Let’s understand how we should map our competition
Introduction
Many a times the competition slide of the pitch decks is designed in a way using the perceptual mapping (Link to earlier blog on perceptual mapping) to highlight no competition or at least no direct competition to the business.
This strategy could wow some but for seasoned investors tend to do their own in-depth research before investing & then the identification & segmentation of competition is solely let to them.
Approach
Entrepreneurs should boldly and objectively identify the competition to their business and segment them in the appropriate bucket while presenting in the pitch decks to the investors.
Competition under this approach can be classified into 3 buckets:
Illustration:
Direct competition is in which businesses offer products or services that are essentially the same and the businesses are competing for the same potential market.
Indirect competition refers to a business whose products or services are different but potentially could satisfy the same need and reach the same goal.
A classic example here could be Uber starting food delivery.
Till then none had mapped the cab aggregator as competition to food delivery . And a tweak in the existing offerings by Uber turned them into direct competitor to food delivery services.
Replacement competition (also called “phantom competitors”) are the businesses that sell a product or service that is both different in category and type, but one which the customers could choose to spend their money instead.
Conclusion
Competition segmentation is an effective way of communicating the Unique Selling Proposition, Differentiation & Value Proposition of the business. It also positively contributes to the decision making of the entrepreneurs in the due course of the business.
As in the above, Swiggy and Zomato are direct competitors but Zomato’s unique selling proposition of discovery of restaurants for dine-in acts as a clear communicable differentiator.
Thus, competition segmentation forms a crucial element for effective pitch communication. It is important to note the narrative for the communication is the key.
Identifying replacement competition broadly reflects on the spectrum of the vision and adds to the decision making with consideration to the landscape.
