What do you do when there is a lot of competition in your space?

Anonymous

July 7th, 2016

We are building a SAAS solution for a problem that already has a lot of players. The market is huge and there is a lot of potential. I have a better price and product but there is nothing extremely different than what is offered by some of these softwares. I have read that having competition is good because there is a market need.

Mike Moran Senior Strategist at Converseon

July 7th, 2016

Lower price is a very tough way to stand out. Anyone can undercut you at any moment. You need to find differentiation, which is more than just being different from the competition. Differentiation means being different in a way that a particular market will pay for. They need to be willing to pay more for your product than the others because your product solves their problem better then the others.

This doesn't mean, necessarily, that your product is better than the competition. It means that a particular group of customers that your product is demonstrably better. It might be worse for most customers.

This has always been important, but never more so than now. The Internet makes much more information available to prospective customers than ever before, so if you can't make a strong appeal to at least some of the market, it is very tough sledding.

Yes, I would be worried.

David Pariseau

July 7th, 2016

I'm sure it's disappointing to find that you underestimated the competition (sobering I'm sure, since you'd hope to approach a venture by having a very good understanding of the market). So, what now. One asset you might have is that as a smaller concern you can perhaps focus and address a market niche in your space that is less attractive or less well served by your competitors. See if you can't identify a market segment with specific needs that are not being addressed specifically and see if you can't make your firm a specialist in that field and direct your limited resources at providing a solution to that market. That will give you a method to differentiate yourself from existing solutions and keep you from having to meet your competition head-on with a me-too product.

Alistair Davidson Eclicktick Consulting

July 7th, 2016

I think you should worry. Research on innovation suggests that the single largest predictor of new product success is offering a differentiated high value product. The biggest prediction of failure is inadequate understanding of the market, which implies a lack of understanding of user needs and values sought.

I have a book on the subject available on Amazon Kindle. You might want to read it.

Alistair Davidson

Shrutin Shetty Design Strategy Consultant. Helping bold & innovative companies grow faster.

July 7th, 2016

If you're just starting up, the biggest question to ask yourself would be, 'does this excite you, and will it excite you 3 years down?'

If not, you got your answer.

If yes, any space, however saturated or dull, has scope for innovating and/or improving the customer experience. For that, while you need to be aware of the competition, it's best to focus on understanding customer needs and catering to them. Some of the greatest innovations have sprung from just understanding the customer and their needs a little better, and not blindly following the competition stating nothing more can be done.

Bill Lennan Red Rope Social - everyone is an influencer.

July 7th, 2016

Maybe you should worry - and maybe not.

How well do your competition sell their product? How's the marketing?

Even if they have a better product, if the marketing and sales are negligent, you have all kinds of opportunity.

Neil Chalk Product Manager

July 7th, 2016

Couple of questions spring to mind:

Your potential competitors - are their customers happy with the service? or are they regarded as poorly as a cable company?
You mentioned that you have a better price, how much do you know about how your total unit cost compares to their variable cost? Could they start to price way to prevent you getting established?
How much of your addressable market is already being serviced by the competition? 25%? 50%? 90%?
Is the market a commodity market? If not then price might not be enough of a differentiator for a new entrant.

Hasnain Millwala

July 7th, 2016

I think it depends on what you are trying to achieve with this business. There are millions of businesses in the world and honestly very few are like really innovative or different per say. Nonetheless people run normal businesses as well that may not count as innovative or breakthrough but are enough to make a decent living and really run a business. If the market is big enough it will accommodate the players. In fact if there are already so many players I'm sure your research shows that not all of them are drastically different from each other. I bet many of them have common features. Find that one value add that one feature or pillar that u can sell on. And in fact it doesn't have to be just features. Price and market positioning also count as distinguishing features. If u can find one such feature and market is big enough. Your business will sustain. Might not be the one to scale to billions or more or be a unicorn but it can surely be a business

Cameron Ackbury President US Operations | Investor | Seeking top tier University entry level Sales, Marketing, PR Candidates

July 7th, 2016

There is an old adage: a person never loses their job buying from Microsoft. The same applies here - if you can't distinguish yourself and provide better value then you should worry.

Michael Barnathan

July 7th, 2016

Come at the problem from a different angle that none of them are doing, or provide value by aggregating all of these players in one place. I started a deals app in 2012, which would have been crazy... except that location-aware services were just becoming a thing and no one had created one that could follow you and make real-time recommendations at the point of action yet. You can find something that is just becoming possible / user friendly (e.g. strong machine vision, voice control, "bots", VR) and use that to redefine the way people interact with whatever industry you're thinking about. You could also become the Expedia of your space, gathering data from all of the other players and delivering it in one centralized location (with a referral link or advertising paying for that convenience). That was what the company which ultimately acquired mine did.

John Seiffer Business Advisor to growing companies

July 8th, 2016

As a follow on to what Michael X. Heiligenstein said - if you didn't study how customers are solving their problem now you didn't really identify the problem from the customer's perspective. You only identified how YOU think about the problem.

Example - if my "problem" is getting from point A to point B and I have a car I'm happy with, I don't have a problem. If you make a car you think is better - that's not a solution to me because I don't perceive a problem.

FYI there are many ways to learn this w/out a business plan, but that is one way.