How can a product novice do a good competitive product analysis?

Before a product design is implemented, the product often needs to have some insight into the market and analyze and compare similar products in the industry in order to know both itself and its competitors. So, where should a newbie in the product industry start to conduct a competitive product analysis and then serve the company and the product?

Competitive product analysis is one of the basic survival skills of a product. Below I will introduce to you in detail how to do a good competitive product analysis based on my own experience.

1. Why do competitive product analysis?

Competitive product analysis is one of the essential skills for product managers. For enterprises, competitive product analysis can provide a certain reference for them at the strategic level, allowing them to quickly locate market segments and avoid entering a red ocean of competition. At the same time, at the product planning level, we can analyze competitors and learn from their advantages to quickly polish our products and bring them to market.

Product Manager Essential Skills Chart

2. Common steps for competitive product analysis

Simply put, competitive product analysis is like buying clothes at the market. What clothes do you buy, which stores do you compare, what style, material, comfort, etc. of the clothes you value most at the moment, and which store and model do you ultimately decide to buy, and why do you buy it. Although you don’t think about it deliberately when buying clothes, you still use some concepts of competitive product analysis invisibly.

The following are six common steps for competitive product analysis. For beginners, strictly adhering to these six analysis steps will at least help you submit a qualified competitive product analysis report.

Six steps to competitive product analysis

3. Competitive Product Canvas

The competitive product canvas is an important outline and summary. Before doing competitive product analysis, list the key points first to avoid omissions and repetitions. After confirming that the direction is correct, further analysis can achieve twice the result with half the effort. The following is an example of a competitive canvas:

4. How to choose competing products

There is no uniform rule for selecting competing products; it depends on the user’s purpose of analyzing competing products and the current product’s life cycle stage.

It is generally advisable to select 3. Too few objects will lead to insufficient analysis and incomplete conclusions; too many objects will be comprehensive but not precise, making it difficult to make targeted comparisons.

Competitive products can be selected from direct competitors, indirect competitors, substitutes, and cross-border reference products. For example, if your product is currently facing fierce competition and the purpose of the analysis is to learn from it, it is best to select some cross-border reference products to avoid homogenization.

5. How to analyze different dimensions

The dimensions of competitive product analysis depend on the purpose of the competitive product analysis. Common product analysis dimensions can be divided into two categories: classification from the product perspective and classification from the user perspective. This analysis is mainly conducted from the product perspective.

The product perspective is to analyze the factors that determine the success or failure of a product, which usually includes the following aspects:

1. Function

Functional analysis is an important part of competitive product analysis. Generally, functional analysis includes the following elements: main functions, secondary functions, and functional comparison. Here we take the video conferencing products Tencent Conference, Webex, and Zoom as examples:

2. User experience design

User experience usually depends on the user's subjective feelings. In general, the rating or star method is adopted: 5 stars means very good, 4 stars means good, 3 stars means average, 2 stars means barely acceptable, and 1 star means very bad.

3. Team Background

Team background usually includes 4 parts. In-depth and thorough research on the competitor's team background can help us extract the competitive advantages and disadvantages of competitors.

4. Marketing

A common method of marketing analysis is the 4P theory, namely product, price, place, and promotion.

5. Strategic positioning

Strategy formulation is a dynamic and complex process. Corporate strategy will have a fundamental impact on business strategy, innovation strategy and product portfolio strategy. The following is an example analysis of strategic positioning based on the Myers and Snow (M&S) strategic framework and the video conferencing industry case:

6. User Profile

When analyzing user situations, pay attention to the user perspective, the differences between user groups, user group characteristics, user group size, and user evaluations of different competing products.

7. Profit model

Profit models are usually but not limited to the following: paid, freemium, inducement, channel sharing, etc.

Let’s take video conferencing as an example: Webex and Zoom have a paid profit model, while Tencent Meeting adopts a free value-added model in order to quickly expand the market, which is basically the same as the profit model of most domestic SaaS service providers.

From a product perspective, it is usually recommended to analyze from the above dimensions. However, in actual application, it is difficult for us to cover all aspects. Different departments have different focuses, so we need to choose a few dimensions to focus on based on the purpose of the analysis, rather than analyzing all aspects but not thoroughly and deeply, which makes the competitive product analysis lose its fundamental meaning.

VI. Summary of Information Collection Channels

Common ways to collect product information:

1) Public Platform

Competitors’ official websites, public accounts, and service accounts.

2) First-hand data

Sign up for trials, hands-on experiences, surveys, and more.

3) Frequently used websites

The above is the competitive product analysis experience I have summarized in my daily accumulation. I hope it can be helpful to everyone!

Author: Better's Yukiko

Source: Yukiko from Better