How to Conduct Competitive Analysis for Product Development

Introduction

Competitive analysis is a crucial process for product managers to understand market dynamics, identify opportunities, and make informed decisions. This guide addresses the challenge of conducting a thorough competitive analysis for product development, a skill essential for both transitioning MBA graduates and seasoned PMs seeking standardised approaches.

By following this guide, you'll learn how to systematically analyse competitors, uncover market gaps, and position your product effectively. We'll cover everything from initial research to actionable insights, assuming you have basic product management knowledge and access to standard business intelligence tools.

This process typically requires 2-4 weeks, depending on the market complexity and depth of analysis. You'll need a small team, access to market data, and the ability to synthesise information from various sources. The outcome will be a comprehensive competitive landscape that informs your product strategy and roadmap.

Quick Reference Guide

• Tools: Market research databases, SWOT analysis, competitive positioning map
• Estimated time: 2-4 weeks
• Difficulty: Intermediate
• Required skills: Research, data analysis, strategic thinking
• Expected outcomes: Competitive landscape overview, SWOT analysis, positioning strategy

Prerequisites

Before beginning, ensure you have:

• Basic understanding of your product and target market
• Access to market research tools (e.g., Gartner, Forrester)
• Collaboration software for team communication
• Spreadsheet and presentation software
• Team members from product, marketing, and sales
• Allocated time for research and analysis
• Stakeholder buy-in for the competitive analysis process

Set up a shared workspace for documenting findings and schedule regular team check-ins to align on progress and insights.

Step-by-Step Process

Step 1: Define Your Competitive Landscape

Begin by identifying your direct and indirect competitors. This step sets the foundation for your entire analysis.

1. List known competitors
2. Conduct market research to uncover lesser-known players
3. Include indirect competitors who solve similar problems
4. Categorise competitors by type (direct, indirect, potential)

💡 Pro Tip:

• Insight: Look beyond obvious competitors
• Context: Disruptive innovations often come from unexpected sources
• Application: Include adjacent industries in your search
• Impact: Broader perspective on potential market threats and opportunities

⚠️ Warning:

• Issue: Overlooking indirect competitors
• Impact: Missed opportunities and potential blindsides
• Prevention: Cast a wide net initially, then narrow focus
• Recovery: Regularly revisit and update your competitive landscape

📋 Step Checklist:

• Prerequisites: Market understanding, research tools
• Action items: List competitors, categorise, validate with team
• Validation: Comprehensive competitor list approved by stakeholders
• Next steps: Begin detailed analysis of each competitor

Step 2: Gather Competitive Intelligence

Collect in-depth information on each competitor to understand their strengths, weaknesses, and strategies.

1. Analyse competitors' websites and marketing materials
2. Review financial reports for public companies
3. Gather customer reviews and testimonials
4. Examine product features and pricing strategies
5. Investigate partnerships and integrations

🛠️ Tool Guide:

• Tool name: Crayon
• Purpose: Competitive intelligence automation
• Setup: Integration with your CRM and marketing tools
• Cost: Varies by plan, typically enterprise-level pricing
• Integration: APIs available for custom data flows

✅ Success Criteria:

• Expected outcome: Detailed profiles for each key competitor
• Validation method: Cross-reference data from multiple sources
• Quality check: Peer review of findings
• Timeline: 1-2 weeks for thorough data gathering

Step 3: Conduct SWOT Analysis

Perform a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for your product and key competitors.

1. List internal strengths and weaknesses
2. Identify external opportunities and threats
3. Compare your SWOT with competitors'
4. Look for patterns and unique positioning opportunities

💡 Pro Tip:

• Insight: Use SWOT to inform product strategy
• Context: SWOT reveals competitive advantages and vulnerabilities
• Application: Align product roadmap with identified opportunities
• Impact: More focused and differentiated product development

Step 4: Create a Competitive Positioning Map

Visualise how your product compares to competitors on key attributes.

1. Choose two critical factors for comparison (e.g., price vs. features)
2. Plot competitors on a 2x2 grid based on these factors
3. Identify clusters and gaps in the market
4. Determine your ideal positioning

⚠️ Warning:

• Issue: Choosing irrelevant comparison factors
• Impact: Misleading positioning strategy
• Prevention: Validate factors with customer research
• Recovery: Iterate on map with different factors if needed

Step 5: Analyse Pricing and Business Models

Understand how competitors monetise their products and how you can differentiate.

