Competitive Analysis: How Product Managers Can Pinpoint Which Competitors Matter Most

Competitive Analysis tools for Product Managers

This article discusses the big picture of Competitive Analysis and how you can get a thorough understanding of the competitive landscape.

If you know the enemy and know yourself, you need not fear the result of a hundred battles.”
—Sun Tzu, The Art of War

Product management can sometimes feel like fighting a battle against unknown adversaries. Maybe you’ve just launched a new software product. You solve real problems for your target market, yet your first customers fail to purchase after the trial period is up. Or, you may already be the market leader. You’re at the top of your game, and then you start to see increased churn. Sales tells you that prospects are asking how you compare to a solution just announced by a company you’ve never heard of before.

No matter your situation, if the need your product serves is worth serving, you will face competitors. If you are successful in the market, you will attract challengers. Understanding that competition can make the difference between a product that just does its job – and a product that dominates the market. But how do you know what you’re up against?

Competitors Aren’t Always Who You Expect

First, be sure to consider the entire landscape of possible solutions to identify your most significant competition. Customers are always meeting their needs in some way, sometimes by avoiding, or ignoring them! They want to get their jobs done. Never forget that your most entrenched competitor may be a “substitute” as opposed to a solution similar to your own. That substitute may seem inefficient, expensive, and incomplete. It could be a service or a process when yours is a product (or vice-versa). But beware the status quo. “That’s how we’ve always done it” could be the toughest competitor you face.

A substitute could even compete for the same pool of resources: money, time, or mindshare. Sure, Netflix competes directly with Hulu and Amazon Prime. They also consider video games, novels, and even sleep, as competitors that consume some of the 24 hours their customers have in a day!

If you find that potential customers are doing little or nothing today to address the need you’ve identified, and their substitute is mostly inaction, it signals that something is out of whack with the perceived cost-benefit of serving the need.

In this case, consider the following:

  • Identify another target market experiencing more pain or urgency from the need, or greater willingness to pay for a solution.
  • You may not have identified a real customer need – find a new need to serve!

Competitive Analysis – Play Chess, Not Musical Chairs

Just as it’s important to understand with whom you are competing, it’s critical to understand the nature of that competitive arena.

Typically, the competitive landscape lies somewhere between these two poles:

  1. The market is young, a “green field” to harvest customers from that aren’t already locked into one of your competitors. You are fighting the status quo situation, but otherwise you’re mostly competing head-to-head with relatively few competitors.
  2. The market is saturated – nearly every customer is already using one of your competitors to solve their problems. Now you have to “take away” each customer from someone else.

First-mover advantage

Head-on competition can be compared to a game of musical chairs, where you and your competitors are the players and potential customers are the chairs. In the first scenario, with limited incumbents, the music is playing and everyone is eyeing where to sit down next. If you are faster and more nimble than your rivals, you have a greater chance to sit in a chair. You can see how first-mover advantage can work in your favor.

Incumbent competitors

To continue the metaphor, the second scenario is full of incumbent competitors. The music has stopped, and the chairs filled up, perhaps, before you entered the room at all! You could attempt to free up a chair by pulling out its current occupant. However, it’s often not enough to just be “better” or even “cheaper” than the incumbent when you are later to the game. Displacing an incumbent is challenging, particularly at the wrong point in the buying cycle. It rarely can be accomplished by brute force.

Competitive analysis for the win

Instead, successfully replacing competitors requires ingenuity, customer intimacy, knowing your differentiating competencies, deep market understanding and – yes – competitive analysis. Play chess, not musical chairs. Many of the growth companies of the 21st century have been disruptors in mature markets – consider Zoom in teleconferencing, Slack in instant messaging, or Amazon in retail. The key to becoming one of these disruptors is to think beyond the structural conditions of the market and identify new ways to create value.

Operationalize Competitive Analysis

Once you have uncovered potential competitors, you will need to select the top two to three companies for a deeper dive and ongoing focus on their products. The obvious criteria for determining your top direct competitors is by market share. However, there are a host of other criteria to consider: publicity they receive, mentions by prospects, strength of solutions, even patents and partnerships.

Ongoing monitoring is critical, as markets can change quickly, particularly in the digital product arena. You may need to quickly ramp up your knowledge of a competitor you hadn’t heard of before last week.

At 280 Group we teach nine elements of Competitive Analysis so you can deeply understand your competitors from multiple angles and leverage that knowledge in strategic planning.

Learn the Tools to Compete

Check out Part 1 of our Competitive Analysis webinar series below.

In our co-hosted AIPMM webinar, Beat the Competition, Part 2: Driving a Product Strategy that Wins, we explored our tips in-depth, and completed the survey of critical tools and frameworks to use. We discussed how to make Competitive Analysis a regular part of your work without breaking a sweat, and how to turn analysis into actionable insights to both build products that matter, and market them most effectively. Check out the blog and slide presentation, Competitive Analysis: How to Dismantle the Competition.

About the Author


Susannah Axelrod is an Principal Consultant and Trainer at 280 Group
Susannah Axelrod has held Product Management and Strategy roles for more than 25 years. She started her career as a consultant working with tech companies and VCs in the thriving startup community in Israel. Susannah later held product marketing roles at Intel, launched a new product at Intuit and led product teams at Sage, Thomson Reuters, Verizon and open-source startups in the developer tools space. Her focus is on helping B2B and enterprise software companies adopt modern product management practices and achieve product-market fit.

280 Group is the world’s leading Product Management training and consulting firm. We help companies and individuals do GREAT Product Management and Product Marketing using our Optimal Product Process™.

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