By James F. Riordan
What's the competition for your new product? Competition consists of both DIRECT and INDIRECT competition. Direct competition comes from all those companies and individuals who sell the same or similar products. Indirect competition comes from all those companies and individuals who have a product that can act as a substitute for yours. Winning products, of course, are those which have little or no present competition of either kind.
Day in and day out, I have clients tell me "this product doesn't have any competition." But this statement couldn't be farther from fact and reflects a misunderstanding of the term "competition." In the broadest interpretation, ALL products compete for the consumer dollar and in that sense, every product the consumer can choose instead of yours represents a form of indirect competition.
For example, a consumer may be on the way to the hobby store to buy a remote control toy airplane and instead, change his mind at the last minute, choosing to buy a new mountain bike he sees displayed in the bike store window. For the purpose of our evaluation, however, we'll limit the definition of "indirect" competition to mean those products that can actually be used as a substitute for your product.
For instance, alcoholic beverage manufacturers face DIRECT competition from other alcoholic beverage companies and makers of simulated products like non-alcoholic beer and wine. They face INDIRECT competition from companies that manufacture soft drinks and flavored carbonated waters that could be consumed at a party as a substitute for an alcoholic beverage.
As a new product developer, you must investigate existing competition to determine the level of difficulty in introducing a new product to the market and also to determine the difficulty of maintaining a growing market share. You should find out where the battle for market share will be fought. Will it be on price, advertising, product features, packaging, or some other area? This study will help you determine whether you're capable of penetrating and competing with the established players.
Your investigation should include:
1. Neighborhood stores that sell similar products.
2. A search of the Thomas Register in the library.
3. A search of Standard Rates & Data Trade Journal publication in the library.
4. A search of "14 Million Businesses Compiled from the Yellow Pages."
5. A search of New Product guides published by Taiwan and Japan.
6. A search of all applicable mail orders catalogs.
7. A patent search.
8. A Trademark search.
Some devious people have been known to pose as buyers or other professionals to obtain marketing information about their competitors. I know of one particularly devious innovator who called a company and posed as a doctor. He said he was treating a child who had swallowed their product. He hoped to coerce the company into divulging all the contents in the product so he could compare it to the product he was developing. Product development can be a "dog-eat-dog-all-is-fair-in-love-and-war" type of business that occasionally drives people to cross all lines of restraint.
In summary, remember that some competition is healthy. It lends credibility to the fact that you have a viable product and sometimes can act as a reason for you to raise your prices without resistance.
The above article was taken from James F. Riordan's classic book, HOW TO EVALUATE THE POTENTIAL FOR SUCCESS OF A NEW PRODUCT OR TECHNOLOGY. Riordan's highly-acclaimed, 36-point system is a valuable tool for inventors, product evaluators or anyone interested in the invention process. Each section is followed by a comprehensive questionnaire that can be used to evaluate your product.
The highly-recommended book can be ordered by contacting the James F. Riordan Company, 3110 Camerosa Circle, Cameron Park, CA 95682. The company can be reached by phone at (916) 676-4729. The book may also be ordered through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.
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