You’ve designed your product. You’ve secured your funding. You’re the next big thing and the name on everybody’s lips. But how can you take your business to the next level?
In an intensely saturated market, companies are investing more than ever in competitor research to help them to compete with the very best brands. Even top dogs can learn new tricks from their rivals — but what is it that makes this such an invaluable tool? Let’s take a look at the top reasons to invest in competitor research in 2023.
1. Provides Pricing Clarity
Enquiring into your competitors’ product price points can help to inform your own pricing strategy. We see this kind of research and response wherever we go, from streaming service pricing structures to supermarket price match promises. This strategy can provide a competitive edge when consumers are choosing between similar product offerings, as well as allow you to compare your profit margins and relative market positions.
And it’s worth noting that this kind of research works for both the products you’re selling and the ones you’re buying. There are many tools that go into making a company’s cogs turn, and a little investigation into the kinds of prices your competitors are paying for their business solutions can help illuminate how much you should be spending too.
This applies across a range of goods and services, but given the recent rise in digital transformation efforts, it’s probably most applicable to software as a service (SaaS). SaaS management platform Vertice explains that “to ascertain whether you’re getting a good deal on a product, it’s wise to compare your fee and contract terms with industry peers”, especially considering that pricing information for software is often obscured.
2. Improves Your Product
As well as comparing the back-end figures that go into making and marketing your competitors’ products, you can also research their features and functions. The obvious way that this could help you is if they offer a unique selling point (USP) that your product currently lacks, you can assess how best to adapt to restore your own competitive edge. By evaluating competitor products, services, integrations and partnerships, you can determine how their strategy and offering differ from your own and target the areas that you may need to address in order to compete.
Once again, we can look to industry giants for examples of how to effectively implement this. This time, we’ll consider social media. Back in 2016, “stories” was a pioneering feature exclusively offered by the social photo-sharing app Snapchat, allowing users to post a brief snapshot of their day that would last for just 24 hours before vanishing. Since then, the feature has inspired similar iterations from the likes of Facebook, Whatsapp, and Snapchat’s main competitor Instagram, with huge success.
However, while taking inspiration has paid off for some brands, others have found themselves in legal turmoil for developing products with a little more than a passing similarity to a competitor — a testament to the importance of respecting intellectual property laws.
3. Identifies Gaps In The Market
Competitor research can also help to inform you of gaps in the market that are not currently being served by your or your competition’s products. Consumer needs are dynamic and ever-changing, and while companies do what they can to forecast upcoming trends based on their own feedback, it’s also wise to inspect what your competitors’ customers are saying.
Gauging consumer sentiment using competitor ratings and reviews can help to inform what consumers value about alternative products and what they could be doing better. Business solutions experts from SpotOn explain that when researching, it’s productive to identify the key categories where your competitors may be falling short in order to inform your strategy. These may include:
- Poor customer service
- Sub-par products or menu items
- Slow service
- Unfair pricing or return policy
- Unwelcoming/discriminatory environment
They go on to advise that you should use these categories as a springboard, to “identify the ones where your business meets or exceeds customer expectations”, or has similar weaknesses that need to be addressed.
The Bottom Line
Competitor research is an important, accessible tool that should be utilised by any business looking to gain a competitive advantage. As new startups continue to populate the market, companies need to set themselves apart however they can — and insight into their competitors’ operations is an effective vehicle for doing so, providing insight into pricing information, product features, and market gaps.