competitive product
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The defintion of a competive product has changed multiple times over the years. As business competitors innovate and push the boundaries of their competitive offerings.

How we define a competitive product has also changed.

Competitive product can be classified into the following  three distinct categories:Direct Competition, Substitute Products and Similar Products.

Direct Competition

Products that are direct competitors provide the same benefits to the customer and are aimed at similar target markets.  A great example of directly competitive products are Coke and Pepsi.

Figure 1. Coke and Pepsi are directly competitive products.

Another example of direct competitors is Honda Civic and Toyota Corolla.

Substitute Products

Substitute products allow the customers to achieve the same benefit using different technology.  For instance, a substitute product for a regular pencil is a mechanical pencil.  They both allow the user to make marks on paper but they use very different technologies.

Figure 2. A substitute product for a regular pencil is a mechanical pencil.

Another example of substitute product is the cell phone and the land line.

Similar Products

Similar products are products that perform similar functions but in different contexts or for different purposes.   Fans move air and propellers move water.  They perform similar functions but in different contexts.  Similar products are interesting because they suggest alternative ways to solve the design problem.

Figure 3. Propellers and fans are similar products.

Other pairs of similar product include staples and nails, paper shredder and sink garbage disposal and an automatic car washer and a dish washer machines.

What substitute or similar  products to people use now to achieve the benefits you want to deliver in your new product?  Why didn’t I ask about direct competition?

 

via Competitive Products | New Product Design

What is a competitive analysis?

A competitive analysis is the analysis of your competitors and how your business compares. By evaluating the strengths and weaknesses of your competition, you can begin to formulate how to give your company an advantage.

Competitive analysis helps a business determine potential advantages and barriers within a target market around a product or service, and generally helps brands monitor how direct and indirect competitors are executing tactics like marketing, pricing, and distribution.

What should you cover in a competitor analysis?

Your competitive analysis can vary widely depending on what you’re trying to learn about your competitors. You might do a competitive analysis around a specific aspect of your competitors’ business—like their website, for example—or you might do a high-level look at their marketing approach as a whole.

There are a lot of different ways you can structure a competitive analysis, so let’s look at the types of information that are frequently seen within this kind of research.

If you’re doing a high-level competitor analysis, there are a few major elements you’ll want to be sure to include around competitors’ market positioning, such as:

  • Who their target customers are
  • What market share to they currently own
  • What their main differentiator or unique value-add is for their business and products
  • Key features/benefits they highlight in sales materials
  • Price points for products, even across different marketplaces
  • How they approach shipping
  • If they’ve received any funding or venture capital

These sections will help you get a zoomed out look at what separates these businesses from each other and how they’re working to differentiate themselves from the competition within the niche.

If you want to look at more specific elements of your competitors’ approaches, you might consider adding sections like these to your competitive analysis:

  • Features on competitors’ websites (like search tools, product images, design/layout, etc.)
  • Customer experience elements (cart abandonment strategy, customer support, mobile UX, etc.)
  • Social media approach (channels used, frequency of posting, engagement, etc.)
  • Content marketing tactics (blog topics, content types, etc.)
  • Marketing tactics (types of promotions, frequency of discounts, etc.)
  • Email marketing approach (Newsletter, promo codes, etc.)
  • Customer reviews (language used around products, recurring complaints, etc.)

Generally, competitive analysis can take on many shapes and forms depending on what a company wants to evaluate about its competitors, but this should give you a rough idea of what could be included within the different sections.

Why competitive analysis matters for ecommerce

Maybe at this point you’re thinking, Okay, but why does competitor analysis matter for me as a business owner?

The main reason this activity is important is because you can’t effectively compete without knowing your direct competitors—and you can’t differentiate yourself if you don’t know what actually makes you different.

For ecommerce businesses in particular, a competitive analysis can also help:

  • Make more informed decisions about your marketing strategy
  • Identify industry trends
  • Create benchmarks for yourself
  • Determine your pricing strategies
  • Unearth new ways of speaking to customers, or even new customers to speak to
  • Finding a gap in the market, but also ensuring there’s a “market in the gap”

This type of analysis is not just for first-time business owners, either. A competitive analysis can be a living document that’s constantly evolving as your company grows and matures over time.

