Whether a business is just entering the market, or is a regular market player, it has to know its competition: who they are and how they work. This helps to stay atop of market trends, identify potential opportunities to outperform competitors and, what is more, to get deeper insights on business’ customers.
'I don't need a competitor analysis, could we skip it?'
While competition research is one of the key components of the marketing environment analysis, product design companies are often approached by clients asking to skip the competitor analysis phase.
Let’s take a look at the most common reasons they name and try to understand if their concerns are reasonable.
'There are no competitors on this market'
For starters, you should understand if there are customers on the market, there will always be competition - in direct or indirect form.
A lack of competition on the market could be very indicative. According to product management theory, business owners have to think twice before investing in a market where no one operates.
If there are no competitors, there must be a handful of reasons for that - no demand or some difficulties entering the market or operating there.
Your idea might be new. It even might look like there is a market need as users day to day face challenges doing a certain job. However, digging deeper might show that customers aren’t ready to pay money for the product now.
Another part worth considering is possible technical limitations and legal restrictions of entering a market. What if they’re too strict and restrain other players? Were there previously some attempts to create similar products? How did it go? And why didn't these solutions survive? Having investigated all of these topics and thus validated the market, we could proceed.
It happens that there are really no businesses doing exactly what you do. In this case, you have to interpret your product or service to needs and problems that it solves. If you find the solution that partially covers the needs of your customers, that’s your competitors.
'We don't want you to copy the design of a competing solution, we want an original one'
Competition research covers way too much more than just an analysis of competitors’ design. Evaluating competitors that are doing great allows you to get deeper insight on the audience and their needs. This in turn helps to define or improve your value proposition, uncover hidden opportunities (e.g. customer segments that are not served by competitors or are served partially), better your own ideas and disprove ones.
Competitive analysis also sets a basis for creating original products with unique use cases, content, wording, etc.
'All of our competitors have very poor user experience, so there is no need to analyze them'
Sometimes competitors are very good at showing how not to do. Analysing unsuccessful competing products, business analysts and designers are able to identify confusing features, clumsy user flows and poor visual design decisions.
Should we mention that by listening to your comments on competitors’ products we get better insight into your vision as well as elicit requirements from the other stakeholders?
'We have analyzed competitors and we’ll share the results of the research with you'
Those clients who have already conducted research and know a lot about competitors we ask to share the results. If you have gathered user’s feedback, analyzed paid and free features, and noted interesting points, we will certainly use all this stuff.
However, utilizing documented notes isn't equal to using the application itself - playing with features, filling in different forms, passing onboarding and adjusting settings.
So the question is how properly the user experience can be analyzed without actually experiencing the product?
How could we know how the user feels? Is it easy to complete a goal? How does the system support a user? What options are available? Are they intuitive enough?
These and many other questions both business analyst and designer have to answer every time they test-drive a new software. And it is extremely important to give them an opportunity to try the product out on their own.
Moreover, here at Selecto we've developed our own best practices of researching that save time spent by a delivery team as well as ensure consistency and high-quality results.
What if there are no direct competitors?
Rarely, but it happens that finding a direct competitor is difficult. In these cases a business analysts look into a solution from another business domain, but with similar patterns.
For example, to create an online knowledge base for real estate brokers we could analyze a similar website for doctors, where they share useful materials, updates, courses or conferences and other relevant industry-related information.
Another example might be a business specializing in giving professional reviews to hosting providers. In this case, an online restaurant or hotel review platform might be used as a source of inspiration, since both solutions contain lists with different view types, smart filtering, comparing characteristics, commenting (reviews) etc.
A real case we experienced
A few years ago we were approached by a sports school with a unique specialization - they set up challenges for companies from different countries. They’d been on the market for several years at that time and asked us not to handle the competitor analysis side, as no one else operated in this field. How surprised the clients were to see a list of foreign companies offering very similar services after some research had been conducted. Each of those businesses had some specifics but still the core idea was the same.
We also managed to get trial access to a few products to learn how all features really work and analyzed the user feedback. Through the latter we found out what looked inconvenient for users, what was annoying, what features were lacking, and what functionality they did not understand. With these valuable findings a new, better product was designed later.
Competitor analysis is much more than evaluating bad or good product examples. Done properly, the research gives you enough data to back your business decisions. It helps you define your product's unique value, validate your ideas, uncover opportunities, and eliminate or prevent some risks.
Here at Selecto, we do not recommend skipping this phase. Let the team, involved in product development, take care of the research to design a product that the market will love.