Module Three: What Is the Market/Competition Like?

Any successful venture requires an understanding of the market and the competition. You need to discover if the market is profitable and how you can compete. Once you understand the market and how it affects your business, you will be better prepared to face the challenges that will come your way and increase the likelihood of success. 

Is the Venture Lucrative?

Before beginning any venture, you must discover if it is lucrative or profitable. This requires you to understand the niche market that you are interested in joining. Some business trends will be obvious while others will not. For example, you can see brick-and-mortar stores struggle and/or close. Online trends, however, change quickly and require more research, using tools such as Google Trends. This shows you how the market is changing and if your interest remains lucrative.

Is There Competition?

Most new ventures will face competition. It is rare for people to come up with truly original ideas, and many of these are adaptations of established markets (e.g. video streaming over rental stores). Once you know your market, your first job should be to identify the competition. Your main competition will be the closest to your product/service. For example, a coffee shop is not the main competitor of a restaurant.

Once you identify your competition, determine its strengths and weaknesses to give yourself an advantage. Pay close attention to their objectives and see how you compare. Some businesses focus on the customer experience while others are solely focused on low prices. Paying attention to objectives will show weaknesses that you can exploit.

How Can You Set Yourself Apart from the Competition?

By understanding your competition, you will be able to make yourself stand out. You have already established which objectives your competition is lacking, and you can fill the niche. For example, some customers may be willing to pay more for customer service that a business focused on low prices will lack. There are also other ways to stand out:

•       Expertise – Take advantage of your expertise to draw in customers.
•       Value – Explain how you offer a better value than competitors. This requires understanding the customer.
•      Communication – Use creative and innovative ways to connect with customers.

How Is the Customer Prospect?

Creating a successful venture cannot be done without understanding the customer completely. Success depends on identifying what customers want and providing it. Begin by understanding the demographics in your area. This will give you insight into the spending habits and values of prospective customers. You should also hold panels and surveys to better understand what your customers expect from you. In panels, customers provide you with their ideas. In surveys, customers answer specific questions. Continued customer feedback allows you to constantly tailor your business for your customers.

Lesson Summary

Competition and the market are integral to the success of a venture. To maximize the chances of success, it is important to fully understand both. This includes identifying the potential profitability of the market, assessing existing competition and strategies for standing out, and understanding customer prospects.

• Is the venture lucrative? Consider researching the market and using tools to monitor potential trends.
• Is there competition? Identify key competitors and their objectives. Understand their strengths and weaknesses to give yourself an advantage.
• How can you set yourself apart from the competition? Leverage your expertise and value to differentiate yourself, and use innovative communication methods to connect with customers.
• How is the customer prospect? Know the demographics in your area, and utilize panels and surveys to better understand customer needs.