Why Product Managers need to do an effective competitive analysis for their features

At the outset, we would like to let all our readers know that this is our first guest blog post, meaning this blog has been written by one of the active members of CohortPlus (largest and the most active community for Product enthusiasts and product management professionals) , Gayatri Puwar who works at the Wells Fargo group and is involved in MI and AL Product Management. If you are on CohortPlus and would like to similarly contribute like Gayatri, do reach out to us at admin@cohortplus.com

This blog delves deep into competitive analysis and why it needs to be done at various stages of the product lifecycle by every Product Manager whether s/he works in an established firm or in a startup. Gayatri Puwar is a seasoned Product professional having worked for firms such as Google, Microsoft, Motorola earlier. She takes a real-life example of Skype Dialer Product on Cyanogen Android OS (something that she worked on and launched earlier) and explains with appropriate frameworks on how to effectively do competitive analysis.

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Without further ado, here are the details of the blog post -

1. Why Competitive Analysis?

We get tons of advice from companies saying that we don’t follow competitors but develop our own moats and customer strategy. In its full context, what it really means is that they don’t blindly copy rival’s strategies. Your Strategy should fit your own unique situation, and your customer needs based on what you offer, or you could offer and should be discerningly different or better from your competitors. But unless you establish the baseline — and have industry, market or competitor knowledge — how would you define what’s better? Hence, the competitive analysis remains one of the effective tools to find gaps or niches which are not served in the strategy development nonetheless as you don’t operate in the vacuum hence, the background.

Leaders face three central questions when growing or sustaining their business prospects which are important to consider before I delve into the topic at hand — on competitor analysis and the tools I used.

A. What’s the company’s present situation?

This prompts to evaluate market and industry conditions, competitive pressures at the macro level and then examining one’s own situation, trends, the performance of the products and market standing, strengths and capabilities, customer feedback, and its competitive weaknesses in the fair light.

B. Where does the company need to go from here?

This question pushes companies to make choices about the direction the company should be headed — what new different customer groups and /or existing customer needs it should endeavour to satisfy to provide value to their customers. What market positions it should be staking out, what’s their core and distinctive advantage and what type of leadership they offer whether it’s niche or mass-market, collaborative or operational efficiencies to establish their unique position in the industry. Early products focus on acquisition, and activation and niche cohorts, while mature products focus on expanding to new markets in their growth cycle — market expansions, channels, and strategic partnerships for example. In general, understand what changes in its business makeup are needed to get there depends on what stage they are at.

C. How should it get there?

Strategy stands a better chance when it’s rooted in the actions, business approaches and competitive moves aimed at creating the different market position. This is where you also create a high-level roadmap capable of moving the company /product in the intended direction growing its business, to improve its financial and market performance to meet set objectives. Understand that roadmap is partly proactive and partly reactive, and they evolve over time as you build, ship, learn and iterate.

2. Competitive Analysis Approach:

A. Know your Company’s and Organization level Product Strategy.

Know company’s strategy in-line of sight, and what stage your company/product is at, what are you trying to achieve? Do understand objectives and market cohorts and what key results or learnings you are expecting.

B. Conduct Market Research.

The 1st step is to conduct market and customer research — using primary and secondary methods w. the goal to drive key-learnings on consumer’s behavior, usage patterns, what could be the key tension points, what is your core and the distinct advantage is and perceptions with the segment of the users you are pursuing.

Both of these points are important to understand the next state — and what, and why behind competitive studies and what learnings you can derive from it to take in the whole context.

C. Conduct Competitor Research — What Competitors should I focus on?

First and foremost, identify who are your primary, secondary and adjacent competitors are. For some of the new product ideas, I didn’t have direct customers like offering AI chatbots 1st time on messaging platform in the US, but there were players such as Wechat in China and others who offered similar capabilities. Within the platform, when I looked into UX around card practices, I studied iOS HIG (Human interactions Design), Google inbox and Twitter structured messages etc. to drive some learnings in the completely new area. The reason I mention is that you look into adjacent industries, different verticals, and substitute products as well.

