Definition: Identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to those of your own product .
A competitive analysis is a critical part of marketing plan. A competitive analysis is also very useful to define the planned features and to decide the technologies to be used. Choice of right technology for a planned product will often have significant bearings on the cost, robustness and scalability of our product, especially if the product is going to be built using cutting edge technologies.
With this evaluation, you can establish what makes your product or service unique--and therefore what attributes you play up in order to attract your target market.
- Evaluate your competitors by placing them in strategic groups according to how directly they compete for a share of the customer's dollar.
For each competitor or strategic group:
- list their product or service, its profitability, growth pattern, marketing objectives and assumptions, current and past strategies, organizational and cost structure, strengths and weaknesses, and size (in sales) of the competitor's business.
- list their functional features
- if possible, evaluate their functional features like user experience, performance, compliances (ex. legal)
- evaluate the product's runtime environment (cloud, desktop, mobile, wearable, etc)
- finally arrive at strengths and weaknesses
Answer questions such as:
- Who are your competitors?
- What products or services do they sell?
Business Plan Relevant
- What is each competitor's market share?
- What are their past strategies?
- What are their current strategies?
- What type of media are used to market their products or services?
- How many hours per week do they purchase to advertise through the media used in this market?
- What are each competitor's strengths and weaknesses?
- What potential threats do your competitors pose?
- What potential opportunities do they make available for you?
Product Design Relevant
- What is each competitor's features & USPs
- What technologies are used by each competitor
- Strengths & Weaknesses for each competitor
- Pricing of each competitor
- Gaps (missing features) that are relevant for our business case
- What is the proposed USP of our product compared to competitors
A quick and easy way to compare your product or service with similar ones on the market is to make a competition grid. Down the left side of a piece of paper (or spreadsheet), write the names of four or five products or services that compete with yours. To help you generate this list, think of what your customers would buy if they didn't buy your product or service.
Across the top of the paper (or spreadsheet), list the main features and characteristics of each product or service. Include such things as target market, price, size, method of distribution, and extent of customer service for a product. For a service, list prospective buyers, where the service is available, price, website, toll-free phone number, and other features that are relevant. A glance at the competition grid will help you see where your product fits in the overall market.
Your final competitive analysis report may consist of one or more slide decks, spreadsheets and word documents.