© 2010 Dream Merchant • 2309 Torrance Blvd. #104, Torrance, CA 90501 (310) 328-1925 email: Jkm316@aol.com
The Existing Competition for Your New Product Will Determine Your Level of Marketing Difficulty.
Existing competition consists of both DIRECT and INDIRECT competition. Direct competition comes from all those companies and individuals who sell the same of similar products. Indirect competition comes from all those companies and individuals who have a product which can act as a substitute for your product. Winning products are those that have little or no present competition.
Day in and day out, I have clients tell me "This product doesn't not have any competition," yet that 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 out there, that the consumer can choose to buy instead of yours, represents a form of indirect competition
For example, a consumer may be on the way down to the hobby store to buy a remote control toy airplane and instead, changes his mind at the last minute, choosing to buy a new mountain bike that he sees displayed in the bike store window right next to the hobby shop. For the purpose of our evaluation, we will limit the definition of "indirect competition" to mean those products that can actually be used as a substitute for your product.
As an example, alcoholic beverage manufacturers face DIRECT competition in the form of other alcoholic beverage manufacturers and makers of simulated products such as 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.
The new product evaluator 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 and growing market share once the product is introduced.
The evaluator should determine where the battle for market share will be fought. Will it be on price, advertising, product features, packaging, etc. This study will help to determine whether the product developer is capable of penetrating and competing with the established players.
The 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 and Data Trade Journal.
4. A search of "14 million Businesses," compiled from the yellow pages.
5. A search of New Product guides in the library.
6. A search of all applicable mail order catalogs.
7. A patent search.
8. A trademark search.
Some devious people have been known to pose a 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, treating a child who had swallowed their product, in order to coerce the company into divulging all of the contents in their product so he could see how close the ingredients of their product came to the ingredients of the one he was developing. Product development can be a "dog-eat-dog," "all-is-fair-in-love-and-war" type of business, which 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 through the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501. The phone number is (310) 328-1925.
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