5. Competitive Analysis

Competitive Analysis

Competitive analysis is a crucial step in understanding the landscape in which your product or service will operate. It helps businesses identify the strengths and weaknesses of competitors and uncover market opportunities. This document outlines a comprehensive approach to conducting competitive analysis, including tools and strategies that provide actionable insights.

Red Ocean vs. Blue Ocean Strategy

The first step in competitive analysis is determining whether your product or service is entering a Red Ocean or a Blue Ocean market. This understanding will shape your strategy.

Knowing whether you are entering a saturated (Red Ocean) or untapped (Blue Ocean) market is critical to shaping your competitive analysis and strategic positioning.

Key Indicators for Competitive Analysis

When analyzing the competitive landscape, it is essential to look for specific indicators that reveal the true potential and dynamics of the market. These indicators include:

  1. Number of Established Competitors: Are there many large players, and is the trend showing growth or decline? Understanding this can help you gauge how crowded the market is.
  2. Age of Products and Technology: Are the products and technologies in the market outdated? Newer technologies may address unmet needs, creating opportunities for innovation.
  3. New Entrants: Are new players entering the market frequently? This suggests that the market is expanding, but it may also mean increased competition, and you’ll need to assess whether you can compete effectively.
  4. Marketing Investment: Are top competitors spending heavily on marketing, or is their growth organic and viral? If marketing is a key driver, you’ll need to evaluate whether you can match this level of investment.
  5. Community Engagement: Do competitors have large, engaged communities? Strong community engagement can indicate a loyal customer base, and you may need to develop community-building skills if you plan to compete.

Conducting a Competitive Analysis

To conduct a thorough competitive analysis, follow these key steps:

1. Identify Top Competitors

Begin by mapping out the main players in the market. This includes gathering data on their revenue, user base, product offerings, and market presence. Look at their websites, app stores, and public reports to understand their value propositions.

2. Understand Why They Are at the Top

After identifying top competitors, analyze why they are successful. Some methods include:

3. Mapping Competitors in the App or Web Environment

If you are in the app or web market, start by conducting searches using keywords relevant to your business. Use platforms like the Google Play Store, Apple App Store, and Google Search to see who appears in these search results. This can help you identify both direct competitors and adjacent players.

Once you have mapped your competitors, examine the market’s growth trends and concentration of revenue or downloads among major players. This will provide you with a clearer picture of the market’s competitiveness.

5. Feature Table Analysis

A feature table allows you to compare your product’s features with those of competitors. This table helps identify what differentiates your product and what areas might require improvement.

For example, if you identify a feature that only your product offers, assess whether it truly adds value or if there is a reason competitors are not including it. In some cases, what may seem like a competitive advantage could actually work against your business model.

6. Include Failed Competitors

It is equally important to study failed competitors in your analysis. Understanding why a competitor failed can provide key insights into market pitfalls, unmet customer needs, or poor strategic decisions. This can help you avoid similar mistakes.

Using Desk Research for Competitive Insights

If you lack resources for a full user research or discovery phase, desk research can still provide valuable insights. Some tactics include:

Practical Example: Zé Delivery

Let’s use Zé Delivery as an example:

  1. Market Mapping: Zé Delivery is part of the beverage delivery market. By searching for similar apps and services, you can map out competitors like iFood and Rappi.
  2. Revenue Concentration: By analyzing data, you find that a large portion of the market is dominated by a few major players.
  3. Feature Table: Comparing Zé Delivery’s features with competitors, you might find that Zé Delivery has a unique advantage due to its partnership with Ambev, allowing it to offer competitive pricing.
  4. User Sentiment: A desk research into app store reviews might reveal common frustrations users have with delivery time or app usability, providing areas for improvement.

Conclusion

A comprehensive competitive analysis involves more than just identifying who your competitors are; it also requires understanding why they succeed and where they may be vulnerable. By using tools like feature tables, review analysis, and market mapping, businesses can uncover valuable insights to differentiate their products and strategically position themselves in the market.