The Importance of Competitive Analysis in Product Management
Gaurav Dahra
Product Management | Lead Business Consultant @Thoughtworks | Storyteller | Product Strategy & Execution
As a product manager, understanding your competitors is crucial to positioning your product for success. Competitive analysis isn't just about knowing who you're up against, it's about understanding the why behind their actions. It's about empathizing with their customers and anticipating their next moves. This guide will help you transform competitive analysis from a data-driven exercise to a strategic advantage..
Why Competitive Analysis Matters?
Imagine leading your troops into battle blindfolded. Disastrous, right? Competitive analysis is your intelligence gathering mission. It helps you:
1) Uncover Hidden Opportunities: Analyze competitors to spot unmet needs and capitalize on market gaps they've missed.
2) Sharpen Your Strategy: Deep insights into competitors strategies help you refine your product roadmap and marketing plans, ensuring you're always one step ahead.
3) Position Yourself for Victory: By understanding competitor strengths and weaknesses, you can position your product strategically, highlighting unique selling points and value propositions.
Key Components of a Competitive Analysis Report
A well-structured competitive analysis report gives you a comprehensive view of your competitors and their positioning in the market. Here's a breakdown of what your report should include:
1) Executive Summary: A concise overview of key findings and strategic recommendations to guide your team.
2) Company Overview: Basic details about the competitor's history, mission and key statistics to understand their goals and resources.
3) Product/Service Analysis: An in-depth analysis of their offerings, including features, pricing, user experience & unique selling points. This allows you to compare your strengths and weaknesses head-to-head
4) Marketing and Sales Strategy: Evaluate their marketing strategies and sales approaches to understand how they attract customers.
5) SWOT Analysis: Assess your own product's strengths, weaknesses, opportunities and threats in relation to the competition. This helps identify areas to fortify and exploit.
6) Conclusions and Recommendations: Actionable insights on how to leverage this intelligence to gain a competitive advantage.
Conducting Competitive Analysis: A Step-by-Step Approach
1. Identify Competitors: Begin by identifying both direct and indirect competitors. Direct competitors offer similar products or services to the same target market, like Salesforce competing with HubSpot.
Indirect competitors address the same customer needs through different means, like Zoom and Slack in communication tools.
领英推荐
Example: For a meal delivery service, direct competitors might be other meal delivery companies, while indirect competitors could include grocery delivery services.
2) Gather Data Using Research Tools: Use a combination of quantitative and qualitative research methods to gather data. To understand what people think, ask them directly through surveys, interviews and focus groups. You can also use online tools to learn about websites and marketing.
Tools like SimilarWeb, SEMrush and Ahrefs can show you how websites are doing alng with SEO insights, while Crayon helps you see what your competitors are up to. By using these tools, you can figure out what works well for other companies and where they fall short
Example: A fitness app could use in-app surveys to understand why users prefer a competitor’s features.
3) Analyze the Data : Utilize templates like feature comparison matrices and pricing comparison charts to systematically compare your product against competitors. This helps you identify USPs (Unique Selling Propositions) and areas for improvement.
When it comes to analyzing data, don't just compare features and prices. Look at the emotional appeal of your competitors' products. How do they make their users feel? What stories do they tell? How they make users feel empowered and in control. This insight can completely transform your strategy.
Example: A pricing comparison might show that while your product offers more features, it's perceived as too expensive. This could prompt a pricing strategy reevaluation.
4) Leverage SWOT Analysis for Strategic Insights: Summarize the strengths, weaknesses, opportunities and threats (SWOT) to inform your strategy. This analysis is vital for identifying areas where your product can dominate or needs improvement.
In your SWOT analysis, don't forget to consider external factors. What if a new technology emerges that disrupts the entire market? What if regulatory changes affect your industry?
Example: Your product has superior customer service (strength) but lacks advanced integrations (weakness). Recognizing this can lead to strategic partnerships or development efforts to bridge the gap
5) Importance of continuous monitoring: Markets evolve and so do competitors. Set up a system to track changes regularly as it will keep your analysis fresh and your team engaged.
Real-World Example: Competitive Analysis in SaaS
Consider the streaming industry. Netflix, Disney+ and Prime are constantly evolving their offerings. To compete effectively, a new streaming service would need to:
Imagine you're a chef opening a new restaurant. You wouldn't just look at other restaurants' menus, would you? You'd want to taste their food, observe their ambiance and even peek into their kitchens if you could! That's the spirit we need to bring to our competitive analysis.
Conclusion: Turning Analysis into Action
Competitive analysis is a powerful tool, but it's only valuable if you use it to drive action. A thorough competitive analysis not only helps you understand where your product stands in the market but also provides a roadmap for innovation and differentiation.
Remember, competitive analysis isn't just about beating the competition it's about serving your customers better. Always bring it back to the user. How can the insights you've gained help you solve their problems more effectively?
By leveraging these insights, you can refine your product strategy, better meet customer needs and outmaneuver the competition.