1 - Identify ALL competitive products in the market
This makes sense - you want to get the best deal out of this and therefore knowing your competition will help you out.
2 - Product positioning
Then, you need to assess each of the strengths of your competitors and measure how your product is compared with theirs.
3 - Creative tension
I borrow this term from Peter Senge's "Fifth Discipline". You need to find a way to position yourself either as a stronger product, or as a complementary product. Go through a creative thinking cycle, and you might find ways to improve your product positioning.
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