Continued from Step 2

1.8 Competitor Analysis

This is another important step within your market research. You'll have been exposed to your competitor's at some point along the way so now it's time to take a closer look at them.

Become a customer of several of your competitor's if you can. Yes, I mean actually go out and purchase their products. Observe the entire process from ordering at their website to receiving the product. Be sure to test their pre-sales customer service and post-sales. Look at the product packaging when it arrives. How long did it take to arrive? How much did they charge you for shipping? You're going to want to be better than they are so you need to know just what they're all about at a detailed level that only a customer could know.

When I created a vitamin supplement business some years ago I purchased similar products from a half dozen other suppliers and it helped me structure my operation in many different ways.

There's a chance that you're going to have to attract customers away from an established supplier. How are you going to do that without knowing their strengths and weaknesses?

During my supplement days I created a simple matrix in MS Excel to record the various performance parameters of my competition. These were some of the fields that I included in the matrix to help me evaluate their strengths and weaknesses and to help me design an approach that would lure customers away from them -

• Product Cost

• Product description versus what was delivered

• Shipping Cost

• Shipping time

• Customer service pre-sales telephone support (standard and ability to help answer technical questions)

• Customer service post-sales telephone support (call them and request information on processing a return. Whether you send it back or not is your decision, but doing so would be a little unethical)

• Packaging quality (you will get good ideas from your competition on packaging design)

Rate them overall on a scale of 1-10 then work out what you could do differently to beat their scores.

1.9 Determining Your Unique Selling Proposition (USP)

In simple terms, you need to look at ways to spin your product/service and create a unique concept from something which might already exist.

To better understand this let me provide you with a couple of real examples.

In 2007 a friend of mine wanted to start an online business retailing sunglasses. It's a highly competitive arena and he needed to have a unique twist on his product's to set him aside from the competition.

That unique twist came as an accidental side effect of making his glasses ultra-lightweight for comfort – they float! Capitalizing on this unique aspect of their design, he targeted sports fisherman and boaters and pitched his product to focus on their uniqueness. He's built a very lucrative business by understanding and capitalizing on a unique selling proposition which came apparent quite by accident.

In 2000 when I was heavily involved in launching a new vitamin supplement business in Green Bay WI, it quickly became apparent that there was not only a large demand for conventional vitamin supplements online, but a large number of companies supplying that demand. The challenge became finding a niche on which to focus my marketing effort. After extensive research I developed products using ingredients from the beehive and focused successfully on that niche market. Further research on the industry showed that many people were buying not just one of the products from the beehive, but oftentimes three or even four of the main products. So I formulated the first 'compound' supplement combining all four bee products in one capsule (royal jelly, bee pollen, propolis and honey). Bee products became our niche and the compound product our “unique selling proposition”. We were able to offer something no other company was offering at the time.

So you need to step back a little from your product idea and look for ways in which it might be uniquely different to those similar products offered by your competitor's. You need to identify or construct your USP.

One way in which you might do this is to research the actual search terms that people are using online, when they are looking for products similar to yours. I'm introducing this next step somewhat out of sequence but I want to show you an important tool to help with this and other stages of launching your new product/idea.

Much of what you do when you get into the marketing phase will revolve around the search engine Google. Google will be your partner in developing your business and sending people to your website. Google can also be used as a valuable research resource, which is what we're going to do next. Go to Google.com and create an Adwords account. Google tends to move around navigation links and pages so I can't give you a link to the signup page since it will probably have changed by the time you read this. But it's generally easy to find.

Create a Google account and signup for Google Adwords.

Once inside your new Adwords account, look for the 'Keywords' tab around the middle of the page and click on that tab.

Look for the link that say's “Keywords Tool” and click on that (please allow for changes to Google's choice of nomenclature when using this reference).

Inside the next page you'll be asked to enter keywords relating to your product or service. Enter a list of perhaps a dozen or so of the obvious search terms that you believe people might be using to find your product's (for example “bee pollen”, “remote controlled cars” etc). When you click the 'search' button, Google will present back to you something looking like this -

This is important so lets take a minute to analyze the data.

I started in this instance by entering two search terms into the search box - “bee pollen” and “royal jelly”. Google gave me data on my two search terms but also presented back a long list of other related terms which people have been using when looking for bee pollen and royal jelly. I'm only showing two others in the image above for the sake of clarity, but there were actually 742 alternative search terms returned.

If you look under the other field headings you'll see that Google also provides useful statistics on each of the terms. It gives you a competition index so you can see what you're up against and also shows you how many people are using the search terms on a monthly basis.

In upcoming chapters we'll explore this data in more detail, but for now we're looking for ideas to give our product a unique edge.

Let me back up a little to clarify this point. You have a product idea and lets assume that there are other companies selling the same or a similar product. (think about the vitamin supplement analogy). You're going to be pitching your product on the Internet and there are going to be many other established businesses selling a similar product with whom you are going to be trying to compete. It's going to be tough for you to get visibility within a competitive field, so you need to look for a niche, where the competition will be weaker in numbers. You need to find a USP.

So take a look through the list that Google provides and see if anything jumps out that might give you a competitive edge or more of a niche. In my example, when I scrolled through my list of 742 alternatives I saw many ideas for targeting a niche with my bee pollen product. One example was “organic bee pollen”. Rather than target the mainstream bee pollen companies, why not source my ingredients from organic suppliers and target people looking for organic supplements. It's a growing market so I could enter it at a stage where it is still possible to gain a foothold, and really capitalize as the market grows.

I can't be more specific, since I don't know what your product idea is, but hopefully you'll gain something useful from this exercise.

Of course once you've identified your niche you will most likely need to readjust your marketing strategy to focus on your USP. That is why it's important to do this in sequence. If you get too far down a specific route and find that it's just too competitive, and you find yourself having to backup and re-evaluate your product's USP, then you'll have potentially wasted a lot of time and money.