The book except “Competitor Analysis: Understanding Your Opponents” was a fantastic read. It was great to kind of get a walk-through of what competition looks like. A key takeaway from this article for me was the fact that competitors can be both existing and potential. In my opinion, this part is scary. Imagine spending your money and putting your reputation on the line for a product you think will be successful and help you make money only to have someone be inspired by your idea and to create a product that is similar to yours. What is worse is that what if their product ends up doing better than yours? We all know of companies/products that would not have started without the idea from another company/product. Two big examples I can think of are LEGO blocks and Oreo cookies.
LEGO was making pull-around animals before they were inspired with the stackable block idea. The took this idea from a man who was making a similar product called Kiddicraft Blocks. Because the man did not have the money and resources LEGO had, LEGO was able to design a product that was basically the same thing as Kiddicraft Blocks and dominate the field. The same thing happened with Oreo cookies. The original cookie was called Hydrox and was doing quite well. Once Nabisco caught wind of the product Oreo cookies, they bought in to this field and Hydrox cookies became a thing of the past or a cookie you bought if Oreos were not in the store. The same theme happened in both of these companies. They knew of the competition they were up against currently, but because no one can see into the future, they did not know these companies were going to not only compete against them, but be more successful.
A great figure I liked analyzing was Porter’s Five Forces. Porter said it is important to know about five powers that promote industry competition and they are the threat of new entrants, the bargaining power of suppliers, jockeying for position amount current competitors, the bargaining power of customers, and the threat of substitute products or services. Once the threat of new entrants is established, everything else kind of works in a circle. With the knowledge of these five forces, one can attack their potential competitor and try and stay five steps ahead at all times.
After reading this article, it made me wonder if Kiddicraft Blocks and Hydrox cookies would still be around today if they were able to better analyze and better recognize who their future competition was going to be. We also read about the importance of determining what the strategy and objectives are of the competitors as well as understanding what they are concentrating on. Perhaps if Kiddicraft Blocks and Hydrox cookies better identified key factors in the past, they would still have a future. This excerpt is important for any entrepreneur to read if they plan to be successful in the long run. Threats and competitors will see a product and develop better ways around it which can ultimately be the demise of a new product.