Start-up Entrepreneurs' Blog

Why Your Start-up’s Competitors May Not Be Who You Think?

October 16, 2012

The real competition for your start-up’s product isn’t other products. Traditional marketing frames the competition in terms of offerings from the same category and sometimes from offerings in related categories. Marketing guru Marty Neumeier points out that today’s strongest competition doesn’t come from those direct or indirect competitors. It comes from the extreme clutter of the marketplace.

How did the marketplace become so cluttered?

The digital revolution has made it easier and cheaper for publishers and media companies to produce thousands of publications and media channels. A few existed decades ago, there used to be less than 600 radio and television stations, now there are more than 48,000.

Venture capitalists know seed capital is more easily obtained today. I’ve heard several VCs mention that early funding is becoming a commodity. It’s the reason many are moving to the later funding rounds. The funding required 15 years ago to start a company might have been $3 to $5 million, but it has dropped to less than $500,000. This has resulted in more products being developed and launched. The result is product clutter with too many me-too offerings.

While a start-up is trying to gain traction with their first product, it’s a guarantee that some other company is developing the upgrade or next generation of the product. Innovation is happening at a faster pace.

The primary research tool for product information is the Internet, which is now over crowded. The result is a confused customer bombarded by too many choices that all look and feel the same.

As a result, traditional advertising and marketing techniques no longer work because there are so many more media channels. It simply costs too much to reach a large enough audience. As Marty Neumeier also points out that while there had been explosive growth in available marketing channels, the human brain has not evolved one smidge. When presented with marketing clutter, people simply ignoring most of it.

The newest barrier for start-ups is breaking past a person’s mental barriers.

How to break through market clutter?

Entrepreneurs need to think of finding their passionate community. The unique selling proposition, which was created in the 1960’s and worked well decades ago, is ineffective with these highly splintered media channels. While an Internet presence is required, companies should ask if whether there are other means to reach customers that will let them break through the market clutter.

Remember companies rushing to install automated answering systems for customer service. We all hate them. It’s almost impossible to talk to a knowledgeable live person anymore. Yet, a lot of companies are attributing their success to going back and doing it the old-fashioned way.

As Marty so aptly puts it, products don’t just need to be different; they need to be radically different. Entrepreneurs need to think Lady Gaga! Groupon may be a success, but as of today, there are more than 600 Groupon-like websites! Think about Groupon-like start-up #359 trying to become a viable competitor.

Branding has become increasing more important in this environment. Identity and brands is how customers make sense out of extreme market clutter. It’s a customer’s a gut feeling about a service or product. Studies show that most customers would rather pay a much higher price than switch from their brand of choice.

People don’t view products and features as desirable as belonging to a tribe or community. Why do teens want iPhones? They want to be one of the in-crowd or the cool kids. There are too many entrepreneurs aiming to build the un-built product, instead find the community that’s under-served and address it – be something to somebody.

Marty Neumeier’s wrote a book called  ZAG. It’s a great, quick read on marketing clutter.  Even if you have a different product, it’s still hard to stand out in a crowd on one million similiar or related ones. It’s a thought provoking book that makes one look at their product offering in a different light.

Filed under: From Concept to Start-Up,Marketing & Sales