How to use a competitive market analysis to prioritize features (2023)

Product managers know that prioritization never stops. It's something they need to master at every stage of a product's lifecycle. Prioritization begins with deciding which features to build for an MVP during the product launch phase. Then it becomes a crucial process when the product decides to scale and grow by going beyond the basics and must-haves.

But prioritization doesn't start with frameworks, methodologies, or sticky notes on a wall — it starts with solid qualitative research that signals product managers to solve the right problems. It starts with great user research, a solid product strategy, and a vision that both your customers and your internal teams can cheer on.

Part of this qualitative prioritization is the analysis of your market position using a feature analysis of the competition.

[PODCAST]Find out why Ripple's Asheesh Birlasays that understanding new competitors and an industry's changing landscape is critical to developing product features.

What is a competitive market analysis?

This type of analysis goes beyond simply evaluating which of your competitors have the features you want to develop. The point is to quantify the value of these traits based onhow they help you differentiate your product from the competition.

By seeing what features competitors are building and how well they are building them, you can learn what counts as highly relevant and loveable features.

If you don't differentiate your product features, you don't give potential customers much of an incentive to use your product over a competitor's. You'll also lose sight of the unique customer problems you're trying to solve -- and your users will notice and jump off as soon as they realize your product is no longer trying to solve their unique problems.

A competitive analysis + customer interviews will help you make more informed product decisions.Product planning begins with surveying users.

Why Conduct a Competitive Market Analysis for a Product Feature?

Looking at how your competitors are approaching a feature (or how they're not) will help your sales and marketing teams sell your product by enabling them to clearly articulate how your product is better than the competition is. It's your job to help them keep track of how you win/lose.

Business-savvy PMs often create short, ready-to-sell documents (battle cards) for their sales teams to outline a competitor's product information, strategy, and value proposition that can be used in selling (or "bugging") against competitors.

Second, conducting a competitive analysis will help you make decisions to differentiate your overall product and stay competitive. In this case, "different" means that a similar function is provided in a way that is better for your users. Depending on the product and users, this can mean providing a more seamless user experience, addressing an underserved need, or something else entirely.

For example, both Google Local Guides and Yelp run off business reviews and both have a "request a review" feature to encourage users to leave more reviews, but each delivers this differently. Both Google and Yelp send push notifications to your phone, but the notifications are triggered by different actions.

Google prompts you to leave a review after you've searched for a business and your phone's GPS coordinates confirm you've visited the place. Yelp requires you to "check in" at the location before the app sends you a "How was Business X?" prompt. In fact, in the user's journey, Yelp creates an extra step that a user might not otherwise take (to check in), while Google follows the natural actions a user takes (search for a store location and then visit the store) before looking for it asks A review.

The winner of this feature battle is the one with the better user experience. Google's GPS capabilities don't disrupt natural user flow, while Yelp lacks the technology to prompt users at the right time.

That's just one trait, but it shows how well you differentiate your traits, how endearing your product is, and ultimately how well your product is performing in the marketplace. AccordinglyBrightLocal, Google consistently outperforms its competitors in this area, as shown below.

How to do a competitive market analysis for a product feature

Use a spreadsheet or competitor analysis tool such asGet the appto house your insights. If you're just starting out, don't worry about including every single one of your competitors. Look at three to five direct competitors, i.e. H. Companies offering a similar product to cater to a similar group of users.

Below are some examples of how you might want to organize your competitor research, but you don't have to use the same format (slide decks are common and can also be easily shared). The types of information you collect depend on your product and market.

Imagine you are a PM for a navigation/mapping platform - your main competitors are Google Maps, Waze (now owned by Google) and Apple Maps. They want to introduce a feature that allows users to report incidents on the road (road closures, accidents, police, etc.)

This product competes with other free products, but you should also compare the pricing information. Notice how your competitors are marketing their product/feature and use their tone/language to try to identify the target audience they're hoping to attract.

