What Every Product Designer Should Understand About Competitive Analysis

Designing a product doesn’t come easy to everyone. Most companies in the market do not begin from scratch. They smartly bridge the gap their competitors’ existing products could not fill.

57% of businesses agree that gaining a competitive advantage makes it to their top three business priorities. Like most robust business strategies, companies can only attain competitive advantage with diligent research.

Thus, competitive analysis is the method that backs product ideas with factual data and customer pain points. At Growth Jockey, our growth leaders collaborate with clients to conduct extensive competitor analysis with Big Data Analytics to make refined product decisions.

The product design and development consultants at Growth Jockey come with years of industry expertise and use it to guide business solutions as virtual co-founders with you!

Start here if you’re a product designer looking to solve another user problem but unsure of the product market fit. This guide will enlighten readers on the crux of competitor analysis and how to do it right.

Continue reading to ensure a competitive new product design!

What is Competitor Analysis?

A common best practice in any business industry is understanding the target audiences followed by the competition. It is fundamental to determine whether your product design has a competitive advantage to sustain itself in the market.

Research suggests that 40% of Fortune 500 companies can expect to be replaced by companies unheard of today. During such a dynamic period, competitor analysis carries more significance than ever.

Thus, with Growth Jockey, businesses are technifying their processes and leveraging the power of Big Data Analytics and Machine Learning. With abundant resources available for free yet scarce in credibility, we provide holistic, authentic solutions to unlock 10X revenue.

Competitor analysis is the process of evaluating the strengths and weaknesses of your competitors to identify your competitive advantage. This process can be used in any industry and is often performed as part of a more extensive market analysis.

Competitor analysis involves understanding your competitors’ strategies, products, and positioning in the market. Product teams can then use the information to develop strategies for differentiating their products and services and succeeding in the market.

There are several different methods you can use to perform competitor analysis. Some standard methods include customer surveys, interviews with industry experts, and analysis of publicly available information.

Steve Rogers suggests, “Designing a product is designing a relationship.” Thus, product designers today must take into account the potential of well-researched and competitive products and their ability to retain customers.

Product Designers Guide to Competitive Analysis

The competitive analysis of design for a new product is easier said than done. Most businesses analyse only 12% of the entire data they collect. Not only does that reduce the competitive margin, but it also results in wastage.

To research the design for a new product, teams must have a strategic roadmap. The research includes market study, user research, and competitor research.

There are different ways to approach competitive analysis, but the fundamentals remain intact:

1. Asking the Right Questions

When product teams embark on competitive analysis, the first thing they want to do is ask themselves- “Who is our competition?” Defining the competition simplifies most of the process from T0 itself.

Surveying the product, you intend to offer must give an idea of the competition. Product teams must start by defining the problem and whether a solution exists in the market.

If there exists a solution, in such a case, shortlisting the products most customers frequently use form the primary competitor group. Considering the top three to five competitors for a focused analysis should suffice.

After clarification of the top competition, asking three simple yet comprehensive questions can result in a concrete analysis.

The Whys?

Here are some examples of the ‘Why’ questions that matter for competitive analysis of design:

• Why does the issue exist among the target audience?

• Why are competitors making the choices they make?

• Why are people using the competitors’ products?

• Why is a particular product preferred over another?

• Why is the competitor successful/unsuccessful in solving a particular pain point?

Questions that the ‘why’ fails to answer can be discovered through other questions.

The Whats?

Following are some significant ‘what’ questions that product leaders must ask:

• What is the competitor’s exact solution?

• What part of the problem are they addressing?

• What particular elements of the product solve the customer’s problem?

• What platforms do they use to connect with the user?

You can answer the ‘how’.

The Hows?

A competitive analysis should be able to answer the following questions:

• How has the competition sustained itself in the market?

• How do they structure their price?

• How does the product design contribute to the customer experience?

• How do they introduce new features in their products?

Structuring competitive research around these fundamental questions helps identify potential gaps your product can fill.

However, while these questions suggest a qualitative approach to analysis, quantitative data, too, assists in making factual inferences about product design. The decision-making process is five times faster with data analytics.

For example, 90% of the top companies use competitive intelligence to leverage the power of Big Data to gain a competitive advantage and capture markets. At Growth Jockey, we have helped numerous founders to reduce 5X costs and execute 4X faster with the power of technology.

After collecting data about opponents, the essence of design analysis lies in presenting the opportunities of your product idea.

2. Using a Suitable Framework for Competitor Analysis

A competitive analysis framework is a ready template that helps teams position competitors and make strategic decisions to place your product. It can be used in any industry and business context, from small businesses to large corporations.

Using any one of the following classic frameworks deciphers a substantial amount of the analysis:

A SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. This framework helps product teams understand the competitor’s competitive landscape and identify areas where they can gain an advantage.

Product designers must gather information on competing businesses to conduct a SWOT analysis. You can do it through secondary research, such as financial reports, press releases, and customer surveys.

Once you have this information, you can identify their strengths, weaknesses, opportunities, and threats.

After identifying these areas, you can develop a strategy for competing against your competitor. It may involve exploiting their weaknesses, capitalising on their opportunities, or mitigating their strengths.

Whatever strategy the product manager decides to pursue, the SWOT analysis can guide its initial reasoning.

Growth Sharing Matrix

The growth-share matrix is a framework by BCG that helps assess a company’s competitive position within its industry.

The model is based on two factors - market growth and market share. Market growth measures the market’s overall size, while market share measures the company’s market share.

Using the growth-share matrix, you can plot each of your rivals on a graph and see where they fall concerning each other. It can help product leaders understand their competitive position and make decisions accordingly.

For example, while analysing a product portfolio, the growth-sharing matrix can guide decisions about which products should sunset.

Perceptual Maps

A perceptual mapping framework is a tool to generate a visual representation of how customers perceive the attributes of a product or service. Product designers may use it to understand how customers view the competition and the gaps that one can exploit.

There are a few steps to follow when using a perceptual mapping framework for competitor analysis.

First, identify the attributes that are most important to customers. Next, create a grid with those attributes on the x- and y-axes. Then, map out where each competitor falls on the grid.

For example, if there are 4 quadrants of price or quality ranging from low to high, identify where each falls. Finally, identify any gaps in the market that your product can exploit.

Designers can better understand their competition and find opportunities to improve their products using a perceptual mapping framework,

3. Scoring Yourself

Once the team prepares their competitor analysis report based on one or many frameworks, they can score themselves. For example, consider the following criteria for a new product design:

• Feature list

• User experience

• Customer service

• Differentiation point

Given the above mentioned items, where does the current product design stand?

Hypothesise a 5-pointer scale and rate the in-house product against the competitors. Ultimately, the product team will have an indicative competitive score for themselves.

Summing It Up

In business, it is essential to always be aware of your competition. Knowing what your competitors are up to can help you make better decisions for your own business.

The following steps help simplify the competitive analysis process:

• Identifying the top three to five competitors

• Asking the why, what, and how behind the competing products

• Using a sensible framework to present the product’s competitive position

• Scoring the competitive advantage based on relevant metrics

At Growth Jockey, our team of dedicated technology experts simplifies the competitor analysis process for you with the help of data analytics and machine learning. With industry insights and research inferences, our consultants present a strategic roadmap for your product design success.

At Growth Jockey, we are committed to delivering tailored solutions that effectively address the critical challenges faced by our clients across various industries, ultimately enhancing the user experience. Regardless of your company's size, whether it's a small-scale enterprise or a large corporation, you can now leverage advanced technologies to optimize your user experience. Take a proactive step towards unlocking the next level of growth for your brand by reaching out to us today!