How to conduct competitive product analysis for product promotion?

Before starting to make a product, it is often necessary to do a competitive analysis first. By understanding the market situation and the advantages and disadvantages of competitors, you can prescribe the right medicine and create your own product. So for new operators, how should they conduct competitive product analysis?

Competitive product analysis is a very high-frequency basic skill for operations students. It can be said that an operator who cannot perform competitive product analysis is not a good operator. So for novices, is there any competitive product analysis template that they can refer to?

In fact, there are a thousand competitive product analyses under a thousand people, and the ideas determine the way out. So what is the idea behind analyzing competitors and getting to the heart of the matter? Here’s a mind map of this article!

Next, we will reveal the truth about competitive product analysis to you. We will guide you step by step through the Ren and Du meridians of competitive product analysis and show you the correct way to perform competitive product analysis.

The full text took a total of 20 hours to write, with a total of 7,000+ words, and the content is absolutely practical! It can enable more people to learn the ideas and methods of competitive product analysis, understand how to conduct competitive product analysis, and help everyone get promoted and get a raise in the workplace.

what? What does it have to do with promotion and salary increase? Don't worry, take your time.

This article is divided into four parts:

1. Clarify the purpose of competitive product analysis?
2. How to choose the right competitor?
3. How to start analyzing competitors?
4. How to create a competitive product analysis report?

1. Clarify the purpose of competitive product analysis

Without it, competitive analysis loses its soul. Before doing any competitive analysis, you should ask yourself two questions:

1. What problem am I trying to solve?
2. Who is my audience?

This is the most important premise that cannot be overemphasized. Without it, competitive product analysis will lose its soul. Given its importance, I will spend 1/3 of the article to talk about this. If you understand this, your competitive product analysis will be half successful.

1. Differentiate between product analysis and competitor analysis

First, let’s look at the difference between product analysis and competitor analysis. Based on the two dimensions of complexity and value, the commonly used analysis types for Internet products are divided into two categories: descriptive and decision-making recommendation.

Two common types of analysis for Internet products

If only a certain product is to be analyzed, most of the time the five-layer model of user experience is used to conduct a vertical analysis from the strategic layer, scope layer, structural layer, structure layer, framework layer to the presentation layer. This is more of a descriptive analysis, which is usually classified as product analysis.

User Experience Elements Empirical Model

If we analyze multiple products, we often use the comparative research method to select suitable competitors and corresponding dimensions for horizontal comparative analysis based on the purpose of the analysis. The analysis results will be used in real business decision recommendations. This is a true competitive product analysis, which is a decision-making recommendation analysis with higher value and complexity.

2. Four common purposes of competitive product analysis

Since competitive product analysis is a decision-making recommendation type of analysis, the purpose must be clear and targeted before analysis. Specifically, depending on the target audience and application scenario, there are four common purposes and outputs of competitive product analysis:

Therefore, when we get a task of competitive product analysis, we must first clarify which category it belongs to?

1) Product investment prospect research

The main audience is key figures such as bosses and investors. The goal is to eventually obtain financing and let investors judge that the product is worth investing in after reading the project report. Therefore, the analysis dimension must be broadened to industry prospects, market size, product advantages, market performance, investment return forecasts and other market and profit-related indicators.

2) Research before new product development

In other words, decide whether to make this product? First of all, we need to analyze the current situation of this industry. Is there still a chance? Where are the new growth points? What are the prospects? What is the core competitiveness of our product? What kind of business model should we adopt? This will determine whether or not to make this product.

3) Optimization of existing products

It is usually a demand from the product department, users, business parties or bosses. In this case, the company conducts a horizontal comparative analysis of product functions or experiences. For example, a new function is launched on a product, but the user feedback and experience are very bad. At this time, competing products with the same function will be collected to compare their advantages and disadvantages, and finally an optimized solution will be obtained.

In actual work, this kind of scenario is to conduct research on a focused issue each time, and basically no report will be produced. Usually a document, a picture, or a simple PPT will suffice. The most efficient way to analyze is to do it.

4) Job interview research works

That is to say, competitive product analysis is not only the work we do after entering a company, but also a stepping stone for job hopping and job hunting before entering a company.

