Building a product strategy? You need to understand your competitors
Delivering a product strategy for your business isn't easy - but understanding how your competitors think is even harder. Competitor analysis allows companies to understand their competition objectively and pinpoint what they need to do to gain advantage in product innovation.
Read part 2 of our two-part blog series on best-practice UX. You can read part 1 here.
Head of UX Practice at Xoomworks, Dimana Grigorova, explains the crucial role of competitor analysis, the work involved and why you need it to execute your product strategy.
It takes time and substantial effort to gain value from competitor analysis. Without it, however, you could miss important details that will help inform and guide your product innovation strategy, and it’s equally important to keep an eye on the bigger picture.
When it comes to competitor analysis, it's essential to consider three types of companies:
#1 Direct competitors that offer the same or very similar value proposition to your current or future customer segment.
#2 Indirect competitors that include companies offering the same or very similar value proposition to yours but in a different product segment.
- Companies offering a value proposition that is different but related to your value proposition to the same customer segments
- Companies offering a different primary value proposition with similarities to yours and a secondary value proposition targeting the same customer segment.
#3 Market influencers. These companies have a completely different value proposition or customer segment but use tactics, tools and methods successfully that you can apply to your own proposition.
Why does it matter?
A thorough competitive analysis will inspire good practice.
Establish what these companies are doing well and what they are missing or doing wrong. It's an opportunity to learn from their mistakes and figure out what you can do to enhance or differentiate your product and win market share. This can save you from making costly mistakes.
It may even help you establish if there is indeed a place for you in the market! Ultimately, it will help inform your business decision to continue with your idea, pivot and change it, broaden it in scope, or narrow it down.
Where to start?
Step 1: Gather all the information available about each of the companies you within your five "competitor groups" and their products.
Step 2: Organise it so it can be analysed to give you insights and recommendations. The competitive analysis matrix tool is one of the most commonly used methods to help synthesise and organise competitor information. Another way is to simply screenshot information and notes and add them to a Miro board or Sketch. Do what works best for you that helps you compare the characteristics of multiple brands within your market segment to identify their differences, strengths and weaknesses. The information you gather will help you uncover your competitive advantage and identify opportunities to grow your business.
Step 3: Get answers to these questions. It's about learning from your competitors: what have they done that you want to avoid? What do they do well that you can replicate? How can you do it differently, better, or more innovatively?
It's essential to build qualitative and quantitative data into the equation. Both are equally important and have a specific role to play. Quantitative data will give you the numbers and tell you how many people were successful or unsuccessful in using certain features and functionality of your product. Qualitative data will help you understand the reason why.
Step 4: The final step is creating the competitive analysis brief that goes into the detail and which you will need to convince your stakeholders of the viability of your idea. A good way to organise the information is into the following sections:
- Introduction and goals
- Methods used
- Competitors (direct, indirect and market influencers)
- Key findings on your competitors
- Cool features adopted by the influencers
- Recommendations on how to move the product forward.
Competitor intelligence and benchmarking are not only crucial during the early stages of product innovation to enable you to gain deep insights into your competitors’ organisations and how they are performing against others; it’s equally important for product managers to be able to continue checking in on competitor activity throughout the lifecycle of your product. That way, you will avoid any surprises and know when you need to be proactive and take action.
To understand the Xoomworks approach and our role in helping businesses create compelling and inclusive digital customer experiences, get in touch.
We are hiring. Interested in joining a fun, supportive and dynamic team who are making an impact?
Visit our job opportunities