Competition is key: This is how to do a proper market analysis
To win the bid in the H2020 SME Instrument you need to compete. By competing, I mean preparing the perfect proposal, one which will help you “beat the competition”. To succeed, you have to focus on one more aspect where the competition factor plays a big role. This is to incorporate an analysis of competitors and competing solutions in your proposal.
The European Commission says that: “The SME Instrument helps high-potential SMEs to develop ground-breaking innovative ideas for products, services or processes that are ready to face global market competition”. Remember, the SME Instrument is a business oriented programme, so the central point is the market with its competitive landscape.
The Commission demonstrates the importance of the market criterion by encouraging SME Instrument applicants to address the subject of competition on several levels, taking various aspects of the innovative solution into account i.e.: European added value, dissemination and communication of results, the targeted users or user groups, willingness to pay or freedom to operate. The Commission requires performing a realistic comparison with the current state-of-the-art solutions, including costs, environmental benefits, gender dimension, ease-of-use and other features.
Taking the above into account, one of the most crucial elements of an application is to demonstrate expected significant superiority over the state-of-the-art and the potential impact on international competition.
Who is my competitor?
For many applicants, competitive intelligence is, at best, incomplete. Having a unique and disruptive project one may say that it´s so innovative that no one offers similar value. Nevertheless, a competition analysis must be perceived as one which addresses user needs – and those needs are usually met one way or another. To address this issue well, you need to identify what your customers would buy if they weren’t buying your product or service. Don’t look at your direct competitors only, but at all the market players that are addressing the same customer needs and already fighting for the love and wallets of your target consumers.
Well, what should I do, then?
Conducting a competitive analysis should be your main concern before even thinking of applying for SME Instrument Phase 2 funding – looking at the global market and analysing the global competitive landscape is the first step. Try to think as an investor, having in mind that failure of your project can also be minimized by conducting thorough market and competitive analyses. Not only will you be able to prepare a winning proposal, but you just might also discover new markets, new business models, new streams of revenue, new marketing strategies or even media used for marketing purposes. Knowing where your idea stands against a global scene can be surprising, but also a tremendously enriching experience. Treat the analyses as a lesson and an early warning, identifying the need to make the necessary corrections/improvements. With these evaluations, you can establish what makes your product or service superior, what your “unique selling points” will be in comparison with alternative solutions and how to demonstrate and prove “willingness to pay”. So do it as soon as possible.
Before you have got the facts, numbers and indicators, you don´t really know your competition well enough, it´s as simple as that. You need to understand what´s going on in the market with respect not only to the technology, but even more importantly – to the business environment, evolving customer needs, sectoral and global market trends or emerging business models.
Start from Phase 1
The Commission´s (EASME’s) report on the first two years of implementation of the SME Instrument 2014-2015 “Catalysing European Innovation”, shows that Phase 1 has had structural impacts on the functioning of the participating SMEs. The areas in which SMEs have made the greatest progress when performing the feasibility study are: “a better understanding of clients' needs", followed by "better knowledge about competitors". So follow the winners and make use of their experience.
Use the Phase 1 EU money to dig deeper into the market and analyse, analyse, analyse. This will allow you to not only prepare a perfect proposal, one which will convince business experts and win H2020 money but also improve your business concept and help you prepare well for raising more money from other investors.