Know your competition before you know yourself.
“Eureka! I have cracked it, this idea of mind is the bomb, the shizzle, the must-have product of the decade. I am simply going to be rich.” It can feel like that sometimes and for some ideas it is very true, but for most ideas, it is never that straightforward. I have been on the “Eureka” end of an idea panning out and on the Eureka end of an idea that goes nowhere. The trick to ultimate market success and longevity in the new product world is knowing how to quickly quality your idea. For me, I like to take the broad strokes of an idea and qualify it against existing competitors in the market first before diving in too deep into the design.
Explore The Market – today, exploring the market segment you are entering is easier than ever. A simple Google search will generally tell you if your idea is unique if your idea already exists in the market in a limited fashion or if your idea faces massive competition from many established competitors. This early exploration is the first step to qualifying your potential Eureka moment.
Competitor Product Analysis – it doesn’t have to be fancy but it needs to be thorough and with purpose. Where are existing competitive products being sold? What is the feature set? What is the retail price?Â What is your best estimation of their production price? What is your best estimate of the wholesale price? You won’t know exactly but you should be able to get close to the correct numbers that will show you your competitors profit and the retailers profit and that is what it is really all about. How much money is on the table, is it skinny money or fat money?
Competitor Company Analysis – what I am trying to determine here is how powerful my competition is. Are they private? Are they public? What is their financial history and current position? Do they have a history of playing fair in the patent world? If I am up against a startup company that is offering a single SKU, like my idea, then I am on a level playing field. But if I am up against a major brand who have many products selling in many different channels, with a long history of success, then the way forward is much tougher. Not that a tough road is an idea killer, but it is a reality that you need to know. Knowing how tough the competition is will go a long way when you are planning out production, marketing strategy, time line strategy and so much more.
Potential Customer Analysis – with this analysis you really need to get away from how great you think your idea is. “It’s awesome, everyone will want one. $50 and everyone will buy, guaranteed.” You need to get away from the fantasy you have laid out in your head. What is the reality on the ground? What are people paying for similar items? Is your product a luxury or necessity? Is your product a problem solver? Does your product actually pay for itself over time? What is an acceptable price point that is a win-win-win for you, the retail channel, and your customer? If your product is a luxury item with high profit per piece then your task ahead may be more focused on branding and presentation that matches a higher price point expectation. if your product is more for the masses then your challenge is likely manufacturing pricing to be able to hit mass market sweet spot pricing, $9.99, $19.99, $49.99. Of course, pricing is only one arm of customer analysis but I like to make it the first step because if my pricing isn’t right then nothing else likely matters.
Self Analysis – this is the face reality moment. If your Eureka moment aligns well with your existing skill sets then you are in the ball game. But if you are just seeing a different way forward in an area that you really know nothing about then you likely will not fair well. You don’t have to possess all the skills necessary to bring your idea to life but you do need to be able to offer something more to your project than just the idea. That something more might be design skills or engineering skills or marketing skills or maybe you are just the person with the idea and cash. If you have to go outside for everything (and you are not the cash person) you are going to have a really tough time.
Once you have taken the broad strokes of your design and placed it up against a thorough competitor analysis then you will be well positioned to know if you have a potential Eureka moment that is worth pursuing or a “Eureka” moment that should be shelved. Working hard, having tremendous fortitude and willpower, all these things are needed when it comes to product development but they are not enough on their own. Knowing your competition before you know yourself is a good way forward.