I like one tool called “Strategic Canvas “ to access market positions of the key competitors around key factors. Image 1 and 2 examples — approach is for you to try to understand KSFs (Key Success Factors) in your industry and for your Product — what attributes (features, benefits) are crucial for your users, to form your framework. a Now put them in the table and rank them (for ranking, you can brainstorm in a diverse group, also you may conduct customer surveys to gauge sentiments and values as well. Next, plot them in the chart — from where you will be able to drive home some key learnings from peaks and valleys, and then finding your own unique position to see based on your strength and capabilities, where you can drive differentiation.

Note. In order to develop effective competitive strategies, you need to make a realistic assessment of your own and competitors’ strengths and weaknesses, as viewed by the market. You need to ask yourself what each of your competitors do very well, better than your own company in each of these areas and then, ask yourself in what areas are each of your competitors weak? In your competitive analysis, do make few predictions about what the competition is going to look like in the future. New competitors are constantly coming and going in the marketplace so do consider incumbent players as well — New companies often bring new ideas and innovations to the marketplace and can quickly become major players. Ask yourself: Who are my competitors likely to be? How long before the competition catches on? Don’t underestimate anyone.

D. Conduct Customer (your) Research — What are their needs/pains?

I think it goes without saying that your customers are unique to you, and you need to validate your hypotheses and their needs besides market/competitive research as well– whether you can spend money on large ethnographic studies, or you can be scrappy and try SurveyMonkey or some product to do surveys. Do always focus on what you are trying to validate, don’t lead users with the questions but be open to learnings, and keep it short, brief and focussed. If it’s an existing product, do use qualitative and sales/partner and CS data.

For Skype Dialer Product on Cyanogen Android OS which I launched in the market in 2016 with certain OEMs and Android devices — here is a snapshot for some of the questions based on the customer survey launched globally and responses are posted here for illustration purposes. Here, the competitive analysis was done across particular component/feature within mobile OS to find gaps and for key insights.

Q. What is the primary Operating System on your primary mobile phone?

Q. Which communication app(s) do you use frequently to make voice calls, video calls and IM/chat?

A key finding was that the native dialer of the phone OS was mostly used application, and given we had an opportunity to integrate with the Mobile OS partner and OEMs, we could leverage that to build that functionality as a 1st mobile SDK driven product for Android. Also, close competitors to watch out for were Google hangouts, and Whatsapp (in Android OS market)

Besides the normal integration of dialer, call logs, contacts — we also had an insight and gap per SWOT and competitive analysis done — to offer video functionality (core strength of Skype) to offer Facetime like functionality on Cyanogen Android Open Source OS for the Emerging markets to differentiate.

Further, it was noted customers wanted options to limit their cellular usage/billing and wanted functionality beyond app-to-app calling to call cellular and landline nos. which was a result of the “qualitative” portion of the survey so, we could bring in Skype to Cell and Landline calling right into dialer in addition to video calling to provide all calling modalities to augment native dialer, also to add monetization and revenue sharing aspects across value-chain (note. I haven’t shown a full survey and report here for obvious reasons).

3. Analyze information and determine your Product’s Competitive Position -

Determine Your Competitive Position in the Marketplace — By now, it should be fairly clear to you that if you are a market leader, one of several followers, or new to your marketplace. Once you have identified and analyzed your competition, and understood your competitive position, your goal is to get ready to identify and discuss key areas of competitive advantage and disadvantages, looking at both similar and substitute products or services and then summarizing the major problems and opportunities facing your firm which may require action. Issues which should be considered include types of market penetration, engagement, retention, product breadth or diversification, price revisions and/or cost reductions where applicable.

