How I simplified competitive analysis
Simplifying competitive analysis to support better decisions - Part 5 in "Building a product saga"
TL;DR
Competitors are any suitable substitutes that would reduce your pricing power. This includes tools that are not marketed directly to your target market.
To determine how you can stand out from the competition, you need to understand each competitor’s:
The type of competition (substitute, direct, sibling)
Overlapping Buyers
Overlapping Users
Core Values (Commodity values that need to exist but don’t offer differentiation)
Differentiation (What makes them special and desirable)
Gaps (What makes buyer and/or user unhappy)
Knowing which buyers and users you share with which competitor will help you to know what you need to build to blunt their appeal (Core and Differentiation) and how you can stand out and charge higher prices.
Story so far…
We have completed our high-level buyer and user persona so we can understand what their ideal outcomes are, what problems are standing in their way, what adoption or retention traps we need to avoid, and the set of alternatives they have or could use.
These alternatives tell me who I must compete with, so let’s get started.
The competitors
I review our buyer and user personas to identify the alternatives each uses. Luckily for me, the alternatives are fairly consistent, and they are:
Buyers (Greg, the Growth-Minded Leader; Helen, the Harassed Product Leader)
Traditional consulting companies or consultants.
Books.
Product management tools (Product Board, Aha!, Rally-One).
Product dev tools (Jira, Azure DevOps, Trello, Asana, etc.).
Folk knowledge (what I hear from friends and peers).
Users (Gwen, the Growth-Challenged Manager; Olly, the Overwhelmed Manager)
Books
Online classes
Friends or community
Formal Training
I then condensed them into a single list.
Consulting Company
Book
Product Tool
Online Class
Friends and Family
Formal Training
Determine competition type
Next, I go through each competitor to determine what kind of competitor they are. However, since I don’t have a solution in mind yet, I am skipping this step for now and will return once I have a solution.
But if you already have a solution or product, this is how it will work.
Substitutes are anything that can be used to achieve their outcome. For example, “Friends and Family” would be a substitute regardless of what solution I come up with.
Direct (competitors) are anything your product will have to market against directly in a formal purchase decision. For example, if I were to offer a consulting service using my experience, Consulting Companies would be my direct competitor. I would need to define specific consulting companies that I would compete with. But if I were building a SaaS product, Product Tools would be my direct competitor, and I would need to break it down further.
Siblings are anything that your company already offers that could be used instead of your product. In my case, I don’t have anything yet, so that I won’t have any siblings. Siblings could be a legacy system or complementary but overlapping value. For example, iPad Air, iPad Pro, and Macbooks would be considered Siblings.
Buyer and Users
Since the different buyers and users use the same alternatives, I don’t have to explain it in detail. But I did realize I missed a couple of users’ alternatives, so here is my chance to fill them in.
However, if your buyers and users use different alternatives, you want to attach the appropriate users and buyers to each of your competitors to make it easy when building your roadmap.
Core values, Differentiation, and Gaps
Core values are commodity values people expect but don’t offer differentiation or key desirability.
Differentiation makes them special and especially desirable to their target buyers and users.
Gaps are things they do not do well, even for their target buyers and users.
I won’t bore you by going through all of them, but I will offer three examples.
Consulting Companies
Core Values:
Show what “good” looks like
Provide recommendations on solutions to the problem
Differentiations:
White-glove, customized recommendation
Prestige or Confidence through the “Halo effect”
Gaps:
It could take months before see benefits
Often leaves before implementation
Books/Online Courses
Core value:
Shows what “good” looks like
Provides recommendations and how-tos
Differentiations:
Users can use it at their own pace
Can refer back at any point
Gaps:
Lacks specific help to the buyer or user’s unique situation
Unable to have follow-up questions
Friends and Family Network
Core values:
Shows what “good” looks like
Provides recommendations on solutions to the problem
Provide high-level how-tos
Differentiations:
Trust (because they know the person’s experience)
Free (don’t cost any money)
Personalized (specific to their needs)
Gaps:
Not scalable to the rest of the team
Putting it together
Now that I have put some of the information down, I can start to see a pattern of where my opportunities are and what types of solutions I can and should consider.
On to building out my strategy!
Want a quick diagnostic to see if your product is leaving money on the table? Contact me at john.wu@simplifying.work to learn more.