1. Document pricing structures for each competitor
2. Identify underlying business models (e.g., freemium, subscription)
3. Assess the value proposition relative to pricing
4. Consider how your pricing strategy can create a competitive advantage

🛠️ Tool Guide:

• Tool name: ProfitWell
• Purpose: Pricing strategy and revenue analytics
• Setup: Integrate with your billing system
• Cost: Free core tools, paid advanced features
• Integration: APIs for custom reporting

Step 6: Evaluate Marketing and Sales Strategies

Examine how competitors attract and convert customers.

1. Analyse marketing channels and messaging
2. Review sales processes and tactics
3. Assess brand positioning and target audience
4. Identify gaps or opportunities in go-to-market strategies

💡 Pro Tip:

• Insight: Look for underserved segments or channels
• Context: Competitors may overlook niche opportunities
• Application: Develop targeted campaigns for neglected areas
• Impact: Efficient customer acquisition in less competitive spaces

Step 7: Assess Product Features and Roadmaps

Compare product offerings and anticipate future developments.

1. Create a feature comparison matrix
2. Analyse product release patterns and frequencies
3. Investigate public roadmaps or announced features
4. Identify areas for differentiation or improvement

✅ Success Criteria:

• Expected outcome: Clear understanding of feature landscape
• Validation method: User feedback on feature importance
• Quality check: Alignment with product strategy
• Timeline: Ongoing, with quarterly deep dives

Step 8: Synthesise Insights and Develop Recommendations

Bring together all analysed data to form actionable insights.

1. Identify key trends and patterns across all areas of analysis
2. Determine your product's unique value proposition
3. Develop strategic recommendations for product development
4. Create a competitive response plan for various scenarios

📋 Step Checklist:

• Prerequisites: Completed analysis from previous steps
• Action items: Summarise findings, brainstorm strategies, prioritise actions
• Validation: Stakeholder review and approval
• Next steps: Integrate insights into product strategy and roadmap

Validation Checkpoints

Ensure the quality and relevance of your competitive analysis:

• Stakeholder alignment on competitor list and analysis scope
• Cross-functional review of gathered data for accuracy
• Customer validation of key differentiators and value propositions
• Executive approval of strategic recommendations
• Regular (quarterly) updates to maintain relevance

Test your findings through:

• A/B testing of messaging based on competitive insights
• Pilot programs for new features or positioning
• Continuous monitoring of market share and customer feedback

Troubleshooting Guide

Common problems and solutions:

1. Insufficient data on private competitors

   • Solution: Use web scraping tools, industry reports, and customer interviews

2. Analysis paralysis from too much information

   • Solution: Focus on key metrics aligned with business goals

3. Rapidly changing competitive landscape

   • Solution: Implement ongoing monitoring and quarterly deep dives

4. Difficulty differentiating in a crowded market

   • Solution: Focus on niche segments or innovative business models

5. Team disagreement on competitive positioning

   • Solution: Use data-driven decision making and facilitate structured debates

Advanced Considerations

For enterprise-scale or complex markets:

• Implement AI-driven competitive intelligence tools for real-time monitoring
• Develop a dedicated competitive analysis team for continuous insights
• Create industry-specific analysis frameworks
• Consider geopolitical factors for global markets
• Integrate competitive insights into agile development processes

Adjust for team size by:

• Smaller teams: Focus on top 3-5 competitors and key metrics
• Larger teams: Divide analysis by competitor tiers or market segments

Templates & Resources

Downloadable templates:

• Competitive Landscape Matrix
• SWOT Analysis Template
• Feature Comparison Spreadsheet
• Competitive Positioning Map

Tool recommendations:

• Crayon for automated competitive intelligence
• Ahrefs for SEO and content analysis
• SimilarWeb for website traffic insights

Further reading:

• "Competitive Strategy" by Michael Porter
• "Blue Ocean Strategy" by W. Chan Kim and Renée Mauborgne

Expert resources:

• Product Management Insider blog
• Mind the Product community forums

Community support:

• ProductHunt for startup landscape
• LinkedIn Product Management groups for peer insights