There's a two-fold mission to this statement: one part applies to your startup's value proposition/unique selling proposition and the other pertains to the brand (how your startup makes people feel).
In short, you must know what is out there so you can create something that stands out. Let's break it down using the categories listed above.
Most startups will resort to "lowest price" on this point, but we can do better than that. Instead, ask yourself what are the alternatives to your product and what do they lack that your customers need? Sometimes it's as simple as a better interface or a different distribution method (i.e. Dollar Shave Club going subscription for razor blades). This should indicate what the big selling point of your product is or at least inform you of what is lacking within your competitors. From there, you can adjust your messaging to hit on the specific pain point your customers are looking to ease.
No two companies are alike in nature. Not even if they are in the same industry. Guaranteed, there are cultural nuances and quirks within every company that make them unique and special. Frankly, most of them hide it behind a professional demeanor and an unwillingness to be human. So, your goal is to assess your competitors personalities and find a void to fill. If the majority of them come off as stoic and cold, you have an opportunity to be friendly and vulnerable. Granted, you have to know yourself, since you can't put on a false identity in the hopes of attracting people.
These two bits of research can inform almost every decision your company should make in marketing itself. They give you the reason people should buy your product and why they won't forget you.
My roommate made some shrimp last night and offered me some. After my first bite I could tell this wasn't gonna be something that made my stomach feel good, so I scrapped the rest. Waking up this morning, it was even clearer that something wasn't right. I didn't feel like eating anything else, as if my body was illuminating a "no vacancy" sign over my stomach.
So, I listened. My body was feeling sick and needed to (putting it euphorically) expel or fix everything that was making it feel bad. If I'd tried cramming more food in my belly to ease the gurgles, it wouldn't have ended well and I'd have a bigger mess to clean up.
It leads to the question, are you treating your product the same way?
Are you forcing more features to make up for those that are making your product sick?
Are you trying to gain more users when the ones you have aren't close to satisfied?
Are you trying to expand your brand without first solidifying it?
Take time and make your product healthy before you starting filling it with more.
In layman's terms, it means that certain things remind us of other things. Whether we like the certain thing is dependent upon whether we like the thing it reminds us of. More importantly, this varies from person to person and tribe to tribe.
After defining your software brand's personality, look, and feel, you can begin the hunt.
The hunt? Yes! The hunt.
The hunt for things that resemble those traits. They can be anywhere, you just have to find them. If possible, your ideal user will already have quite a few that you can reference. They're found in the things they eat, the clothes they wear, the gadgets they use, the movies they watch, the people they admire, and the beliefs they adhere to.
If you can find these things, apply their look, their language, and their attitude, then you are using semiotics to your advantage.