How to Assess the Competition for a New Product
It's important to assess the competition for a new product before you bring it to market so that you can iron out any bugs it may have and set an appropriate price. Unless you are the sole inhabitant of a niche of a market, you are likely to have at least some competition, even if it is in a secondary market. Taking the time to assess that competition will allow you to position your new product for success.
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Instructions
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Discover who your competition is. Assume the role of a consumer, and attempt to identify how you would meet the requirements your product addresses. Your new product may have obvious competitors, or the competitors may provide the same features in a completely different way.
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Become your competitor's customer. The best way to research what your competitors are doing is to shop with them. This will give you a first-hand experience of how your competitors are succeeding and what they could be doing better.
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Talk to your competitor's customers about their opinions when you go undercover as a customer yourself. Often, you can get opinions that are more candid when you approach customers informally.
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Hold focus groups on competitor's products. Focus groups are a more formal way to assess customer opinions about products, and they can be coordinated in-house or outsourced to a product research firm.
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Set a price for your new product using your competitor's price point as a guide. If your product is superior to your competitor's product, you can set a higher price. If you product is on par with your competitor's product, however, it can help drive sales to set your price slightly below your competitor's price point.
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Tips & Warnings
If you are unable to shop with your competitors because you are known to them, ask a friend or employee to do it for you.
The best time to assess your competition is before investing large amounts of capital into a business idea.
Remain objective about the merits of your new product in comparison to those of your competitors. It can be hard to stay neutral when you invest a lot time and money into developing a new product, but is is impossible to assess the quality of the product properly if your analysis is skewed.
Be open to making adjustments to your product if your research determines that your competitor's products are better positioned in the market than your new product would be. You may need to do minor reworking, or you many need to do a complete overhaul. Either way, it's better to make changes before you launch a product than to have that product fail.