Maintaining a resource like this is a powerful way to measure how your brand stacks up against the competition right now—but it also can help provide clear direction on how you’ll continue to excel in the future.

How to conduct a competitive analysis

Once you’re ready to dive into a competitive analysis of your own, you can follow the steps outlined here to keep your research structured and organized appropriately.

Step 1: Create a list of 7-10 competitors

To identify relevant competitors to include in your analysis, start with searches on Google, Amazon, and Alexa around your product and business idea. You want a mix of competitors that:

  • Sell similar types of products
  • Have a similar business premise
  • Market to similar and slightly different audience demographics
  • Are both new to the marketplace and more experienced

To put together a list of diverse competitors that will give you a good look at the competitive landscape that’s not too small and not too large, it’s a good idea to create a list of 7-10 relevant competitors, before deciding on the ones you want to analyze.

Step 2: Create a spreadsheet

As you collect data on this group of competitors, keep it organized within a table or spreadsheet that can be easily shared and updated over time. Within this document, jot down the different criteria you want to compare and contrast, such as:

  • Price range
  • Product offerings
  • Social media engagement
  • Content used for lead generation
  • First time visitor offers
  • Other traits that are worth exploring

Step 3: Identify primary/secondary competitors

Starting with your list of competitors, begin your spreadsheet by categorizing each one as a primary, secondary, or tertiary competitor. This will help you better determine how they’ll relate to your business:

  1. Primary competitors are your business’ direct competition, selling a similar product/service to your target audience. These are the brands that your customers may compare you to. Example: Nike and Adidas are primary competitors.
  2. Secondary competitors sell similar products or services but to a different audience (e.g. they focus upmarket or downmarket with their products). Example: Victoria’s Secret and Wal-Mart are secondary competitors.
  3. Tertiary competitors are related brands who may market to the same audience, but don’t sell the same products as you or directly compete with you in any way. They may be potential partners or future competitors if they choose to expand their business. Example: Gatorade and Under Armour.

Step 4: Collect data via tools

Once you know which competitors you’ll be studying, it’s time to start diving into research and data collection for your competitor analysis. The good news is that today there are many different tools available that can make data collection for your competitive analysis simpler, more efficient, and more accurate.

Depending on what stage you’re at with your business and the size of your budget, you can invest in more powerful tools like Ahrefs and SEMrush to monitor the competition over time. But for the sake of this post, we’ll explore some of the more accessible options to help you research your competition.

SimilarWeb

SimilarWeb offers insights into estimated monthly visits and key traffic sources for a website. This can help you guess at where your competitors are focusing their marketing efforts. You might even discover other websites like yours, and thus new competitors to monitor and learn from.

Competitor analysis via SimilarWeb

Mailcharts

Mailcharts can give you insight into your competitors’ email marketing, from the frequency of email sends, their subject line tactics, and more.

Using MailCharts for competitor analysis

Buzzsumo

You can plug your competitor’s domain into Buzzsumo to see their top-performing content, as well as total social shares and where that content has been shared. You can also use this to discover other websites that are producing content in your space.

Using BuzzSumo to research competitors' websites

Alexa

Alexa helps you identify the audience demographics and search rankings related to a website, as well as some of the sites that are linking to and mentioning your competitors to get a handle on their PR and SEO strategy.

Using Alexa for competitor analysis

Facebook Audience Insights

Facebook Audience Insights (access through your Facebook Business Manager) can give you a variety of information about audiences on one of the largest social networks around. For many established competitors, you can even see the breakdown of their Facebook page’s followers, including age, gender, and geography.

Using these resources, you can start gathering data and dropping it into your competitive analysis spreadsheet so that your findings are all stored in a single, organized space.

Step 5: Do some hands-on research

Along with the research you’re doing through software and tools, it’s a good idea to get hands-on with your competitive research. Assume the role of a potential customer and check out what your competitors are doing in the marketing department.

You can do this by:

  • Subscribing to their blog
  • Following them on social media
  • Abandoning a product in your shopping cart
  • Even purchasing a product and evaluating the customer experience

As you execute these activities, be sure to document your findings with notes on the tactics you see. By studying their approaches to cart abandonment and looking at how they deliver support via social media (and beyond), you can spot interesting approaches your competition is using to attract more customers and drive sales.

