What is market research and competitive analysis and why are they core skills used by virtually every Product Manager? Let’s start with simple definitions and reasons why they are so important for Product Managers.
Market research is the way in which Product Managers gather information about customer needs and market drivers. If you want to gather information from actual customers to make a decision, then you need to understand and use market research.
Competitive analysis is a subset of market research. When you investigate your competition, you use market research techniques and concepts to understand what your competition is doing today and gain insight into their plans for tomorrow.
What problems can market research solve?
Market research informs your decisions as a Product Manager. Here are four categories of decisions Product Managers use market research for.
- Identifying market needs and customer problems
- Segmenting markets
- Documenting the customer journey
- Evaluating new markets
- Defining or testing new product concepts
- Solidifying pricing
- Prioritizing features and releases
Investigating the best marketing options
- Creating or testing messaging
- Measuring marketing program results
Analyzing business success
- Measuring customer satisfaction
- Learning about the competition
Are you getting yourself out of the building?
Product Managers often start their journey as Product Managers because they know a lot about a product category. Very quickly their instinctive market knowledge is no longer up to date. The best attitude of the successful Product Manager is one of humble curiosity. At each decision point, rather than assuming the people around the table know what the right answer is, assume that you don’t know. Head out into the world and ask questions. Really listen to the answers and then hear the underlying assumptions that are built into the answer.
Some questions are harder and more complex to get answers to. Involve market research firms to help you ask the right questions and get good answers before you embark on important projects.
Market Research and Competitive Analysis: Numbers vs the Story
The assumption is often that market research and competitive analysis provide enough cold hard facts that your plans will be impervious to anyone else’s opposing arguments. In reality, facts are best understood in the context of a good story.
And the story provides a structure to your point of view. Data forms the branches that support the core story. A more formal definition is that the storyline is the qualitative data. The survey numbers are the quantitative data. Together they provide better support for the decision you are asking managers to ratify.
Any decision you make is best if you start with the story and support it with the numbers from a survey or market study.
Getting Help and Getting Started with Market Research
Getting started with your first market research project can be scary. Reach out and ask for help from the following people:
- A more senior Product Manager
- Internal market research staff
- External market research companies
And don’t be afraid to try out your first market research project on a shoestring. Check out low-cost or no-cost online survey services – even Google forms – and start asking questions.
What are market research methods?
Here are the most common types of market research. Investigate them and see which one suits your situation best.
Which competitors should I look at during competitive analysis?
Competitive analysis can mean the difference between success and being blindsided by a competitive move you didn’t see coming. While you may operate in a crowded market, focus on the top 3 and you’ll have enough information to not worry about the smaller players.
Competitive analysis model – Porter’s 5 forces
Michael Porter developed a model to break down the competitive forces in any market. In the field of competitive analysis, he identified the bargaining power of customers, bargaining power of suppliers, the threat of substitute products, the threat of new entrants into the market and the intensity of competitive rivalry as key aspects to understand the nature of competition in your industry. Read up on this important thinking process to become more aware of where the competitive threats are likely to come from in your industry.
Product Comparisons for Competitive Analysis
The most common competitive analysis that Product Managers use is a side-by-side product comparison chart that compares features. Remember to add in aspects of service, warranties, finance, service, and reliability that may add more strength to the competitive argument. Organize your findings in a table that you share with your sales people. One word of caution: beware of what information you want to share outside the company.
Competitive Analysis Beyond Product Comparisons
Go beyond this initial analysis to understand the company in much more depth. How are their finances? What is the background and bias of their leaders? How about the team that takes products to market? Understanding a competitor’s sales, channel and marketing actions and reflexes helps you become more able to counteract their moves.