Determine how you win/lose against your competitors. Is your feature missing important or appealing functionality that it provides? If so, knowing your strengths and weaknesses before you start development will help you not only shape the product but also your sales and marketing messages.

Example competitive market analysis

Direct Competitors: An Overall Product Comparison

Below, in this product feature competitive analysis, a single feature is considered in more detail.

Test your competitor's feature by signing up for a free trial, then note all the ways their feature works. Your analysis headers depend on what feature needs you think are most important to your users. In incident reporting, this includes how you display the incident to the user, how users report incidents on the go, and the options for different types of incidents, so the example below compares these elements to your three main direct competitors in your dummy product Feature Competitive Analysis- matrix below.

To add context for your teammates, since they're not all testing your competitor's feature the same way you do, you might even want to capture GIFs of the feature in action and add them to your analysis.

Some PMs will add a rating of the feature out of 5 from the lens of how useful it might be for their own target users.

Direct Competitors: A comparison of a single product feature

If one of your top competitors doesn't offer your proposed feature, does they have a workaround to accomplish the same task? If you can't find any competitors that have this feature, congratulations - you may have stumbled upon an amazing product idea for an underserved or totally untapped segment of the market. The disappointing alternative could also mean that your competitors have done some research and concluded that there is no customer demand for the feature.

When testing your competitor's functionality, pay special attention to use cases that may not be considered in your own space. Gaps in their function can point to opportunities in your product, and it's okay to take inspiration from what your competitors have produced—as long as your product outperforms them.

You should also be aware of how your competitors are marketing their feature and product overall. In the example above, Google uses phrases like "discover the world" to offer users an experience and not a product. Google Maps highlights some of its unique features, including being available on multiple devices. Waze, on the other hand, markets itself much more straightforwardly and emphasizes that the app is "community-based". Each product's marketing copy signals you who their target users are, as well as the features they think are most important to them. Identify your own key differentiators and sell the crap out of them.

Finally, it's important to keep track of your competitors' key acquisitions, additional funding, patents, or product launches. Setting up Google notifications is a quick and easy way to make sure you don't miss a thing.

What insights can you draw from a competitive market analysis?

After all this research, there are several ways you can use this information both internally and externally.

For the product team:

Share your analysis with your product team and decide which functional components are important to your team and which aren't. It's okay to exclude features that aren't relevant to your target user, even if they're useful to a different demographic. Your target user's use cases will matter more than one super feature that can do it all.

In cases where a single feature will be the key selling point and differentiator for your product, continue to invest in and build on that feature to ensure it is the best area of ​​your product.

For sales and marketing:

Product messaging and positioning are just as important as what you build because you need to market and sell it. Outside of your product team, your insights should be shared as short, sellable documents. Arm your sales team with quick layoffs — the three most important things to know when discussing a competitor — to have more productive conversations with customers. (e.g. Product X has a clunky user experience, is the most expensive product on the market, and has no incident reports.)

Let your marketing team know how your competitors are talking about their product/features and let them decide how to highlight your own unique value proposition - whether it's one feature or multiple that sets you apart. Remember that your feature is only part of your product and should make your product stand out as a whole. It's your product that wins out over your competitors, not just a single feature.

In the hands of your marketing team, your competitive analysis can also be repackaged into a buyer's guide that can be used as a lead generation tool. This information also helps them to highlight your key differentiators by selling the basic functionalities that your customers expect as well as the unique benefits your product offers, which you now know after completing your product feature competitive analysis.

Ready to start planning your feature? Try our ready-to-use productRoadmap Template.

Our guide to prioritization

We know good PMs are always looking for ways to improve their product prioritization process. That's why we created a guide for PMs who are always looking for actionable ways to change their approach to idea management and product prioritization. Check out the other chapters below.

1. 7 Product Prioritization Frameworks for Product Managers
2. Tips for improving your idea management process
3. How to avoid common pitfalls when prioritizing product residues
4. How to make your product prioritization more data-driven
5. Prioritize features with weighted and unweighted scorecards