Competitive Analysis in a Nutshell
“If you know the enemy and know yourself, you need not fear the result of a hundred battles.” ~ Lao Tzu
Building a product is a continuous effort and is a constant battle. In order to win and compete well in the market, product managers need to know their products very well as well as their competitors’ products. To do that, product managers need to conduct competitive analysis. Competitive research or analysis is doing market research on your competitors’ products and measuring those against your own product.
You need to know your competitors and how they are doing in the market, what’s working for them and why customers choose their products.
With so many options in the market, it has never been easier for customers to leave a product or service they currently use for another service so long as the product or service solves their needs. Customer loyalty is very difficult to achieve, thanks to the internet.
Competitive research is a must have technique for every product manager. Below I show how to conduct a competitive analysis.
How to do competitive analysis?
- Determine who your competitors are
The first step is to know who your competitors are. Have a list of companies and their products and divide them into direct and indirect competition.
- Direct - Your competitors have almost the exact same product and both of you compete for the same customers
- Indirect - Products or services that are close substitutes for your product
- Determine the products your competitors offer
A company either has a product or service. Since we are product managers, let’s focus on products.
Create a competitive analysis table. In an Excel sheet or Google Sheet, on the first row, list the name of your product and the major competitors of your product. Leave the very first cell blank. In the first column, have a list of features each of those products offer. Also, leave the first row blank. In other words, cell A1 is left empty. Mark “yes” if a feature exists in a product. Do this for all the features. This way it’s visual, so you can immediately see how your product competes against other products in the market.
- Check competitors pricing
In today’s competitive market, it is important that you position your product that brings the most value for your customers’ money. Being the product that is the cheapest in the market doesn’t always mean that you are going to be the favorite. In a customer's mind, it could mean that the product provides less quality even though that may not be true. Pricing your product as the most expensive, on the other hand, may hurt your revenue because customers may opt in to using a suboptimal product that offers exactly the same solution that you offer at a much lower price.
- Check their digital presence
Websites and social media are the best ways companies can reach their audience. Make sure you check each of your competitor’s website first and foremost. You can tell a lot by the way they are talking about their products. Then you move on to their Linkedin, Twitter, Facebook, and Instagram and research how they market themselves to their audience. Pay attention to the words they use and the message they want to convey to the customers.
- Check out the jobs they are hiring for
Job boards are often a doorway to the roadmap. Check out the online job boards like Glassdoor, Linkedin and their career page on the types of engineers and product managers they are hiring. This will tell you more about their strategy around what they are building next.
Product managers need to understand their competition in order to differentiate their products in the market and win the hearts and minds of their target customers. The more they know about the competition the better they can position themselves in the market and serve their customers.
John Santos is a volunteer with the BPMA blog team. He is a PM who has nonprofit experience and is passionate about making an impact in people's lives.
