Building the first product is so exciting! That’s the reason why competitor analysis (if it’s being done) often looks like this:
Of course, it’s just exaggeration. But I once saw a spreadsheet just like that! This happens when the researcher’s goal is not to evaluate competitive landscape properly, but to prove their product is better.
Competitor research is a powerful tool to find your opponents and reveal opportunities. Let’s do it thoughtfully.
The only way to succeed is to find opportunities that competitors overlooked.
1. Evaluate yourself
To discover your product’s competitive landscape, you definitely need a very good understanding of what you doing. It sounds weird because everyone has it, right? Not really.
Recently I spoke with an entrepreneur who was building “The new Yelp”. I asked him why people wouldn’t go to the original one instead? Why people would prefer something new over familiar Yelp or Tripadvisor? What was his strategy and what benefits for customers that others don’t have? He just shrugged and said that the old Yelp is obsolete and this is just a matter of time until the new one comes. So he was planning to build a good product for future Yelp crisis.
So, yes, at the beginning we need to ask ourselves the most important questions.
- What are the problems I’m trying to solve? (What do my potential customers struggle with?)
- How I’m going to solve it? (What is the product idea?)
- Who has this problem? (Who exactly are my customers?)
- How can I be sure the problem is valid? Have I spoken with real people who have this problem? (Spoiler: if there are successful competitors, it’s probably a valid problem.)
Example of the outcome you should have in the end:
I know for sure that_____ and _____ have problems with ______ that ruin ______. It can be solved by _____ and ______. And my product idea, which is _____, can help resolve it.
This form should be used very roughly, because after conducting research you may need adjustment or even completely changing the whole vector. However, you’ll get a starting point for the research.
2. Solution VS addressing the problem
It seems very same, right? Not really.
Doing competitor research for my startup I have begun from products that have a similar principle of improving the engineering process as ours: watching repositories to find “bad” pull requests. There were very few of them, but totally out of our league: GitPrime and Codeclimate. Looked very optimistic: we still had a niche. But then I shifted the focus to the problem: a lack of development visibility. And found at least 5–7 products that solve the same problem. So looking for an exact product is the self-delusion.
The truth is the customers don’t choose which of similar products is cheaper or they likes more. They look for a solution that benefits more.
3. Think twice about the price
Many new companies hope to be competitive offering the lower price for the same product. In this case, competitor research led to conclusions like “Hmm… we can deliver the same product but cheaper”. Stop right there and think why they have such high prices:
- Are they monopolists? Because if there are no other competitors, yes, they can dictate prices and you have a chance. But how many monopolists do you know?
- Do they have a solid brand? If yes, again, they probably spent a lot of money and time to create it. Are you ready to spend as much? Or do you know how to get famous without money?
- How big is a product? Because your competitor probably pays developers, product managers, designers, support etc. Also, the price of a product includes infrastructure, services and maintenance.
And then answer yourself: am I ready to do the same offering low prices?
4. Unknown competitors
Another thing to keep in mind: looking for competitors don’t forget that the biggest part of the information may be hidden. Image, you’re working on integration for two well-known products. And then suddenly they released this feature, which made this product useless. And no one knew about that.
This probably one of the most complicated parts of the research. The almost all ways to get potential competitor’s plans either illegal or inappropriate. However, you can try to recognize the company direction.
- If a company is big, then check acquisition. Maybe they bought technology or acquired team with the ability to develop this technology.
- If a company’s small, then check the background of founders and key managers. It’s far from 100% but could give a clue.
- Attend conferences and meetups where your competitors are involved. Sometimes they can reveal something.
- Check social networks. Maybe they’re making surveys or something relating to the problem you solve.
Again, legal methods are very vague. Eventually, this is the reason why we usually find out about that kind of things later that we’d want.
5. Customer point of view
Another thing that helps you to get better results it’s the customers’ opinion. You assets your competitors from your point of view. But It might be very helpful to take a look from the customers’ side. In order to do that don’t hesitate to ask your friend and colleagues why and how they use it (if relevant). The other way to obtain this important information is honest reviews. Of course, if you’re stepping into the new market or trying to create one it might be useless. Otherwise, there are some services to explore:
These services not only can help you to understand the level of customers satisfaction by competitors products but also give free customer insights.
- Size of companies using competitive products.
- Job titles of users.
- Market (finances, insurance, whatever).
And also provide you with thoughts about the pros and cons of products.
Some of them even make the user answer a question ‘‘What business problems are you solving with the product?’’. That’s a huge advantage!
Of course, you shouldn’t read all the reviews and create every requested feature. Your goal is to understand deeper your potential customers, their problems and feelings about products at the market.