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How do you approach competitor analysis?

I launched a couple of small apps in the past months, but I am a bit frustrated because I've seen the same pattern repeat, that is:

  1. I have an idea and do some form of validation (e.g. interviews)
  2. I look for competition, and find none (or just some smaller players)
  3. I start building
  4. I find out about some major players doing the same thing. 😞

Now, I am a bit frustrated because I find it difficult to map all the competitors before starting a project. I usually do a bit of research, but I feel I often don't know what kind of words to search for in order to surface similar competitors. In my last project, I found a competitor when I was checking the availability of a domain I chose for my app. Maybe funny enough, I had the same idea for the name as the competitor. Overall, it has not been a pleasant surprise (both for the added competitor and for the domain+name taken 😅).

So my questions are:

  • do you do competitor analysis before starting a project? If yes, how do find as many existing competitors as possible?
  • what information is important for you to know prior to starting a new project?
  • would you give up an idea if you found an established competitor with a similar value proposition as yours? Or do you interpret it as a signal that there's an opportunity for this category of products?

Thanks!

  1. 2

    Hey Francesco,

    The fact that there are larger competitors in the market that are doing the same thing is great news!

    It's the validation that you need for your idea - there is an existing market :-)

    Of course, it's a bit of a double-edged sword because in order to succeed you need to be able to capture the attention of your potential customers BUT that's difficult to do when you have major competitors that have brand awareness already.

    Lots of startups try to use the freemium model to overcome this problem but it's VERY difficult to use that model effectively.

    An easier and more effective way to capture attention is to use a sort of "belief freemium" model - I actually just wrote an article about this the other day on here. You can check it out here - https://www.indiehackers.com/post/the-belief-freemium-strategy-that-took-this-sideproject-from-0-8-million-a-year-3b465df4c0

    Hope that helps!

    Best

    Chris

  2. 2

    I think it depends on a wide variety of factors before you give up. It depends on the size of the competitor, the level of similarity, and the size and nature of the market (the last one is quite important).

    Size of competitor and similarity to your product are obvious. For similarity, I find that large competitors tend to offer solutions to your products, but they're more general so they don't focus their resources on that specific solution, which might be your turn to shine.

    For example, Amazon sells books, but there are so many more bookstores that exist. How? Because they are able to focus more of their resources on selling books compared to Amazon.

    Of course, it's also possible they solve the problem you're solving really well despite being general, which in that case, it would be wise to find a different product.

    Regarding size and nature of the market, they say it's better to be a big fish in a small pond than a small fish in a big pond. However, although true, I think it's a little misleading.

    It's worse in every way to be a small fish in a small pond.

    So regarding size of market, if the market is larger, then there will be more room for many competitors and more gaps for you to fill. So even the your competitors are doing something relatively similar to you, it might not spell the end.

    For nature of the market, it depends on differentiation. Oil is the same anywhere, so the cheapest wins. However, something like a community might not be. So if the market has little differentiation, then it will be much harder to separate yourself from a competitor.

    To give my own personal example, I'm developing a web API for AI for developers so they can implement AI into their projects more easily. I plan on hosting Stable Diffusion and Bloom (GPT-3 alternative) first.

    These two already have pretty tough competition. Stability AI (company that developed stable diffusion) already has a web API, and GPT-3 is better than Bloom in many ways.

    So how did I differentiate? Well I noticed OpenAI (company that developed GPT-3) and Stability AI were both very finicky about NSFW generations, and had very high costs.

    So what I learned is that although finding competitors can be annoying, take some time to explore their product more to find limitations, because finding those can be a pleasant surprise.

    If you're curious about my product, you can follow it for updates here: https://www.indiehackers.com/product/evoke

    I'd love to get your feedback when it releases.

    And can hit me up or follow on Twitter as well, where I post a lot about my product: https://twitter.com/therealetch

    Good luck!

  3. 2

    Do you do competitor analysis before starting a project?

    The competitor research is the first thing I do when I have an idea.

    How do find as many existing competitors as possible?

    I'm pretty good mining for competitors.

    I you find difficult to find competitors you can hire a SEO expert on Fiverr for a quick search or use some tool like the Google Keyword Search Tool (it's free and you can find it in Google Ads).

    What information is important for you to know prior to starting a new project?

    I collect these info from competitors:

    • Distance from my idea
    • Distinction traits
    • Number of employees
    • Number of customers
    • Monthly or annual revenue
    • Capital invested, if any
    • Customer targets
    • Marketing strategy
    • Website quality
    • Product quality, pros and cons

    Would you give up an idea if you found an established competitor with a similar value proposition as yours? Or do you interpret it as a signal that there's an opportunity for this category of products?

