As a CFO for startups, I’ve seen firsthand how crucial a thorough market analysis is for any company, especially during a turnaround. Understanding your competitive landscape can illuminate opportunities and threats crucial for your strategy. Conducting a market analysis provides clarity on where your startup stands in the competitive ecosystem. It helps identify market trends, customer needs, and competitor strategies, which are vital for making informed business decisions. After you’ve correctly calculated your TAM and have nailed down your Ideal Customer Profile, it’s important to delve into your competitors, which will be a key slide in your next fundraise.
Key Questions for Effective Market Analysis
- Who are your direct competitors? Identify companies offering similar products or services that have a similar ICP and at least a portion of your TAM.
- What is your market share compared to your competitors? Understanding your position in the market is crucial. Calculating your market share annually and estimating your competitor’s share will give you insight. Use your network to try to find this information.
- What are the unique selling points (USPs) of your competitors? Analyze what makes your competitors appealing to your target audience. Typically they will be focused on a strategic advantage – figuring out what their advantage is and how they market it to your ICP will help gain insights on where to focus on both your product and positioning.
- How do competitors price their products/services? This helps in pricing your offerings competitively. Who are you beating on price? Who are you losing to on price? Which of your competitors is choosing to be the lowest in price, and how do you plan on competing?
- What marketing strategies do they use? Understanding this can help in refining your marketing approach. Looking at their website, sponsorship spends, paid advertising presence, PR, content, frequency of content, and email newsletters will all give you insight as to how they target and retain customers.
Analyzing Competitor Strategies
- SWOT Analysis: Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of your main competitors to understand their strategic position.
- Product/Service Analysis: Look at their product features, quality, and range. Create a grid comparing products and services of all your competitors, a common slide in pitch decks to focus on your unique position.
- Marketing and Sales Tactics: Analyze their marketing channels, sales tactics, and customer engagement strategies.
Building a Competitor Matrix
Create a competitor matrix that includes:
- Market Position: Where each competitor stands in terms of market share and industry influence.
- Product/Service Offerings: Comparative analysis of features, pricing, and quality.
- Marketing Strategies: Channels used, messaging, and target demographics.
- Financial Health: Revenue, profitability, and growth trends.
- Customer Base: Size, loyalty, and demographic details.
This matrix will provide a visual representation of where you stand among your competitors and highlight areas for strategic improvement.
Market analysis is not just a one-time task but an ongoing process, especially in a turnaround scenario. It helps in understanding the market dynamics, positioning your product correctly, and crafting strategies that align with market needs and stand out from the competition. Typically a startup should be doing this exercise annually during annual planning, when needing to pivot during a turnaround, and when fundraising. The revenue side of the house – sales, BD, and marketing, all should be using this data to sell against your competitors. An expert fractional startup CFO can help in these exercises. Reach out to Ravix Group today for a free hour consult with an expert:
