The combination of robust business infrastructure and openness to innovation makes the US seem like a logical next step for many innovative startups abroad. With such a vast opportunity, though, comes more competition. There is nothing more suspicious than a startup with no competition, especially in the U.S.! However, most Europeans underestimate how crowded and loud the US market is, as well as how sophisticated the competition’s marketing and lead generating activities are. Having a great product that responds to an immediate customer need, is paramount to traction in the US. But a thorough competitive analysis is also mandatory to form the foundation of your decision-making process.
By thorough competitive analysis, we mean current competition including direct and indirect but also new entrants.
The following questions will help you understand your existing competition better.
– Who are your competitors — direct, indirect, adjacent, up and down the stack?
To properly grasp where you are in relation to your competitors, you must document and profile them, go deep into their content marketing, and figure out how they distribute it. Your sales team, in particular, will be an excellent source of this information, since they will likely hear from prospects on a daily basis about what makes your competition good or terrible in contrast. You need to start from the customer needs and think of all the solutions that can answer them (in the same way or in a different way). Amazon has cracked this very principle.
A good practice can be to think about the value chain of the customer needs, map all the players on each value chain and based on that, define who is a competitor and who could be a partner. Our recommendation is to get an actual demo from the competitors so that you can also understand how they present their offers and the questions they ask.
– What are their growth rates and where will they be in one year when your US operations are up and running?
Growth rates can provide you with a more accurate depiction of financial health, especially when comparing percentage growth to industry rates. For example, if your competitors have a low growth rate then you need to investigate the potential causes of their performance issues, such as high prices or insufficient advertising, and strategize how this will benefit you. Anticipating what your competitors’ future is, is not an easy feat. While your competitors will not just publish their playbooks online for the world to read, they will often make online publications. Read their press releases and, if their senior management publishes, read what they have to say about the market and industry, as well as any predictions they make.
While it is beneficial to compete in a highly profitable market, it can also attract unwanted attention from outside the industry. Firms that do not now compete in the industry but may do so in the future become your potential new entrants. You can evaluate the impact of new entrants by asking these questions:
– What are the barriers to entry in your industry?
Pharmaceutical companies face infamously high barriers to entry in the United States due to the Food and Drug Administration (FDA) and significant health care regulations. Similar such industry-specific regulations may act as a barrier for your US market entry.
– If you do well, are you going to be hit by a wave of new entrants – all chasing after the same market?
If your industry’s barriers to entry are easy to overcome then it becomes easier for a new competitor to break into a market. This may cause your market share to deplete.
– What moats can you build around your offer?
But the threat from these new entrants can be subsided by understanding how you can navigate around your product offer to make it more desirable.
– What are your key differentiating factors? Are these sustainable?
Typical product differentiation examples often involve the case of solutions that set themselves apart by offering better quality, better service or an array of singular features or benefits. The differentiation factors should be such that they retain your current audiences and remind shoppers of the value that they offer, even as the competitive landscape is constantly evolving and shifting.
How to gather the information?
- Check analyst reports and/or online comparator
- Check competitors’ websites including press releases, white papers, etc.
- Call competitors and get a demo
- Synthesize the information in a way that can really show your positioning and strategy not the way it looks good for your company
Having a fully comprehensive knowledge of your competitive landscape and being able to represent it in an insightful and actionable manner is key, both to define your positioning and to convince investors to back you up.
To know more about how to tackle competition in the US watch the competition webinar