04009 Competitive Analysis: Ready When They Are

Competitive analysis is a vital function at a company, especially in the fast changing software industry. Yet it is an activity that is often neglected or haphazard.

Usually, gathering competitive intelligence doesn’t fall squarely in the camp of one department. In fact, like product management itself, ultimate responsibility for competitive analysis may be found in different departments at different companies.

Like many functions that don’t fall consistently into one department or another, competitive intelligence often becomes the responsibility of Product Managers. Product Managers, because of the scope of their jobs, which span sales, marketing, development, and management, make good point people for gathering information on competitors to meet different needs in multiple departments.

Gathering competitive intelligence is like being a scout for an army. You may take some secretive and unexpected pathways in order to spy on the other side and report on its forces and their movements. If your company doesn’t have a good idea of the current and expected moves by the competition, it risks losing sales and market share.

Read on for guidance on gathering competitive intelligence so that when the competition makes a move, your company is ready when they are to counter them effectively.


Spying and Lying

A quick note before we begin this discussion. This is a time when many people are particularly sensitive about ethical behavior in business – since it appears that so many people have been so very insensitive about it recently. Gathering intelligence on competitors can feel a lot like spying. Companies frequently gather information by using non-employees to pose as prospects with their competitors, or by interviewing disgruntled ex-employees.

You need to consider possible ways of obtaining information and determine ahead of time whether you find them acceptable. This way you’ll be prepared when you find yourself called to do something you don’t feel completely comfortable with, as will likely happen.

Understand the End to Understand the Means

Competitive analysis covers a huge scope of information that could be gathered. Different types of information are useful for different purposes. And there isn’t enough time to gather all the information out there. Therefore, it’s important to clearly define why you want information on a competitor, so that you can determine what to look for.

For example, three major uses for competitive intelligence are:

  1. to sell better against the competition;
  2. to determine how your product features compare to the market; and
  3. to identify products and companies to purchase or be purchased by.

If you don’t clearly define the end you have in mind, you can waste lots of time finding and communicating information of little value.

Competitive Analysis For Sales

When gathering information for your sales reps to use against your competition, focus on each competitor’s strengths and weaknesses. While it’s tempting to discount competitors’ strengths and your weaknesses, the first step is to objectively recognize the good and the bad of each player.

Strengths and weaknesses can relate to product features, scalability and performance, financial stability of the company, the management team, the customer base, and ability to deliver services.

For every competitor, list each strength or weakness along with a message that the sales rep can provide either to undermine a strength or take advantage of a weakness.

Competitive Analysis For Feature Leadership

A second common reason to analyze the competition is to determine how your product’s features compare to competing products. You do this in order to select and prioritize features to add to the product so it will sell better against the competition.

For this exercise, start by compiling a list of all functional areas addressed by your competitors. If at least one competitor provides features in a functional area, include it.

Also include major functional areas that the market is talking about as appealing extensions to the current selection of products.

Create a table that lists features along one side and competitors along the other. Then color each cell in the table to represent how good a product is at addressing that functional area. If a product doesn’t handle the area, leave the cell blank. Otherwise, provide three colors (such as light blue, blue, and navy blue) to represent three levels of functionality: weak, acceptable, and strong.

Remember that “acceptable” is a relative term. In order to determine what “acceptable” means, look for the average level of functionality in the group of competitors. This level is what is taken for granted by prospects evaluating your product and its competitors.

The resulting color-coded table can show you very clearly where your feature strengths are and which areas need the most improvement. It also tells you which areas to improve in order to compete better against a specific product.

Competitive Analysis For M&A

The focus for competitive analysis of M&A (merger and acquisition) purposes is on a company as a whole: its size, health, customer base, functional and technical fit with your product, and goals.

This type of information involves the most informal data of the three. It includes snippets gathered during off-the-cuff conversations with prospects, research analysts, and competitors themselves. The goal is to have a reasonably good idea of a competitor’s value as a prospective purchase or acquirer, before an executive from your company approaches them to explore a potential deal.

Three Levels of Information

There are three levels of information gathered for competitive analysis: information, analysis, and predictions.

Information is the simple gathering of equivalent facts for each competitor so that you can make an apples-to-apples comparison. This can be provided in summaries for each competitor that all follow the same format and provide the same information such as annual sales, number of employees, product name, and strategic partners.

Analysis takes the information gathered and provides comparison, conclusions, and recommendations. For example, analysis will point out that a company is financially unstable and that your sales reps should exploit this vulnerability.

Predictions look at the information and analysis and make educated guesses about a competitor’s next moves. Predictions are nothing more than educated guesses, but by regularly making predictions and then reviewing them for accuracy later, you will hone your skills at this.

Predicting the Next Move

When you are able to predict likely next moves of a competitor, the company can take action, or be ready to take action, to minimize the risk from those moves.

Armed with a list of predictions, your management team can decide how to respond to each predicted event if it happens to come true. A final piece of competitive analysis may be to provide specific recommendations to counter predicted moves.

Pre-Emptive Strike

When your company faces potential moves by competitors which would be very harmful, it may be worth a pre-emptive move of your own. This could involve acquiring a company or product that is an acquisition candidate for the competitor. Or it may be simpler, such as a change to product positioning, sales messages, or product capabilities to counter a move when (or if) it occurs.

Getting the Information to the Troops

Finally, one of the challenges of competitive analysis in the past has been the difficulty of getting valuable competitive intelligence and analysis into the hands of all the teammates who could benefit from it. Fortunately, with intranets, you can post this information in a convenient, centralized location.

Having competitive selling information available to all the sales reps, for example, leads to more intelligence from the reps, who see that what they contribute is put to good use.

Next: Tactics and Techniques

Competitive analysis is a big topic involving a good deal more than what has been covered here. A future issue will cover tactics and techniques for gathering intelligence on your competition.

— Jacques Murphy, Product Management Challenges


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