    If i find a well founded competitor using exactly with my idea and with good execution, I will give up my original idea. Eventually I will search for a different niche with a simpler product or an extension/plugin idea to attach to the competitor's product. In this case it's better to partner.

    If I find no competitors (it's rare or almost impossible) I search for more indirect competitors that solves the same problem. If the problem is already solved I my give up the idea or niche down it. If the problem is not solved I must proceed with a deep market analysis interviewing potential customers because the risk of having an irrelevant idea is high.

    If there are enough competitors, preferably with investiments or a relevant annual balace, it means that the idea is worth it. In this case it's better to start the business as soon as possibile.

    1. 2

      Thanks so much for the detailed answer! One question: how do you go about estimating the monthly or annual revenue? Thanks

      1. 1

        Thank you Frabia. I check on ZoomInfo, CrunchBase or on the founder's social profiles.

    2. 1

      I would love a walkthrough video of how you typically use Google keyword search to do this research. Thank you for your answer.

  4. 2

    Besides googling for the most relevant keywords, I also use https://ahrefs.com.

    It allows me to find what websites rank well on Google in different countries and find more relevant keywords together with search volume. It also gives you a rough idea on how popular competitors are: Domain rank (DR), number of backlinks,...

    It really depends on the idea or product actually on how I would approach doing competitor analysis.

    1. 1

      That’s a good suggestion. Thanks!

  5. 2

    The product im working on has a competitor with a very similar concept but using a different approach and they have received investment recently. For me this is actually a validation of the general idea i had and encouraged me to work on it.

    For me finding competitors is actually just a sign that the idea is valid and that there is a demand and market for it. Usually ill also take notes and see how they tackled certain problems and features and how thing’s can be done better and implement those learnings in my own concept. Obviously if theres too much competition the market might be saturated but to me competition never meant something bad.

  6. 1

    Competitors are irrelevant. What is relevant is JTBD. Jeff Bezos famously focuses only on being a leader, not a follower and competitors are the ones who chase him, not the other way around.

    I use what's called JTBD analysis, currently the best and scientifically proven method.

    Imagine you are asking millions of people what is important to them and how satisfied are they.

    If you think about that, the majority won't say that there is something very important, yet they are dissatisfied if there is strong and good competition that satisfied these needs. Right?

    But you can't talk to millions. So what do you do?

    You do JTBD interviews with your network, domain experts, and, of course, potential customers, and map out the journey-to-be-done, jobs-to-be-done, steps, and personal outcome metrics. You can interview 10 people, but you won't probably interview even thousands. So what now?

    Now, you create a survey, send it, gain responses, then analyze them. You can perform statistical, factor, and cluster analysis depending on how much data you have. Now you can form very specific markets and niches as a group of people with the same psychometrics + the same job they try to get done and the same personal metrics that are underserved for them.

    Finally, you apply statistics to scale these findings for the entire potential population, e.g. going back to a million people.

    And you can conclude something like:

    "We found that 54% of young Americans struggle with X in this way", and then you do bottom-up market sizing and can clearly see if there is a strong segment and how big it is.

    You can also create a JTBD survey where you ask about different competitors and see where exactly people are dissatisfied the most among many competitors.

    Don't look outside and do not chase the tail.

    Only look within and understand why people do what they do, what they struggle with, what they try to achieve, what prevents them from getting where they want to be, what are their underserved needs, and how many people are there like those.

    P.S. I am a global JTBD expert and a founder of ATHENNO which helps anyone to apply all that easily without being a scientist. And I am writing a blog about JTBD here:

    https://athenno.com/insights

  7. 1

    Hey Francesco,
    Competitor analysis helps us identify our competitors' strengths and weaknesses. This gives us a chance to improve ourselves. In addition, we also get an opportunity to see where we stand against them.

    A good competitor analysis will give you insights into your competitors' strategies, products, services, markets, etc. It will also help you develop your own strategy.

  8. 1

    There is a chance that when you do the research for a project the competitor is still not "public", because same as you it's in developing state. There's not much you can do there. For existing competitors i find that keyword analysis works good, i type key words of the product or services (or the problem I'm trying to solve) and comes back with "ads" and links that help discover potential competitors.

  9. 1

    Have you done any sort of searching on Reddit to find competitors? When researching an idea I usually go to Reddit to do an initial pass (searching pain point keywords related to the solution in mind), and often times you'll find recommendations of existing solutions in the comments.

  10. 1

    Try to find strengths and weakness of the competitor. Focus on the things I can work more better and make my app more engaging and great .

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