Researching Competitors — The Product Manager’s Way
In this reading, I’ll describe the motivations, methods, and outcomes of competitor research, from a digital product perspective.
Why research competitors?
Product Parity: This idea isn’t much different from building a minimum viable product. While doing customer discovery (finding customers, their problems, and whether it is worth solving them), we should also research competitors to find out how current alternatives offered by them lack/fair in solving the problems we aspire to profitably solve for our customers. Parity is often the common minimum, that is, something offered by almost every competitor. Customers expect this parity from every new product in addition to the product solving a major problem for them.
If you plan to build a new messaging app for the modern teen with a bold mission to prevent them from being fed misinformation & fake news, you still have to include the common minimum — security, connectivity in slower networks, multimedia content sharing, etc — things almost every messaging app in the market provides. It is to find this common minimum that we do competitor research.
Product Differentiation: The number one objective of product marketing, the singular factor that determines whether our product will win customers just because it’s cheaper, and if we will be able to be command margins & be profitable in the long-run — the importance of product differentiation couldn’t be emphasized enough.
When products become a success, there is a deluge of competitors that start emulating their stand-apart features. Differentiation starts to dilute. Competitor research post-launch keeps this dilution in check by helping us constantly assess how well our products are still-differentiated in this imitation frenzy.
Though Spotify has, over the years, won millions of users with its innovative & nuanced ‘Discover Weekly’ playlists, this differentiator in form of ‘personalized recommendations’ may dilute with Apple Music which also now offers similar features through its ‘For You’ playlists. For Spotify, careful analysis of its closest competitor Apple is crucial to find new avenues of differentiation — possibly exclusive albums, live radio, new subscription models, video content, etc. I am just guessing.
Product Enhancements & Product Strategic Roadmap are two other decision areas where competitor research helps. Larger companies rummage around their markets for potentially disruptive startups that can be targeted for acquisitions or partnerships.
Competitors’ newly introduced product enhancements are often a much cheaper way to validate user adoption hypotheses for similar features in our product.
Doing competitor research — whose job is it?
Now that we know the 4 primary motivations for doing competitor research (parity, differentiation, enhancements, strategy), it is almost intuitive to guess where inside a company these competitor research activities happen.
Product Strategy Teams
Product teams are the ones that do the majority of this research since they cover multiple motivation areas — parity, differentiation & enhancement.
Ever wondered how fast most Android phone makers are able to replicate what is made possible by the newest flagship Androids and that latest phone from Apple? There are able to do it despite the fact that a typical product development cycle is months long. It’s because they take competitor research to extremes — by utilizing not just the market information but also contacting upstream entities such as component suppliers so as to be abreast with what other phone makers are planning, even before them making the newest development available to the masses.
Product Marketing Teams
In most companies, product marketing teams’ three main responsibilities are — (1) developing product & company positioning for existing & potential customers, (2) enabling sales teams with information & tools, and (3) driving adoption with digital marketing campaigns & marketing analytics.
Competitor research is helpful in all three of these roles. (1) Positioning: The second half of positioning statements contain the phrase “unlike the competition, our product does this _____(statement of primary differentiation) for our customers”. Competitor research helps articulate this differentiation while the product teams are busy building the same. (2) Sales Enablement: Researching competitors help marketing teams develop sales pitches and outreach plans, and also gives insight on which customers to put most attention to. (3) Digital Marketing Campaigns: Apart from the basic campaign and conversion tracking, marketing teams also use additional web analytics tools such as SimilarWeb, to track changes in web traffic, page-views, and clicks on competitors' websites after their campaigns. This helps marketing teams in calibrating our future campaigns.
Corporate Strategy Teams
They are involved when it’s not just a single product, but a ‘portfolio’ that competes for customers head-on with one from a competitor. Portfolio decisions are often complex as there are integration challenges, there isn’t much overlap in the customer base of different products in the portfolio, global positioning is difficult, sunsetting existing & new product introduction is often highly consequential, etc. Thus, competitive research can have varying objectives. Given the long-term nature and criticality of such portfolio-level decisions, companies are often more than willing to spend some time with competitor research and use insights from that analysis to aid decision making.
Apart from the three major teams described above, many large companies at times find it useful to create, what’s called, “Market Intelligence Teams”. These teams serve as a shared resource for the entire organization and produce competitor reports that can be consumed by different divisions in the company. Apart from doing other market research activities such as — market sizing, and analyzing trends with customers, suppliers, government — they prepare competitor battle-cards, which are one-two slide summary of competitors on their financials, range of products/ services, M&A activity, growth & market expansion moves, strengths & weaknesses, etc. Such reports give a headstart to the product, marketing & strategy teams in doing their own custom research.
We now know who does competitor research and why it is done. It’s time to go to some basics of competitive strategy and the steps in performing competitor research.
Step 1: Who is my competitor?
Just as answering “who is my customer and what am I gonna do for them?” precedes product development; answering “who is my competitor and what am I gonna about them?” happens alongside product development and continues post-launch.
Competitors are those that solve or are in a position to solve the same problems we solve for our customers.
This simplistic definition helps divide competitors into three categories. Since most analyses concentrate on direct competitors, let’s understand them in detail. Come up with a list of 10+ competitors. This is easy as these are the same names that pop up in office chats, or in Google search on our product category (“Major companies in _____”).
Now just by visiting their websites or reading some news articles, we’ll discover that they are different from us, and also among themselves in many ways.
We now bucket them further — What is their size of operations? Where they are in their product lifecycle, that is, are their products just recently introduced, are they growing in adoption, mature in their market, or declining in their customer base? What geographies they operate in, that is, where do their customers live?
Step 2: What should I look for and where will I find it?
As we read above, ‘identifying competitors’ exercise not only reveals their names but also their product descriptions, lifecycle stages, and active markets. However, this isn’t enough! Depending on our objectives and scope for the research, we may need to dig deeper. All information that we find can be put in one of the three categories below:
(1) Information on product features, range of products, and pricing (sometimes) can be sourced from competitor websites. If some of our competitors are listed public companies, their regulatory filings such as 10-K annual reports (U.S.) also reveal a lot of information on portfolios, products, and pricing.
(2) They are many SEO analytics tools (such as SpyFu, etc.) that tell us what keywords are our competitors bidding for. Additionally, there are Google products such as Google Alerts that track every update on competitors we set alerts for.
(3) For strategic & growth moves, there are many third-party reports such as those from Gartner, Crunchbase, etc. that compile information on all the M&A and funding activity startups and large companies engage in.
Step 3: How do I present this competitive intelligence?
The following are some common deliverables & recommendation templates I’ve seen:
Corporate strategy teams researching to aid a portfolio growth & expansion decision:
An analysis of the competitors reveals certain geographies and customer groups are relatively less penetrated by our competitors despite presenting huge potential opportunities atop manageable technological challenges.
Product Marketing teams researching to aid a customer adoption decision:
An analysis of competitors reveals that there is an opportunity to increase ad spending on ‘these keywords’ to get more search impressions. Also, based on customers laggard response to our competitors’ recent promotional plan to increase subscriptions with partner offers, we can rule that out and focus either on free trials or email newsletter campaigns.
Product strategy teams researching to aid a product roadmap prioritization decision:
An analysis of competitor trends suggests that ‘this feature’ will be available in many more comparable products in the next 6 months, we can prioritize this closer in our product roadmap if further research shows that it may become a make-or-break expectation of a portion of our customer base.
The above templates are just a few examples of the way in which competitor research & analysis can be presented to make meaningful recommendations. The job of every competitor research activity in product management is to help product leaders make decisions about — products, their evolution, and their growth.
