Competition Analysis
You will deep dive into the competitive landscape to understand how your competition is currently winning, how competitors are succeeding (or failing) and how your own internal organization can be potentially altered to either mimic or better the structure of best-in-class competitors
In this training, you will
- Develop a deep, accurate and precise understanding of your competition.
- Learn how to use secondary research to generally understand your competition.
- Learn how to use qualitative and quantitative research to precisely understand your competition.
- Learn how to use qualitative and quantitative research to precisely understand your competitor’s customer.
- Identify the type of competitors you are facing and their respective capabilities, strengths and weaknesses.
- Determine in which markets your solution will operate so that you can effectively analyze the market in the next step.
Skills that will be explored
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The Task
The tasks laid out in this article will tell you who your competitors are, what they are doing, how they are doing it, and what effect it will have on your business. Armed with that knowledge, it’s up to you to decide what to do about it.
Note: Analyzing competitors is a long and tedious process. You may wish to augment your team with third-party support. For the cost-conscious: interns are excellent resources for this work. If not interns, UpWork, TopTal, and Catalant offer less-expensive on-demand solutions. As always, the HowDo team and I are here to help you, contact us today. Whichever way you choose, third-party support offers the additional benefit of removing bias from competitor analysis.
The Three Types of Competitor
There are three types of competitors to profile:
- Traditional: These are the most obvious competitors. Consequently, they should form the baseline for analysis. Consider this the low watermark—you have to, at least, better your traditional competition to stay above water in the eyes of the customer.
- Emerging: These are potential sources of disintermediation in your relationship with your customer. You need to understand your customer’s interplay with the solutions of emerging competitors.
- New Market Entrants: Think AirBnB year 2, or Amazon year 4, or Facebook year 3. All of these players were known—or could have been known—to anyone paying attention to venture capitalist chatter. However, as Clayton Christensen so aptly points out, “Disruption” often happens at the bottom of the market, where big businesses do not see an opportunity.
Profiling Your Competitors
This guide will help you to answer the followingquestions regarding your competition:
- What products and services do your competitors offer? In the eyes of your customer, in which of these areas do they excel?
- What permissions are your customers giving your competition? You need to have the same permissions if you are going to effectively compete.
- Has a competitor recently engaged in an acquisition or partnership?
- What is the makeup and structure of your competitor’s team?
- Who is your competitor hiring? Why?
- What processes does your competitor use?
- Who are your competitor’s existing and future customers?
- How do your competitors measure success?
- Is their market share or deal frequency increasing?
- Do your competitor’s customers share a demographic, income, or profile with your customers?
The answers to these questions give you a profile of your competitors—a persona. With that persona, you can clearly see how they operate today, and what they may do tomorrow. While you cannot ever predict the future, the better informed you are through data and information, the better your business decisions will be.
Here is a summary of the step-by-step process (add link)
- Identify competitors
- Identify key competitor offerings
- Investigate competitor operations
- Identify your competitor’s customers
- Conduct a deep dive on high-priority competitors
- Share
Deliverables
Your competitor analysis will produce the following four documents:
- A Competitor Research Data Document
- A Competitor Research Narrative
- A List of competitors, cut by classification
- A Competitor Product Matrix
Step 1. Identify Your Competitors
The first step in identifying your competitors is to brainstorm with your process team.Most likely, the most obvious competitors are your traditional competition.
Some of your team may not agree on a competitor, which indicates danger. Almost always, something deemed “not really a competitor” should be included as competition.
Your customer data, which should include competitors identified by your customers, will reveal your emerging competition.
New market entrants can be identified by research and from the sources listed below. Categorize them according to function.
- Pitchbook
- CBinsights
- Crunchbase
- F6
- Incubator cohorts
- NSF startup grant recipients
- VC portfoliosSequoia
Note: It is important to categorize new market entrants by function because many will only affect a single aspect of your business. For example, a competitor may be preventing you from obtaining customer feedback or tracking supply chain errors. The point here is that what may seem to be a small component can quickly grow into a wedge between your firm’s data, you, and the customer experience. You need to identify that component and remove it early. Also, do not forget international competitors.
Deliverables
This first step will give you a list of your traditional competitors categorized by function. This step will also provide you with a list of new market entrants also categorized by function. Lastly, your customer data will tell you who your customers consider to be your competitors..
Note: Competitors identified by your customers are key data and should be clearly marked.
Step 2. Identify Your Competitor’s Offerings
This step is research-intensive. Below are the key data you need for each competitor.
- What products and services do they offer? For each product or service, find out the following:
- Pricing
- Features
- Market penetration
- Marketshare
- Growth rate
- Product history
- Has your competitor engaged in any acquisitions or partnerships in the past 10 years?
Deliverables
Step 2 delivers a competitor product matrix. The data on your competitor’s products will be compared with your own products to identify what your products and your company lacks now and might need to develop in the future. The next step, however, is integral to the analysis.
