Competitive Analysis plays a vital role in product management, helping companies gain a competitive edge in the marketplace. It involves the systematic evaluation of competitors’ products, strategies, strengths, weaknesses, and market positioning. By understanding and analyzing the competition, product managers can make informed decisions, develop effective product strategies, and drive successful product launches.

The above image is from one of my live case studies of a Subway Surfer Hence, as per my experience, the concept of a competitive analysis is highly applicable in the following situations:

1. Highly competitive industries: In industries where competition is fierce, staying ahead requires a deep understanding of your rivals. By conducting competitive analysis, you can identify the strategies and tactics your competitors are employing and find ways to outmanoeuvre them. This is especially important when entering or expanding into a saturated market.
2. Rapidly evolving markets: If you operate in an industry that experiences frequent changes, such as technological advancements or shifting customer preferences, competitive analysis is essential. Keeping a close eye on your competitors helps you adapt to market trends, anticipate customer needs, and respond effectively to emerging challenges and opportunities.
3. Products with low entry barriers: When the barriers to entry are low, there is a higher likelihood of new competitors entering the market. Competitive analysis enables you to monitor the activities of potential and existing rivals, assess their impact on your market position, and adjust your product strategy accordingly.
4. Products susceptible to replication: If your product can be easily copied or imitated, it becomes critical to analyze the competitive landscape. By understanding how your competitors are positioning and promoting their similar offerings, you can develop strategies to protect your market share, differentiate your product, and maintain a competitive advantage.
5. Pricing and value-sensitive markets: In markets where pricing and value play a significant role in customer decision-making, competitive analysis is invaluable. By examining competitors’ pricing models, discounts, and promotions, you can optimize your pricing strategy and identify opportunities to enhance the value proposition of your product.

Here are several ways in which competitive analysis empowers product management:

1. Identifying market opportunities: Competitive analysis helps product managers identify unmet customer needs and market gaps. By examining competitors’ offerings, product managers can uncover opportunities for differentiation and innovation. They can identify areas where the competition is lacking or underserving customers and develop products that address those gaps, providing a unique value proposition.
2. Understanding customer preferences: Studying competitors’ products allows product managers to gain insights into customer preferences and expectations. By analyzing user reviews, feedback, and market trends, product managers can identify features, functionalities, or user experiences that customers value the most. This understanding helps them prioritize product enhancements and focus on delivering superior value to customers.
3. Benchmarking and setting goals: Competitive analysis provides a benchmark for product performance. By comparing their products against competitors, product managers can assess their strengths and weaknesses objectively. They can identify areas where their products excel and areas that need improvement. These insights enable them to set realistic goals for product development and establish performance targets that align with or surpass the competition.
4. Market positioning and differentiation: Understanding the competitive landscape helps product managers position their products effectively. By evaluating competitors’ positioning strategies, messaging, and target markets, product managers can identify unique selling points and develop compelling value propositions. This enables them to differentiate their products and clearly communicate the benefits to customers, gaining a competitive advantage.
5. Pricing and monetization strategies: Competitive analysis also informs pricing and monetization strategies. By studying competitors’ pricing models, product managers can gain insights into market dynamics and customers’ willingness to pay. This knowledge enables them to determine optimal pricing levels, create pricing tiers, or introduce innovative pricing structures that capture additional value. They can also assess the effectiveness of competitors’ monetization strategies and explore new revenue streams for their products.
6. Responding to market changes: Competitive analysis is an ongoing process that helps product managers stay updated on market dynamics and respond to changes effectively. By monitoring competitors’ product launches, feature updates, pricing changes, and marketing campaigns, product managers can adapt their strategies accordingly. They can identify emerging trends, anticipate market shifts, and make informed decisions to maintain or regain their competitive position.