This can be divided into two situations. One is that your past experience is not enough, and the recruiter asks you to do an interview work related to the business. The analysis process will involve competitive product analysis. The other is that the recruiter does not ask you to produce an interview work, and in order to obtain higher salary or increase the success rate, you take the initiative to do a research report on the company's products related to the business, which will also involve a lot of industry research and competitive product analysis.

If your final conclusion and suggestions are acceptable to the interviewer, it will greatly add points to your score and greatly increase your chances of success in job hunting. However, if they are not in place, problems will be exposed and only attitude points will be left. Competitive analysis involves a lot of industry research and analysis. For information on how to analyze an industry, you can refer to this article: How to quickly start analyzing an unfamiliar industry?

2. How to choose the right competitive products

With the deepening of Internet+ integration and technological innovation, the Internet industry is no longer an industry of pure Internet products, and our competitors are not limited to our peers. Therefore, the scope of competitive product analysis should also be expanded to all walks of life.

Different competitor selection criteria are hidden behind different competitor analysis purposes. Therefore, before the formal analysis, we need to stop and choose the appropriate benchmark competitors. If this step is missed, competitive product analysis will become a narrow comparative analysis of the same industry segment.

The main purpose of analyzing competitors is to establish one's own competitive advantage, so we focus on three types of competitors: direct competitors, indirect competitors and potential competitors.

Direct competitors are based on the product perspective, while indirect competitors and potential competitors are based on the user demand perspective. They do not have to be from the same product or industry; as long as they can meet user needs, they can be included in the tracking category.

So what are the categories of competing products? How should we choose?

1. Direct competitors - similar products

Specifically, direct competitors are those who sell substantially the same products or provide the same services to the same consumers. For example, Coca-Cola and Pepsi, Duoduo and Himalaya, Meituan and Ele.me, Alipay and WeChat Pay, Taobao and JD.com, Zuoyebang and Yuanfudao, are similar products providing similar services.

If your goal is to be number one in the industry, then find out the top three in the industry, and these will be your main targets for follow-up. But if your goal is to compete for the third place in the industry, then your competitors should be of similar scale, rather than focusing on analyzing those that are too far behind you.

If you want to optimize a certain function of an existing product, then just find a competitor that has a good experience with this function and analyze it.

2. Indirect competitors - similar demand substitution

Indirect competitors may not be in the same industry or have the same products, but they can replace your products and meet the same needs of users. For example, Didi provides travel services, which seems to have nothing to do with food delivery. However, the new business Didi Food Delivery, which was previously developed, is an indirect competitor to Meituan.

If Meituan wants to analyze the tourism and hotel business, then Ctrip is an unavoidable competitor. Although one is in the food delivery industry and the other is in the hotel and tourism industry, as long as it can replace user needs, it is necessary to pay close attention, track and take countermeasures.

3. Potential competitors - innovative alternatives to similar needs

Potential competitors are very interesting. They are often not clear at the moment, but are likely to occur in the future and will disrupt the existing business ecosystem and re-establish a new pattern. They are often new things created through technology or business innovation.

Usually we analyze potential competitors not for superficial purposes such as product optimization, but to find inspiration from the dimensions of market strategy and product planning and to plan ahead. Why should you pay attention to potential competitors? How did it come about? In fact, it is the replacement of old industries with new ones. Therefore, whether it is the leading companies in various industries or the major countries in the world, they are all working hard to compete for the right to speak in new technologies.

We cannot be completely sure about the arrival of the new world in the future. Although it is likely to come slowly, history has told us that the transition from the old to the new will be very destructive, while also bringing people a more convenient and richer lifestyle.

Kodak's film cameras were replaced by digital cameras, and digital cameras were replaced by smartphones. Each time is a technological innovation, and those who are unwilling to change will eventually be eliminated, whether it is a company or an individual.

To identify your potential competitors, ask yourself:

1. Are new technologies emerging in this industry?
2. How does it have an impact?
3. What new products are on the market?
4. What needs of users are met?

Because in future cross-industry competition, our competitors will no longer be our peers, but IT companies.

3. How to start analyzing competitive products

Which dimensions are selected for competitive product analysis and in what form the final output is also determined by the different purposes of each competitive product analysis. Let’s look at the dimensions of competitive analysis and how to choose the analysis dimensions and tools.

The following are the commonly used dimensions for competitive product analysis. If you only need to analyze a certain point, such as a function or a technology, it is usually output in the form of a document or map for internal communication. However, if you need to produce a report, you should refer to the following dimensions to complete and present it.

