Performing a product competitive analysis is a smart, strategic move
Before trying to break into an established marketplace, smart companies need to conduct a product competitive analysis.
Just because you know a need is not being met by any other product and your product idea or MVP fulfills that need, it doesn’t mean you shouldn’t fully understand where your product sits in the market.
When adjacent products already exist, it’s hard to stand out from the established crowd. It’s even more difficult when others are joining the market with similar ideas. So how do you differentiate yourself from your competitors? Here are some UX tools to help your product stand out amid the crowd.
What is a competitive analysis?
A competitive analysis is a way to chart out your competitors’ features, funding, strengths, weaknesses, similarities, differences, and more. Once you know what and how they operate, you can pinpoint areas for opportunity and take advantage of your competitors’ blind spots.
Once you’ve identified these areas, your product can capitalize on what your competition is not doing. It gives you a clear goal on how to create a strong product in an existing market.
The question remains: how do you take advantage of a competitive opportunity?
What does a competitive analysis look like?
There are several ways to assess the competition. One method is a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. These categories are split into a two by two grid, where you can place competitor attributes in the correct sector. Not only is it applicable for competitors, but for your own business. These can be analyzed side by side to understand how to get an edge on competition.
Strengths
A competitor’s strengths are what they are doing successfully. If you conduct a SWOT analysis on your own product or company, this is what you’re doing successfully. Strengths can include competitive pricing, exceptional customer service, or a platform that’s well optimized across devices.
Weaknesses
Weaknesses noted in a SWOT analysis are what a competitor does not do well. In the same vein, this is where your own business weaknesses would go. These can include high prices, limited functionality, or an un-intuitive platform.
Opportunities
Within the market, there are opportunities to fill a user need that has not been addressed or done well. This will show exactly how competitors successfully corner their market, or how your product can capitalize on the market.
Threats
A threat is something that could adversely hurt the business, such as a lawsuit. You can understand how a competitor’s business model may have blocks for sustainability. Meanwhile, you can understand how your own business could face issues.
Competitor analysis matrix
Another common way to assess the competition is through a competitive analysis matrix. Jamie Levy talks about this method in her book, “UX Strategy: Product Strategy Techniques for Devising Innovative Digital Solutions.” This competitive analysis differs from a SWOT analysis because it examines more areas of a competitor.
Levy’s matrix requires research to uncover a number of key indicators including:
- funding and revenue streams
- downloads
- content types
- key features
- customer reviews
- heuristics
Levy provides her toolkit for download on her website, as well as where to buy her book (which we’ve found to be incredibly insightful).
Direct and indirect competitors
Competition can be a business that is within the same industry or in an adjacent industry that can still fulfill the need your business is trying to solve. It is important to look at competition that is both direct and indirect to analyze how your potential customers use their services.
A direct competitor offers a product similar to yours to the same target customer groups. An indirect competitor has a product different from yours that also appeals to the same target customer group. Here’s an example to understand the difference. Imagine you sell a sparkling water product in a can to consumers.
Example
Your product: Canned sparkling water
Direct competitors: La Croix, Waterloo, Topo Chico
Indirect competitors: Home seltzer water machine, Coca-Cola, tap water
Insights from both direct and indirect competitors can show you how to make the most of your opportunities.
Feature prioritization
After gathering opportunities to create a better product, you need to prioritize different features of your product. Features that had already been planned and features that will set the product ahead of the competition can be put on a matrix. A feature prioritization matrix measures various parameters of new or existing features on a product. The parameters can include the impact the feature will have on the product, the effort it will take to create it, and the value that it brings. Proposed features may need to be reorganized to solidify the goals and purpose of the product.
What goes into feature prioritization?
A feature prioritization matrix can include any parameters you find important when creating a new feature. The most frequently used parameters are the value a feature can bring to the platform, and the effort it will take to create it.
Value
As “value” is a broad term, it can be broken down into specifics that are easier to gauge. Popular feature prioritization matrix models will break down value in this way. “Value” can include
- The monetary value
- The benefit it will bring to customers
- The impact on both customers and the business
Prioritize features
Download our tool to help you prioritize your product’s features against your competition.
Effort
Effort is also a term that can be determined using specific measurements. The effort it takes to create the feature includes the work to properly develop and implement, but it can also include
- costs included with development and implementation
- risk involved
- complexity and time cost
A simple matrix will have at least two axes measuring value vs. effort. Other methods for prioritization use a numerical system to rate features, prioritizing higher numbers.
After analyzing competitors, as well as your own business, you can see a clear picture of where your product sits in your industry, how your competitors corner the market, and how to best set yourself apart from the competition. Knowing specific features to capitalize on, with a thorough analysis of the market, gives you an actionable path towards a successful and lucrative product.
