PM has to make a rational decision to make sure that the attempted market for the product is large enough to dive into. There are two approaches to sizing the market. One of them is top-down and another is bottom-up. The top-down approach is calculated by finding the total market and then estimating what your share of the market is. At the same time, bottom-up analysis is done by thinking of current sales of those similar products and then estimating how much of those sales you would be able to capture. Since bottom-up looks at the sales that exist currently in the market, it is a better approach than the top down. Doing market research and competitive analysis, PM can do a feature triage which helps in getting more users or making them happy along with the brand enhancement. For market research, an easy way would be to do a google industry report for X where X is your interested market. Also, another approach would be to look into compete.com and look at the traffic that websites get. Google Adwords used would be another way also along with Twitter and Reddit to find things related to your products.
How to find Competitors?
One of the approaches to finding the competitors is by starting to capture the data of what is out there. For the problem statement or feature, you are trying to solve, check who is already delivering the solution to the market. Others would be channeling the type of users and how they complain about the problem to understand and research on that verbiage to find those potential competitors. Potential places for finding the consumer conversation and competitors would be reddit.com, quora.com, or even Yahoo answers. Once sentence pitches for the products could be a good way to do an internet search for the other competitors.
Categorizing and Understanding Competitors
Once the info about competitors is collected, it can be sorted into direct, indirect, potential competitors, and substitute competitors. Direct competitors are those competitors that are not only going after the same target customers but are also solving the same issue. For example, uber eats and door dash would be the direct competitors; they both provide the food delivery service from the restaurant of your choice. Indirect competitors solve the same problem in different ways and generally for different customer groups. Potential competitors offer similar to the same customer group as yours but they don’t have any products or features as yours. For example: for doordash, Lyft could be the potential competitors. Substitute competitors are those competitors which can solve the same core problems as yours but are not angled to solve the issue you’re approaching. For example, Taco Bell can be a substitute competitor for the authentic Mexican family-style diner.
The following 5 criteria help to better understand the competitors :
How good is the competitor’s product team?
What is the size of the competitor’s user base?
What is the design approach for the competitors’ products?
What is the competitor’s brand?
What are the competitors’ speeds on the delivery of the product?
To monitor the changing competition landscape, PM needs to keep tabs on the competitors. PM should keep track of the following three things :
What is the competitor’s funding? To find the companies funding you can use crunchbase.com
What is the company’s acquisition? You can still use crunchbase.com to check for acquisitions.
Competitors features/product launches. To find more about it, you can use mention.com or google alerts. To make the comparison of the products with that of competitors, we can use a feature table.
Let’s say for a physical product like GoPro, here #1,#2, and #3 could be features or factors like price, video quality, ease of use, design, or aesthetics. Using the features table, we can compare our products to that of others for better market analysis. Using this knowledge can help us develop better intuition about our product idea and the team.
Till next time, happy entrepreneurs!