Supplemental data

You can further expand the insight you gain from your competitive analysis by also gathering information about the market, such as industry-specific trends and economic indicators.

Consider doing a SWOT analysis to accompany this data set, which outlines the Strengths, Weaknesses, Opportunities, and Threats around your business and your competitor’s. Defining these areas will help you take an objective look at your business and can help you make smarter, more informed choices that future-proof your brand.

Competitive analysis template

If you’re still not quite sure how to start laying out your template for a competitive analysis, here’s a free competitive analysis template you can work from to get the ball rolling. Simply copy it to your own Google Drive, or you can download the spreadsheet to work through. Go to File > Make a Copy… OR Download as.

Free: Competitive Analysis Template

By evaluating the strengths and weaknesses of your competition, you can begin to formulate how to give your company an advantage. Download our free competitive analysis template and gain an edge over the competition.

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An example of a competitive analysis

Let’s say you sell make-up brushes, here’s one way you could use this template to compare competitors’ approaches to your own (and identify what you could do to stand out):

Free competitive analysis template for your business

Remember that you can add as many sections as you want to your analysis, but be sure to keep your list of competitors limited to under 10 to ensure your research is focused and highly relevant.

Common pitfalls to avoid

Now that you know how to put together a competitive analysis, let’s go over some of the major pitfalls to be aware of that can throw off the insights you’ve gathered.

1. Competitive analysis is not a one-and-done exercise

Never revisiting your original insights (or updating them, for that matter) can lead to faulty data and poor decisions. Businesses are constantly evolving, so it’s important to remember that keeping an eye on your competitors is an ongoing process—not something you do once and then never again.

2. Ignoring your own biases

As humans, we have a tendency to jump to conclusions around our assumptions. This is called confirmation bias. As you work through your competitive analysis, it’s important to be aware of your initial assumptions and to test them thoroughly rather than leaning on what you “think” is true about your competitors. Let the data inform your decisions rather than letting assumptions take the lead.

3. Data without action is useless

If you’re putting in the work to do a competitive analysis, be sure that you’re acting on the findings rather than letting them gather virtual dust on your computer, buried in an obscure file folder. Make a strategic plan around your findings and execute on the unique angles and marketing tactics that you’ve discovered during this process.

4. Creating more work than you need to

With so many great resources available that simplify the data collection process around competitive analysis today, putting together a top-notch, highly accurate comparison is easier than ever. Don’t reinvent the wheel and do things the hard way: use tools that speed up the process and provide the important insights you need to make informed decisions about your business.

5. Starting without a direction

If you’re directionless while putting together your competitive analysis and have no clear end objective, the work will be much, much harder. Before diving into research, define your goal and what you hope to learn about your competition.

6. Not accounting for market timing

When looking at competitor data, be sure to study how companies have grown and progressed over time rather than examining their approaches at a single, fixed point in time. Sometimes information about how your competitors have evolved their tactics can be even more useful than knowing what they did in the early days (or what they’re doing right now).

Competitive analysis: Your business edge

With the above template as a starting point, along with the resources and tools we covered, hopefully you’re better equipped to approach your own competitive analysis.

By conducting a competitive analysis, and evolving your understanding of your market over time, you can help yourself stay on top of your competitors and even learn from them too.

via How to Conduct a Competitive Analysis (Free Template)

How a competitive analysis improves your product

Since we’re talking about product development, we’ll focus on one specific type of competitive analysis—the product-differentiation competitive analysis.

By focusing on your competitors’ products, you’ll uncover the gaps between their products and what you believe to be the needs of your shared target customer base. Once you’ve done that, you can differentiate your product by taking a competitor’s gap and turning it into a feature that’s a strength for your product.

As an example, Zoom noticed their competitors’ products weren’t easy to use on different devices and often required users to download a piece of software. Based on those shortcomings, Zoom built a product that was easy to use on any device and didn’t need users to download anything. Those competitive advantages helped propel the company to one of the most successful IPOs of 2019.

Had Zoom not taken the time to analyze their competitors, they might’ve just ended up with another also-ran video conferencing tool that didn’t provide any unique or compelling value. A robust competitive analysis can help you follow in Zoom’s footsteps.

