but seen no increase in the number of leads? If you are a startup and you have, it might be time to revisit your broader marketing strategy.

Two Strategies in Marketing

There are two broad strategies in digital marketing – push and pull (also called outbound and inbound).

Pull Marketing

Pull or inbound marketing is analogous to opening a store on a street corner. People walk past the store, and if they have a need for what is being sold in it, they walk in and make a purchase.

When it comes to digital marketing, of course, the store is any online presence. All pull marketing methods are therefore intended to help increase the number of visitors to digital properties.

SEO (Search Engine Optimization), SEM (Search Engine Marketing) and Content Marketing are examples of inbound methods.

Push Marketing

Push or outbound marketing, on the other hand, is analogous to carting products around town to wherever buyers may be found, in an attempt to initiate one-on-one interactions with them that could lead to sales.

There are two variations in push marketing: one that invites one-on-one interaction from a buyer, and one that forces one-on-one interactionon a buyer.

The former approach is analogous to an ice-cream cart ringing a bell to advertise its presence. The sound of the ringing bell is welcome to those interested in an ice-cream. And it is easy and effortless to ignore for those who are not interested in it. This approach is used in many social media marketing tools.

The latter approach is analogous to doing door-to-door sales; the salesman knocks on doors and pitches the product to anyone who answers the door. This approach is usually very annoying to those subjected to it since it distracts them from more pressing tasks and it takes effort to decline the interaction. An example of the latter approach is unsolicited email marketing.

Now that we have understood push and pull marketing, let us take a look at where pull strategies may not work and push strategies need to be used. There are four broad competitive positions that a firm typically maneuvers itself into, and the choice of marketing strategy depends to a large extent on the competitive position that a firm finds itself in.

Four Kinds Of Market Players

In their book “Marketing Warfare”, Al Ries and Jack Trout proposed the concept of a strategic square in terms of competitive positioning.

The four corners of the square consist of four types of players in a market: 1) market leaders 2) the followers 3) small players and 4) local and regional players.

Market Leaders

The market leader is the firm with the biggest share of a market and a clear lead. Taking the U.S. automobile industry as an example, the Ries and Trout say that General Motors with a 59% market share is the market leader (all the other firms in the fray don’t add up to its share of the market).

Followers

The follower is the No. 2 firm in the market. For example, Ries and Trout consider Ford to be a strong No. 2 in the U.S. automobile market with a 26% share.

Small Players

The small players are firms with a much smaller share of the market than the top two players, but with sufficient resources to challenge the big players in sizeable segments of the market that the main players may not ignore. Ries and Trout considered Chrysler with a 13% share of the market to be the small player.

Local or Regional Players

These firms are very small firms that do not have the resources to challenge the big players in any market segment large enough to interest them. American Motors with a 2% share of the market (they manufacture the Jeep, a category of vehicle that has too small a market to interest the bigger players) is a good example of a local or regional player.

Marketing Strategies and Competitive Positioning

Now, we can take a look at the marketing strategies that firms in each of these competitive positions should use.

1. Marketing Strategies for Market Leaders

A firm that is creating a market needs to use content marketing. Content creation is essential because of the need to educate people about the new product or service.

The goal of pull strategies is being found. When a market is created, people who benefit from the ecosystem being created will be likely to link to content from the firm creating the market, if such content is available.

The back links to their content will make the content rank higher in searches, which in turn will help make the market originator and leader the firm most likely to be found by prospective customers when they search for solutions to their problems.

So, content marketing becomes a great defensive strategy for market originators and leaders, helping them maintain their lead.

Once a market matures and people no longer search as much for information on a product category, but more for vendors and comparison shopping, because the benefits and manner of use of the product are now common knowledge, then it becomes important to rank ahead of competitors in search results.

This can be accomplished through the use of SEO (search engine optimization) and SEM (search engine marketing) for the main keywords associated with the products being sold by the market leader.

Push strategies are not needed by the market leader since pull strategies are sufficiently effective in helping them maintain their lead.

2. Marketing Strategies for Followers

Followers have a far lower failure rate than market creators (because most of the risk associated with market size and discovery of solutions to address the key pain points have now been eliminated).

So, it pays to attack the market originator. However, if a follower merely puts out content to attempt to attack the position of the market leader, they are likely to run into the “findability” barrier. The follower’s content will almost never be organically found because the market leader’s content ranks higher on account of the in-links that it has already accrued.

So, the follower will have to focus on finding ways to distribute their content. One method to distribute content is SEM (search engine marketing). This involves taking out paid ads on search engines. Another strategy is SMM (social media marketing) which can involve taking out ads on social media platforms.

Since the follower’s advertisement will be ranked on top for a small percentage of searches, this would give the follower a chance to be noticed ahead of the market leader by a certain percentage of customers.

Followers can also use push strategies to distribute content and get noticed by prospects at times when they are not actively searching.

Over time, as followers get noticed by the ecosystem that has developed around the new market, especially by parts of the ecosystem that would like to have or offer an alternative to the main vendor, more people in the ecosystem will consume and link to the follower’s content.

As a result, the follower’s content will rise in rankings and eventually with sufficient investment of effort and money can lead to the follower becoming more findable than the leader with all the attendant benefits.

Once the follower’s content ranks high enough, it will be sufficient for the follower to fall back to using pull strategies just like the leader. However, as long as there is not sufficient awareness about their alternative and its benefits, followers will have to utilize push marketing in its various avatars.

3. Marketing Strategies for Small, Local and Regional Players

Ries and Trout recommended that small players do something innovative to create new market segments, so that they become the first to enter that new market segment. Clayton Christensen also spoke of this category in his book “The Innovator’s Dilemma” where he called them firms that bring about “disruptive innovation”. Most startups fall in this category (it is not every day that startups get to create and own a new market).

Unfortunately, disruptors will not be able to use pull strategies alone. This is because they, like the followers, have neither the audience nor the volume of high-ranking content required to be noticed by people searching for keywords belonging to their product category.

Moreover, being very small, they do not have the funds to pay for effective SEM at very high volumes. Just as SEO favours market leaders, SEM favours bigger firms because they have the funds to pay for a higher ranking for their ads on search engines than smaller firms do.

For small and local firms, push marketing is often the only way to create awareness about their existence and about their innovations, and ought to be used until a critical mass of audience members for their content is built. Once there are enough social media followers, email newsletter subscribers and partners, it might become possible to switch to pull marketing strategies.

Tag: Competitive Positioning

Competition – Research and Share

When Should Push and Pull Marketing be Used?