Competitive analysis is a buzz term, it sounds like an important term that every Business professional should know and understand, and most important, practice, but not many companies apply it very often. As a product Manager owning a number of products in your portfolio or introducing new you should always use competitive analysis.
But let’s see first what is competitive analysis according to AIPMM:
“Deliberate study of strategic and tactical strengths and weaknesses of current and potential competition”
Sounds simple, right? But how do you do it? Let’s see a simple process below:
First, you should identify the top 2-3 competitors in your industry. If you understand them, then you have a good grasp of your industry also and where is your position. If you know that, you can create your strategic plans based on that and know where you can do better. One key takeaway is that when you are in the planning phase, you should analyze your competitors in the future state. This is when your products will be available to the market. We live in a fast-paced society and new products are created very fast. What is the political environment then and what changes in the market that can affect your product?
Sources of competition info
When researching a company an area that you should spend more time on is the competitive company financial information. For public companies you can focus on risks, for private companies is harder to find this kind of info. A great source to find this kind of info is the company’s websites, especially in the “risks and issues” section. Another source is the analysts and market research reports, news articles, and press releases, product reviews, and social media discussions. An advice for very targeted searches about company profile is to go past the first page on Google results.
What competitive info you should know
In most cases, knowing your competitors’ products will not suffice. Understanding the competitor products means understanding their Marketing, their distribution channels, their next moves, etc. Let’s analyze one by one what we should know about our competitors:
- Performance, spending, and funding – Every company is in the market to make money right? Just follow the flow of money. Check the annual reports, where do they spend their money? On RND? What is their gross and net sales? Spending on their marketing? How they acquire their customers? What is their funding? Venture capitalists? Do they use their funds? Constantly check the level of their spending now with historical periods. Look for trends in this period. Why they were spending more money in a certain period? Find the companies which have high growth in a new industry and established companies in a low growth industry.
- Company focus – Each company has a mission and a vision that is easy to find it. You can understand the company culture and what they promote. Understand how companies find their employees – an example is software engineers without a university degree. What is the background of the board and advisors? What is the current management structure? Do they follow the agile methodology of working? Have they been under digital transformation? What is their attitude and personality towards the market? Aggressive, complacent, conservative or risk-taking?
- Product comparison – This is the most important aspect and focus of competitive analysis. What is the value proposition of their products? Compare the key product attributes. What are the key benefits that they offer to their customers? Include the whole product attributes and services like brand, warranties, reliability, delivery, etc. to understand the pricing comparison also. And lastly, compare values than features. Why the customer values the product?
This is an example of a product comparison chart:
You can see at the benefits and customer value what customers value the most.
- Marketing – Identity their marketing team and their activities, how they promote their products etc. how effective is their ROI. Spending, brand, positioning, marketing, or technology they are focused? Identify their marketing tactics, online and offline, check keywords online, and how they appear. what is the background of their marketing people? How do they act in certain situations?
- Distribution channels – Understand how the sales department works, how they measure key KPI’s what are their channels? How they communicate with customers, what are their tactics? What are their sales pitches and the competitive position of their products? What are the strengths and weaknesses of their current products? What key KPI’s they measure?
- Market share – How we compare to the competition? Understand the market share that the competitors have? An example is companies with big market share don’t care about competitors because they know the way they do things works, on the other side companies with small market share can do things a little bit differently as they need to grow.
- Their strategy – analyze competitors as though they were your company. Use the same tools that you would be using at your own company. Please see below:
- Predict their likely moves – When you have all the analyses from the previous tools you can have enough details to predict the moves of your competitors. You know the competitors’ strategic and tactical moves. How are their products likely to evolve? Consider this data into your strategic product and technology roadmap.
- Deliver your analysis – During the planning phase, this analysis is one of the most important. You can use it in the business case in the competitive analysis section, and the future matrix of competitive products. To identify the market needs and understand the table stakes requirements. You can discuss with Marketing to see the competitors’ positioning, customer success stories, marketing tools to use to compete, etc. And in the end, don’t forget to turn your analysis into action. A table like the one below can help you: