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Is Your Market Position Defensible?

13 Nov

This is a hard but necessary question every founder should think hard about. We all create products that we think are fairly innovative and better than the competition. However, if you are playing in a big market, you are likely to face competitors with stronger financial resources that will be going after your same customer base. In those situations, a startup has to understand the different strategies to defend its market position. Even though you might think that you can always out-innovate your competitors, that’s can rarely be consider a strategy to defend your value proposition

Based on the characteristics of your product and market, there might be different product sustainability models that can be consider to create a defensive and solid market position

IP

IP-based sustainability is the most traditional product sustainability model. If your product provides a very unique IP that is relevant to your customers and target market, that could translate into a very solid market position that will make it hard for your competitors to capture. Contrary to what you might think, IP-based sustainability is really hard to achieve in big markets.

Strong Alliances

Establishing strong strategic alliances and partnerships could result in a very clear product sustainability strategy. A healthy partner ecosystem will not only help to improve your product market presence but it will also make it harder for your other companies to compete in the space.

Stickiness

Is your product or service is able to retain customers once they purchase it? Are they able to switch to a different solution without a significant investment? Sticky solutions with high customer retention levels are more defensible in the long term that solutions without those characteristics.

Solid Exit Strategy

Even If you are not thinking in a short term exit you need to accordingly determine the potential exit strategies for your product and company. Understanding the exit dynamic is important in case you can’t sustain your competitive advantage as a standalone company.

What do you think? What else makes the position product or startup defensible?

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1 Comment

Posted by on November 13, 2012 in Uncategorized

 

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One response to “Is Your Market Position Defensible?

  1. Saravana Kumar

    November 13, 2012 at 2:55 pm

    You can also add having a strong community around your product, that’s difficult to beat. Example from the recent Business of Software Conference, Joel Spolsky talk he explained why they dropped the idea of selling StackExchange as SaaS based solution. They realised open source clones of StackOverflow popping up and it will be very difficult to fight against the open source crowd.

    The only way to beat it is to have a strong community around the product. So for example now, even thought technically it wont take long to build a clone of StackOverflow (in fact there are few already), it will be so difficult to beat them due to the fan base and loyal community they have built around StackOverflow.

     

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