Step 3. Identify Your Competitors’ Operations
You won’t fully understand competitors products without understanding how your competitor operates. This step will provide that information and help you to predict your competitor’s future movements.
Below are the key data to gather.
- What is the makeup of your competitor’s teams? Consider the following factors:Size
- Education
- Function
- Management ratio
- Who are your competitors looking to hire?
Note: This information can signal the direction your competition is heading. You should track who your competitor hires using sites such as GitHub, Twitter, Medium, LinkedIn, Facebook. These sites can provide insights into what these personnel may have been hired to do.
- What processes do your competitors use?
- Agile, waterfall, two-pizza teams, etc.
- What is the structure of their organization?
- Where do competing products and services exist within the structure?
- How does your competitor measure success?
- For example, objectives and key results (OKRs) vs. key performance indicators (KPIs)
Key resources for this data are social media pages, quarterly statements, 10-Ks, and press releases.
Note: GitHub, Medium, Twitter, and LinkedIn profiles can tell you a lot about your competitor’s teams’ proficiency with different technologies. Read every quarterly statement and press release for the past two years.
Deliverables
In Step 3, you develop a summary of your competitor’s operations, team proficiency, and possible future strategies. Forewarned is forearmed.
Step 4. Identify Your Competitor’s Customers
This is the most important step when assessing your competitors. All action you take must be based on the customer, and the customer will let you know which competitors to pay the most attention to.
For Step 4, refer to the guide “Building Customer Focus.” This guide outlines the steps to identify your own existing customers and your future customers. Follow the steps in this guide to identify your competitor’s customers.
Deliverables
In Step 4, you will identify your competitor’s current and potential customers. This data can be compared with your own customer data to help guide your strategy.
Step 5. Conduct a Deep Dive on High-priority Competitors
For most organizations, it will be nearly impossible to do a full breakdown on every competitor. Based on the information gathered above, your team must determine which competitors warrant the time and capital, and then perform exhaustive research.
You need to know as much as you can about your high-priority competitors, but here are key data to gather.
- Is the company’s market share rapidly increasing?
- Has the company’s deal frequency been increasing?
- Do the company’s customers share a demographic profile with your customers? For example, similar income.
- Are customers citing similar reasons for leaving your product?
- What permissions [add link] are your customers giving your competition? You need to have the same permissions if you are actually going to effectively compete.
Suggested resources for deep dives.
- Buy research reports from investment banks (or use leverage with your investors to gain access to these reports).
- Conduct bespoke, in-depth research yourself with services like GLG, DMM, and AlphaSights. The best way to extract information is to use single-blind interviews, remain anonymous, and feign ignorance in the entire sector, solution, product, and customer base. It also helps to have a cadre of people in the room scribbling notes, sounding awed, and providing consistent, complimentary feedback. This creates an environment in which the interviewee chooses to divulge the most relevant information.
- If you’re really desperate for data: setup interviews with marquee talent and have them explain their roles in detail. If they rock, hire them!
Note: While information networks such as GLG, DMM, and AlphaSights are a great source of competitive information for your strategy, your company should institute a policy banning your current employees from these platforms. Your employees may be tempted to leak your information to curious bidders. If you have clogged this hole, bravo! However, the bidders will wait until your employees quit and then harvest your business intelligence for a small fee.
Deliverables
This step, while capital-intensive will provide a Competitor Research Data Document and a Competitor Research Narrative.
These documents represent all you need to know to decide which marquee competitor you want to focus on. There may be a vast array of threats. However, you must prioritize.
Amazon
Amazon is the ultimate representation of the new breed of companies. This company, which started off selling books, has been able to consistently expand into new markets and optimize user journeys. We’ve collected facts and figures that outline how this consumer-centered giant has grown to what it is today. To review Amazon’s company profile, click here.
Apple
Apple has led the hardware market for years. Their product design and proprietary ecosystem has secured them margins seen only in luxury markets with the reach of a consumer product brand. We’ve collected facts and figures to help you understand how they’ve gained this power over the consumer. To review Apple’s company profile, click here.
Facebook
Facebook, with 2+ billion monthly active users, is the largest social media site of all time. This young company, founded in 2004, leverages their network to sell advertising and has cemented its role as Google’s counterpart in the digital advertising “duopoly.” We’ve outlined facts and figures to help you understand how this young company has gotten to where it is today. To review Facebook’s company profile, click here.
Google
Google has developed an amazing business while becoming the infrastructure for the web. The company pulls in ~110 billion dollars in revenue without selling a physical product. We’ve collected facts and figures surrounding Alphabet’s business to help you understand this giant. To review Google’s company profile, click here.
Microsoft
Microsoft has been a market leader for 40 years. Although once more dominant, Microsoft is still a keystone in the digital and internet economy. We’ve collected research to better explain Microsoft’s past and current power. To review Microsoft’s company profile, click here.