Next, evaluate your competition’s product or service. How does your product compare to your closest competitor’s product? What features and benefits are unique to your product as compared to theirs ? The more unique features and benefits your product has, the stronger your market position will be. For example, if you offer a product which is easy to use, and offers cross-platform service vs. your closest competitor, you have an advantage. You can then sell the same market segment the benefit of added convenience, time and availability of the service. However, your competitor may have developed a feature that you don’t have that is giving them more advantage which you seek how to minimize via other approaches, such as developing joint channels, and joint developments, looking into pricing and promotional or value-chain aspects.

Starting Product work now just has begun. I am not diving deep into that for the purpose of this article.

Additional Questions to ponder:

Ignoring the need to tie in a strategic offensive to your own competitive strengths is like going to war with a popgun — the prospects for success are dim. Next. utilize feedback from above research to form a hypothesis for MVP as it’s just hypothesis until and unless it’s validated with relevant consumer base at each stage. In nutshell, employ offensive strategies as well as defensive strategies to fortify your company/product’s position in the market. You must also remember that your competitive research and analysis is never finished. This is on-going, rather than a one-time process. Your competition can change quickly, new players can emerge tomorrow, the economy may upswing or downswing at any moment. It’s only when you clearly understand your competition that you can evaluate your own market position. This also means that time-to-market also becomes important in this respect at times for innovative products — not always though (think Apple).

Appendix:

Questions to ponder:

Your company/Product:

1. How well is my company’s present strategy working? What’s my core and distinctive competence.

2. Is my product competitively stronger or weaker than key rivals? How and in what aspects.

3. On what basis am I able to compete? Do I have those capabilities, do need to buy/partner/make?

4. How can I distinguish my company from my competitors? what’s my value-add vs. competitors?

5. Choose which rivals to attack, and the basis for competitive attack — relative to your company’s strengths and capabilities, and strong points.

6. Is this product serve my customers to boost XYZ goal — whether it’s growth, competitive advantage etc.?

Market:

1. What are the trends in my industry? Macro and micro trends (Political, Social, Economic, and Technological).

2. Consider customer surveys/feedback from various channels.

3. The degree of risk and uncertainty in the industry’s future.

4. Have there been any changes in their targeted market segments?

5. What is % of market share? revenues? Total sales volume/user #’s? Growth rate?

Competitor:

1. Who are my competitors — primary, secondary and emerging?

2. What is the range of products, channels, and services my competitor’s offer vs. mine?

3. What are their positive attributes in the eyes of customers?

4. What are their negative attributes in the eyes of customers?

5. Do my competitors have a competitive advantage; if so, what is it?

6. What’s my Competitors position relative to my own.

7. Are my competitors expanding? Scaling down?

8. Are competitors expanding product lines horizontally or vertically?

9. Are competitors scaling to the more markets?

10. Are competitors doing strategic partnerships in product side, marketing /branding, distribution side?

11. What is my competitor’s distribution strategy?

12. What is competitors channels/partnership strategy?

13. Do competitors operate in the same geographic area/countries?

14. What is the competitors’ promotional strategy?

15. What are my competitors pricing structures? cost-based, value-based pricing or is it more competitive?

16. What’s competitor’s business model, cost and revenue streams for each party involved in value-chain?

17. Strategic partnerships — relationships do they have with other companies in terms of product development, promotion or add-on sales?

Customer:

6. How do current customers view us compared to the competition for each of KSF areas?

7. What customer segments are under-served, poorly served and where I would focus to build?

Tools:

1. Ethnographic studies — Primary Research

2. Industry Reports, news, analysts’ reviews, Google /Bing Search, Quora — Secondary research to spot trends.

3. Market sizing (high-level) and COGR (Growth rate) analysis.

4. Porter 4 P’s (Product, Placement, Promotion, and Pricing),

4 4 C’s (Company, Competition, Cost, Customer)

6. Customer Surveys /feedback from SSN, CS, channels, partners, etc.

7. Company’s annual reports and 10Ks and forward-looking statements (if public).

8. Forecasting/analysis Top-down (done with BD/Sales and finance personnel) or the bottom-up model.

9. Strategy Canvas /Framework for evaluation

10. Secret Shopping — Try yourself, ask your customers/surveys