When new competition shows up, product managers need to know how to get ahead

When new competition shows up, product managers need to know how to get ahead
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Just when everything is going your way as a product manager, that’s exactly when something always seems to go wrong. One of the most common things that can happen is a new competitor shows up. Customers that you thought were a “sure thing”, now want to take a little bit more time to check out what new guy is offering. Your product and its product development definition are under attack. What is a product manager to do?

5 Ways To Handle New Competition

When new competition to your product shows up, you are going to have to react. Do this well and you’ll have something to add to your product manager resume. Remember that they are the “new kid in town” and just because of that they will attract attention from your customers. How you react to their arrival is what is going to determine how successful you’ll be over time. Here are 5 things that you can do the handle a new competitor:

  1. Don’t Get Into A Price War: The last thing that you want to do is to drop the price of your product because your customers now have an alternative. If you do this, then you’ll make your product appear to be less valuable and you’ll not be able to raise your prices later on.
  2. Define Your Niche: You won’t be able to keep every customer – the competition will be able to pick some of them off. What you need to do is to take a very close look at what type of customer you serve better than anyone else. Double down on meeting this customer’s needs and become the only game in town for customers who are in your niche.
  3. Find The Competition’s Weaknesses: What do you do better than they do? Take the time to study your new competition. No matter how bright and shiny their product is, they will do some things well, and some things not so well. Identify where the gaps are and improve your product where they don’t do a good job.
  4. Uniqueness Sells: No matter how similar to your product the new competitor is, their product is NOT the same as yours. Take the time to identify where the differences are. Keep in mind that the difference may not be in the product, but rather in your company itself. Focus on telling your potential customers what makes your offering different and why it’s better for them.
  5. Don’t Bleed For Too Long: If lots of your customers start to select the new competitor over you, sit down and take a look at what is going on. Why are they selecting them and not you? You are going to have to make changes (staff, product, brand, location, etc.) Do this quickly so that you can minimize the damage that is done to your product.

What All Of This Means For You

The bad news about dealing with new competition when it shows up is that there is no quick fix. However, just because you are no longer the only provider of a solution to your customers is no reason to give up. Instead, you need to take action to deal with the new competitive threat. This should be a part of every product manager job description.

The one thing that you are not going to want to do is to get yourself into a price war with your new competition. Instead, take the time to identify what you do differently than they do. Become unique and fill in the gaps in your customer’s needs that the competition doesn’t take care of. Make sure that you are in the right business and consider looking for ways that you could work with the new competition.

The good news is that the arrival of a new competitor does not mean that the game is over. Rather, as a product manager you have just started a new chapter in the story of your product. How you respond to the new competition will determine how successful your product will be. Follow these 5 tips and you’ll be ready the next time a new product shows up in your town.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What’s the best way to discover that there is a new competitor

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P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Product managers want their products to be successful. One big challenge that we all face is that the world is filled with competitors – companies that offer a product that solves the same customer problem that our product development definition solves. In order for our product to be successful, we’re going to have to find a way to deal with all of this competition.

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Word of mouth is the most powerful type of communication about your product

Word of mouth is the most powerful type of communication about your product
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As product managers, it is our job to make sure that our products meet the needs of our customers. As part of our product development definition we spend a lot of time trying to find ways to get the message about our product out to our customers: we run ads, we attend tradeshows, and we create a great deal of collateral. However, it turns out that the most powerful form of communicating about our products is out of our hands: it’s word of mouth.

Why Is Word Of Mouth So Powerful?

Television commercials, magazine ads, direct mail, trade shows – there always seems to be a countless number of ways that product managers can use to reach their customers. However, there is nothing more powerful than that word of mouth communication. The studies have shown over and over again that a happy customer will tell three of their friends about their experience with your product. However, an unhappy customer will tell 10 of their friends about their experience with your product.

The reason that word of mouth communication is so powerful is because of who it is coming from. All of those other forms of communication with your customer are coming from you – and your customer doesn’t know you. What their friends and associates tell them is much more valuable. In fact, studies have shown that what your customers hear via word of mouth may cause them to discard anything else that they hear about your product from other channels.

The power of word of mouth communication is nothing new for product managers. We’ve know about this for quite some time. That’s why you’ll see things like testimonials and letters from customers splashed throughout our advertising material. We are desperately trying to overcome any sort of trust barrier that exists between us and our customers. This is the kind of skill that you’ll see documented on every product manager resume.

The Role Of Social Networks In Word Of Mouth Communication

Recently, the world of word of mouth communication has been turned upside down. The arrival of online social media tools has caused your customers to experience an explosion of word of mouth inputs. Customers can now post stories about their experiences with your products on web sites, on blogs, in Facebook and via Twitter. What this means for you product manager is that more and more people are going to have a chance to read about the experiences of your existing customers.

Product managers need to realize that the arrival of social networking means that our customer’s voices are going to be amplified. It has become so easy to jump online after using a product and immediately share your thoughts that our customers are doing exactly that.

Product managers need to get ahead of this wave of word of mouth discussion about our products and do our best to try to shape the way that the discussion is going. There are three effective ways to go about doing this:

  • Monitor the social media channels in order to detect when customers start to talk about our products. When positive comments are made, we need to share them and make sure that the word gets out to a larger social media audience.
  • Some customers will have negative things to say about our product. When this happens, we need to address it right off the bat. If the comment is valid, then admit what you’ve done wrong and tell the world how you plan on fixing it. If the customer is wrong, explain what they did wrong and offer to help them to make it right.
  • In the absence of any communication from us, our customers will make up their own stories. That’s why it’s so important that product managers provide their customers with regular updates on their product. However, this cannot be done in a “sales” way – you need to work to develop a real relationship with your customers based on trust and value.

What All Of This Means For You

The one thing that all product managers really want is for our customers to both know about our product and to like it. This is a basic part of our product manager job description. It turns out that all of the publicity and marketing that we engage in can help this to happen, but it’s nothing in comparison to the most powerful form of customer communication. What really matters is word of mouth about our product – what are our customers saying about us?

We are now living in the era of social media which only serves to boost the power of word of mouth communication. It used to be an effort for our customers to tell others what their experience with our product was, now it’s easy and something that they can do as part of their daily social media updates. This means that product managers need to monitor social media to detect when their products are being talked about. Different actions need to be taken based on positive and negative comments.

The great thing about word of mouth is that you can’t beat the price – it’s free! However, it is so powerful that you can never hope to control it. Instead, as product managers we need to find ways to steer the word of mouth discussions about our product in the directions that we want it to go.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: When people start talking bad about your product, what is the very first thing that you should do?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Just when everything is going your way as a product manager, that’s exactly when something always seems to go wrong. One of the most common things that can happen is a new competitor shows up. Customers that you thought were a “sure thing”, now want to take a little bit more time to check out what new guy is offering. Your product and its product development definition are under attack. What is a product manager to do?

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