This article was featured in our Ideas to Impact newsletter. Each month we explore the ideas that create real impact with exclusive insights from our team to help accelerate your strategic business outcomes. Subscribe today to receive each issue in your inbox as soon as it’s published.
In today’s business climate – full of looming change, uncertainty and increased competition – carrying out a comprehensive competitor analysis must be a priority for every company. While competition isn’t necessarily a bad thing, companies need a holistic understanding of the competitive landscape in order to differentiate themselves and maintain a successful product strategy. To quote Elon Musk,
“If you’re entering anything where there’s an existing marketplace, against large, entrenched competitors, then your product or service needs to be much better than theirs. It can’t be a little bit better, because then you put yourself in the shoes of the consumer… you’re always going to buy the trusted brand unless there’s a big difference.”
At its most basic level, a competitor analysis is an assessment of the strengths and weaknesses of current and potential competitors. That assessment helps any company build a better, more informed view of the threats and opportunities in their market and make more strategic decisions about the products they develop. Read on for three effective tools for competitor analysis.
1. Competitor Comparison
This involves capturing key information, factors, and features about your competitors and their products, like their number of users/customers, pricing, product functionality, etc. in a table format. It provides an easily referenceable source of information that forms an overview of how you compare to others in the market. During the product development process, these charts become a valuable reference point to ensure what you’re bringing to market fills a gap or improves on an existing option. Download our Competitor Comparison template and instructions.
The 2×2 diagram provides a more visual representation of how other companies are positioning themselves and the main areas in which you are competing. This can be especially useful during product development as it can help uncover opportunities to develop a competitive advantage. The most challenging aspect of the 2×2 diagram is choosing the two key variables to compare. My advice is to experiment with different variables until you find the ones that give you the most informative view of the competitive landscape or to choose variables directly related to a specific product focus. Download our 2×2 template and instructions.
3. Strategy Canvas
Part of the Blue Ocean Strategy framework, the strategy canvas is a powerful tool to quickly visualize where your competitors are concentrating their efforts and how you can differentiate your focus and offerings by identifying the most important factors valued by your customers – like price, product characteristics and functionality, and availability. When you spot items that can be reduced or eliminated because they are less valued by customers, you are better positioned to increase the value of your offering by reducing costs. Too often teams get caught in the ‘build trap’ of adding more and more features, thinking this is a winning product strategy. From my experience, it rarely is. Download our Strategy Canvas template and instructions.
While each of these methods provides a valuable overview of how your offerings compare to that of your competition, none of them are useful if treated as a one-time exercise. To truly see value from competitor analysis, it must become part of the regular rhythm of your business with at least an annual cadence. When it is baked into your product management and development processes, it will put you in a position to unlock value, differentiate, compete, and ultimately, stand out to those who matter most – customers.