1. Purpose of Competitive Product Analysis

Make it clear at the beginning what the purpose of this competitive product analysis is and reach a consensus with the audience. A clear description in one sentence will suffice. For example: The purpose of this competitive product analysis report is to analyze the functional architecture and operational direction of competitive products with highly overlapping core users and similar usage logic habits, while referring to the version iteration records of * to provide ideas and inspiration for **'s version iteration.

2. Industry Background

In order to ensure work efficiency, we often just need to do the necessary things first. If it is just an internal discussion within the company regarding a certain product feature or optimization strategy, this part can be omitted.

If the purpose of competitive product analysis involves market strategy and investment decisions, in-depth research and analysis of the industry is required. For specific practices, you can refer to this article: How to quickly start analyzing an unfamiliar industry?

Generally, a brief version of the industry background analysis can be conducted by briefly analyzing the industry environment, market size, and development trends. Here, you can cite research reports and data from some research institutions. Take the smart home industry as an example. The key data and content are as follows:

1) Competitive Environment

Whether it is unicorns in vertical fields or industry giants in the Internet, hardware, and home appliances fields, they all hope to get a piece of the pie. There are many cross-border players and the competitive landscape is still unclear. All types of companies have opportunities and are in a blue ocean period.

2) Market size and development trends

In 2017, the market size exceeded 300 billion yuan, with smart home appliances accounting for 86.9%.

In 2017, the scale of China's smart home market reached 334.23 billion yuan, a year-on-year increase of 24.8%. Among them, smart home appliances have a higher overall average price, and the intelligent penetration rate of smart TVs, smart refrigerators, air conditioners and washing machines is much higher than that of smart lighting, home security and other categories.

In the same year, the market size of smart home appliances was 282.8 billion yuan, accounting for 86.9%. It is expected that in the next three years, the smart home market will maintain an annual compound growth rate of 21.4%, and the market size will reach 581.93 billion yuan by 2020.

Source: iResearch "China Smart Home Industry Research Report"

The interconnection of all things is the trend of the future. With the increasing maturity of 5G technology, the application of AI artificial intelligence and Internet of Things technology is gradually being implemented, and the era of smart life with the interconnection of all things is about to emerge. Smart home products have become the mainstream trend in family life consumption upgrades.

Here are just some examples to illustrate the key mining points of the industry. The specific report content can be selected and refined according to your needs.

3. Competitive product selection

What needs attention here is that even if the above analysis is conducted on the main industry of your product, it does not mean that you can only choose competitors from it. Just choose according to the purpose of analysis.

For example, Xiaohongshu wants to learn the profit model of content e-commerce from its competitors. In addition to Mogujie, which is a similar platform focusing on female shopping, What’s Worth Buying, which has a large amount of UGC content, can also be included in the analysis. But if we look at it from the perspective of cross-border e-commerce, then it would be more targeted for competitors to choose to switch to Ymatou and NetEase Kaola.

4. Competitive product analysis content

Let's assume a scenario here: we need to summarize the operational advantages and disadvantages of the current product from the competitive product analysis and make suggestions. Then we need to start the analysis from aspects such as product positioning, product functions, product reputation, and product operations.

1) Product positioning

The first is product positioning, which is what problem the product solves for users. This is the core value of a product. This can be seen from multiple dimensions of competitors.

Here I would like to share with you a simple and convenient trick, which is to go directly to the app to see its one-sentence introduction. Usually this is its product positioning. At the same time, we will also find that the positioning of competing products will change dynamically. On the one hand, we need to track them dynamically, and on the other hand, we also need to refine the positioning of products more efficiently.

For example, from this picture, we can see that the product positioning of What’s Worth Buying and Mogujie is to promote demand conversion through content, while the product positioning of Ymatou and Kaola.com is very direct and focuses on the products themselves. Different product positioning directly involves different profit models and monetization links. When analyzing this part, just list it briefly.

2) Product features

We usually use the check-box method for product features. The ticking method is to compare similar products in the same industry to see which one has more complete and richer functions. Should the functions that competitors have that I don’t also be included in the plan? This is usually analyzed when focusing on the product itself, drawing out the product functional architecture, and then comparing them one by one.

Comparison of feature richness

If it is at the strategic or operational level, this is usually not analyzed in actual work. It is more about personally experiencing the competing products to understand the entire conversion process and profit model.

