Chapter 3. sizing up the competition

"On the plus side, we are the only coffee chain with that God-awful burnt bitter aftertaste."

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1. 3 reasons you should do competitive analysis

2. Identifying competitors

3. Where competitors come from

4. Action section: Who are your competitors?

5. 2 ways to evaluate the competition

6. Action section: How good are your competitors?

Underestimating one's competition is a classic mistake made in all walks of business. But it's epidemic on the web, where competitors may not be immediately visible or obvious.

Excuses abound: In a fast-paced development environment, it may seem easier to ignore the competition than to analyze it. And teams that are innovation-focused often resist the idea of examining other sites as if it would undermine their creativity to acknowledge the work of others. Non-profit sites often skip this step altogether, assuming that competitive analysis applies only to commercial sites.

But they're all mistaken. Competitive analysis is essential for all sites commercial and noncommercial, heavily contested or alone in its field because it gives the product team key information.

3 reasons to do competitive analysis:

1. You always have competition.

2. The web introduces new competitors.

3. Competitors give you ideas.

you always have competition Many sites assume they have no competitors because they haven't seen anyone else do the same thing online. It's a common mistake, because it's a common situation. In a rapidly growing medium, millions of companies have been, for a time, the first or only entrant in their particular fields. (Though many define their fields rather narrowly. For example, "We're the first one-hour online photo developers with personalized photo albums in Miami, Florida.")

But most sites do have competitors, even if they're not immediately apparent. There may be sites doing what you do in a different geographic location. Or there may be sites doing something similar in the eyes of your customers. There may also be off-line competitors stores, books, software, TV shows that already fill the need you're addressing or that are poised to follow you online. And even entrants who remain alone in their fields, such as unique entertainment sites and specialized services, need to look outside themselves. For there's always competition, even if it's only for users' time.

the web introduces new competitors Everything powerful is also dangerous, and the web's greatest power is one businesses fear the most. The web allows businesses to achieve geographic distribution in a way that's never before been possible. So even if you run a local business, your competitors may no longer be those you pass on your way to work. They may appear, seemingly from nowhere, online. (Can you say "Amazon?") (identifying competitors, p. 40)

The good news is that the web also gives you access to your competitors if you view them as a source of ideas and potential partnerships.

There's always competition, even if it's only for users' time.

competitors give you ideas It's useful to evaluate your competitors, because it opens your eyes to potential threats. But it also opens your mind to possibilities: in product direction, in partnerships, and in strategy. By anticipating your competitor's next move, you just might think up your own.

Before you launch a site, you should take a long, hard look at similar sites, and see how they solve the problems you face. They're usually full of ideas on what to include, what to highlight, and how to organize it all (evaluating competitors, p. 42).

And if your business (and your competition) is firmly rooted in the terrestrial world, the web is a great tool for analyzing off-line competitors as well. Take restaurants, for example. It can take months to visit and assess a wide range of your competitors. But the web lets you glimpse into their kitchens and dining rooms without placing a single order.