Market Research and Competitive Analysis

Know Your Battlefield

You have validated that people have the problem. Now you need to understand the market landscape: how big is the opportunity, who else is solving it, and where do you fit?

By the end of this lesson, you will have a clear market map, competitive analysis, and unique positioning statement for your startup.

Quick Recall: In the previous lesson, we validated our idea by talking to customers and testing demand with a landing page. Now let us understand the market those customers exist in.

Market Sizing: TAM, SAM, SOM

Investors and partners want to know: how big is the opportunity?

Total Addressable Market (TAM): Everyone who could theoretically use your product globally.

Serviceable Available Market (SAM): The segment you can actually reach with your business model and distribution.

Serviceable Obtainable Market (SOM): The realistic portion you can capture in the next 2-3 years.

Example:

• TAM: All small businesses that send invoices ($50B market)
• SAM: Small businesses in the US that use online tools ($8B)
• SOM: Freelancers and solo businesses we can reach through online marketing ($200M)

AI-powered market sizing:

Help me size the market for my startup:
Product: [WHAT YOU OFFER]
Target customer: [WHO BUYS IT]
Geography: [WHERE YOU OPERATE]
Price point: [EXPECTED PRICE]

Calculate:
1. TAM: Total addressable market with reasoning
2. SAM: Serviceable available market with constraints
3. SOM: Realistic obtainable market for years 1-3
4. Key data sources for each estimate
5. Growth trends in this market

Always cite your reasoning. “The market is $10B” is meaningless. “$10B based on 2M potential customers at an average spend of $5,000/year” is credible.

Quick Check: Why is SOM more important than TAM for early-stage startups?

Competitive Analysis

Competitors are data, not threats. Studying them reveals what the market values, what gaps exist, and where you can differentiate.

Map your competitive landscape:

AI-powered competitive analysis:

Analyze the competitive landscape for:
Product: [YOUR PRODUCT]
Market: [YOUR MARKET]

For each major competitor, identify:
1. What they offer and their core value proposition
2. Their pricing model and approximate revenue (if available)
3. Their strengths and weaknesses
4. Their target customer segment
5. What customers complain about (check review sites)
6. What they are missing that we could offer

Also identify:
- The gap in the market nobody is filling
- The underserved customer segment
- Pricing opportunities (overpriced or underpriced areas)

The Competitive Positioning Matrix

Plot yourself against competitors on two dimensions that matter most to your customers:

                    HIGH QUALITY
                        │
                        │
    COMPETITOR A  ●     │     ● YOUR POSITION
                        │
    ────────────────────┼──────────────────
    LOW PRICE           │          HIGH PRICE
                        │
           ● COMP B     │     ● COMP C
                        │
                    LOW QUALITY

Choose dimensions relevant to your market. Common axes:

• Price vs. Quality
• Simple vs. Feature-rich
• Self-serve vs. Full-service
• General vs. Specialized

The best position is one where you are alone. If every competitor clusters in one area, the opposite corner is your opportunity.

Quick Check: What four types of competitors should you analyze, and why does each category matter?

Customer Personas

Market research is abstract. Personas make it concrete.

A persona is a detailed profile of your ideal customer based on research, not imagination.

Build your primary persona:

Based on my validation interviews and market research, create a detailed customer persona:

Product: [YOUR PRODUCT]
What I learned from interviews: [KEY INSIGHTS FROM VALIDATION]
Market: [YOUR MARKET]

Include:
1. Name, age, role, company size
2. Daily challenges and frustrations
3. Current solutions they use (and their complaints)
4. Goals and motivations
5. Decision-making process (how they evaluate and buy)
6. Objections they might have to our product
7. Where they spend time online (for marketing later)
8. A direct quote that captures their core need

Build 2-3 personas maximum. More than that dilutes focus. Your primary persona drives product decisions; secondary personas inform future expansion.

Finding Your Unique Positioning

Positioning answers one question: why should someone choose you over every alternative?

The positioning statement formula:

For [TARGET CUSTOMER]
Who [KEY NEED OR FRUSTRATION]
Our product is a [CATEGORY]
That [KEY BENEFIT]
Unlike [MAIN ALTERNATIVE]
We [KEY DIFFERENTIATOR]

Example:

For freelance designers who struggle to send professional invoices quickly, our product is an invoicing tool that generates branded invoices in under 60 seconds. Unlike FreshBooks, we require zero setup and charge per invoice with no monthly subscription.

Every word matters. This statement drives every product decision, marketing message, and sales conversation.

Try It Yourself

Build your market intelligence:

1. Size your market using the TAM/SAM/SOM framework
2. Map 3-5 competitors using the analysis prompt
3. Plot your position on a two-dimension competitive matrix
4. Build your primary customer persona from validation interviews
5. Write your positioning statement using the formula

Key Takeaways

• Size your market with TAM, SAM, and SOM: investors want realistic projections, not the total global opportunity
• Competitors validate market demand; study them for gaps and differentiation opportunities
• Plot your competitive position on two dimensions that matter to customers and find the underserved space
• Build specific customer personas from real interview data, not imagination
• A clear positioning statement drives every product and marketing decision

Up Next

In Lesson 4: Building Your MVP, we will build the minimum product needed to test your core assumption with real customers, without spending months in development.