3) Product reputation

Product reputation refers to the market feedback that the operation level is more concerned about, and also includes user experience. The most commonly used rating method is the five-star rating method. There are two main channels:

a. app store

For example, we can see from the app ratings that the overall product reputation is Xiaohongshu > What’s Worth Buying > Mogujie.

Data source: Qimai Data 202007

In addition, we need to summarize what users are most satisfied with and what they are least satisfied with based on the worst and best reviews.

Data source: Qimai Data 202007

Public reviews are for reference only, but sometimes we need real user research to further explore and verify.

b. User research

To compare the user experience of a certain function of a product, we can conduct a survey through a user questionnaire. The highest score is 5 points and the lowest is 1 point. Let the users give their scores, so that our results have data support and verification.

For example, among the worst reviews of the three apps above, Mogujie received more feedback about the stability and ease of use of the product system, as well as after-sales and product quality issues. What’s Worth Buying received more feedback about false marketing and advertising, while Xiaohongshu received more feedback about advertising harassment and privacy theft, as well as a chaotic review mechanism.

So from the perspective of Xiaohongshu, if we want to look at user experience from the dimension of after-sales service, using a survey approach can help us dig deeper into users' ideas and feedback.

c. Third-party evaluation agency

If so, please cite it.

4) Product Operation

Product operation is nothing more than developing from the aspects of growth model, user retention and profit model.

a. Growth model

There are mainly two channels: online and offline. Online, you can refer to data such as download volume, growth curve, and online promotion.

• Monthly active users ranking: Appannie, Usage Intelligence
• Website ranking: Alexa
• Other data: Baidu Index, Analysys, CNNIC, iResearch, Sina Weibo, WeChat, financial reports of listed companies, etc.
• Event Marketing: Authoritative Media Coverage

b. User Retention

It is mainly about retention and activity, which are mainly achieved through operational means and product functions.

• Operational means: various operational activities
• Product functions: interactive community, achievement system, sign-in benefits, etc.

c. Profit model

The profit model refers to how a product makes money, which is actually closely related to the business strategy. All products must eventually make a profit. Different products adopt different market strategies. Some rely on low prices, some advocate word-of-mouth publicity, or some focus on cost-effectiveness. The strategic position of products is different, and the profit models adopted are different.

Therefore, we usually analyze the profit model from the perspective of market strategy. This is actually a common idea in the marketing field and consulting work, including SWOT analysis, 5W2H analysis, logic tree, etc. Then study from a micro level which functions or services the product charges for, and summarize the macro and micro analysis into your results. You can tell this after experiencing the product once.

5) Competitive product analysis conclusion

The conclusion is the final summary and suggestions. It is the essence extracted after collecting and analyzing so much information, and it is also the most important part.

If the purpose of your analysis is to study the growth model of a product, then give specific suggestions for optimizing the growth model of this product. If your goal is to study the means of user retention and activity, then give your targeted suggestions at the end, and so on. In short, you must go back to your original intention to draw conclusions, which is the significance of this competitive product analysis.

When stating the analysis process and conclusions, there are three useful tips, which have been mentioned above. Here is a summary:

1. Speak with data: If data can be used to verify or prove something, try to use data, as data will increase persuasiveness;
2. Comparative screenshots: Comparative research is often used in competitive product analysis. Screenshots of competitive product information are more intuitive and easier to understand.
3. Analysis tools: Flexible selection of analysis tools can improve the clarity and logic of analysis, making it more convincing.

4. How to prepare a competitive product analysis report

Finally, making a competitive product analysis report is actually presenting all the analysis in a document or visual form. We have talked about this before. The form is not the most important thing. The key is the content, but the form can help the audience better understand it and make it more convincing.

Similarly, the competitive product analysis template is not the most important, but for a novice, I can understand the confused state too well. Templates can help you find inspiration from cases, but remember not to copy. The most important thing is the ideas we talk about in the article, and then practice them in practice to truly internalize them.

Finally, I would like to quote a saying from management guru Peter Drucker: "All industries are one industry, and that is service." In other words, all industries are doing the same thing, which is to meet needs, and this is inseparable from products and operations. Competitive product analysis is not the only skill required for operations, but it is definitely the basic skill for doing a good job in operations.

Author: Sukalo

Source: Sukalo