4 steps to conducting a product-differentiation competitive analysis

Like any competitive analysis, the product-differentiation competitive analysis takes time to complete. It’s not something you can do in a few hours. It’s an iterative process, and you’ll likely spend many hours over the next few weeks working on this.

That’s why we’ve broken this project into four steps.

Step 1: Identify your competitors

The first thing you need to do is figure out who your competitors are. This process isn’t as simple as just choosing the leaders in your industry or even choosing the companies whose products are the most similar to yours.

Those are both important, but you also need to consider indirect competitors that:

  • Solve a different problem for your customers but in a similar way.
  • Solve a similar problem for customers that aren’t in your category.

Myk Pono, a product growth specialist, explains this using Uber as an example:

  • Lyft is a direct competitor because they both solve the same problem for the same customer
  • DoorDash solves a different problem for the same customer
  • Zum solves a similar problem but for a different customer

You should find multiple direct competitors and then at least two indirect competitors.

Take all of those direct and indirect competitors and put them into one spreadsheet and categorize them accordingly. It’s also helpful to add some notes about each competitor.

Let’s say we’re building an Airbnb competitor. Our spreadsheet would look something like this:

Competitor Analysis Airbnb

Airbnb, along with Vrbo and HomeAway, are our direct competitors. Onefinestay targets a more upscale audience, and Turo is a car rental company that allows people to list their personal cars for rent.

Step 2: List & categorize all features

Now that you know your competitors, you need to identify their products’ features. To do this, review their websites, download their apps, take advantage of any free trials they offer, and use their products if they’re available.

Create separate tabs in your spreadsheet for each competitor and add all of their features in those tabs. Now, categorize each feature based on how unique it is. If your product has the same or a similar feature, classify it as “similar.” If the feature is unique to your competitor, classify it as “unique.”

Once you’ve done that, give each feature another category. This time, you’ll be categorizing each feature as a “strength” or “weakness.”

  • Strength: The feature is valuable to its users. Users may even pay extra for it.
  • Weakness: There are multiple reasons to classify it as a weakness. Either the feature doesn’t seem useful, or maybe it’s useful, but the execution is poor.

If we were evaluating Airbnb, our chart would look like this:

Competitive Analysis Airbnb

Repeat this process for all of the competitors you listed in step 1.

Step 3: Read user reviews

Next, you need to find user reviews for each competitor’s product. You can use sites like G2, Trustpilot, and Capterra to find reviews from users.

Hiten Shah recommends that you look for patterns when reading through user reviews. Pay attention to the things that create emotion. What features frustrate your competitor’s users? What do they love?

Each time you notice a pattern, make a note of it. Then go through the same process that you did in step 2 and categorize each product trend as similar or unique and its strength or weakness.

Step 4: Chart the features

The last step helps you evaluate what to do with this information. There are a variety of ways to do this, and you might consider what type of evaluation is best for your company.

One possible way is to take all of the features and plot them on an X-Y axis.

The X-axis is going to be Similar → Unique, and the Y-axis will be Weakness → Strength.

Take all of the features that you categorized in your spreadsheet and plot them on the chart. This helps you figure out what features will give you a competitive edge against your competitors.

Competitive Analysis Chart

Look at all the features that you’ve categorized as a similar weakness (bottom left). These are your starting points because you have a similar product feature as their weakness. If your similar feature is a strength of yours, good. You’ve found a competitive advantage.

If your similar feature isn’t a strength, that’s even better. You’ve found a place to start building a competitive advantage.

Repeat this process on the features you’ve categorized as unique, weakness. What makes them unique but weak? Is there a way you can develop a similar feature but execute it better? Spend time considering if this feature could be a strength for your product. Maybe it isn’t worth building at all. But if it is, it represents another way to differentiate your product.

In our eBook, Dan Olsen outlines how he approaches differentiation and uses Instagram as an example.

Once you’ve gone through this whole process, it’s time to move onto the next step in your product strategy: product prioritization.

Gain a product advantage with a competitive analysis

Competitive analysis identifies the gaps between your competitors’ products and their customers, who are likely your customers as well.

You’re not trying to create the same product as your competitors. You should be trying to create a product that solves the same problems for your users but in a much better way.

A product-differentiation competitive analysis will help you achieve that goal.

via How to Differentiate Your Product With Competitive …

 

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