In the first article of this series, we talked about the importance of data to product management and the role that research plays in a product manager’s life. In case you missed it, here’s a quick summary.

Data is the single source of truth. Product managers mostly lead by influence, not authority which means that, they require stakeholder buy-in to make decisions such as what to build, when, and for whom. Beyond stakeholder engagement, they also need data to validate their assumptions, effectively predict the future and measure the success of their products.

Data-driven PMs are those who consistently pay attention to important information in relation to their markets including their industries, users and competitors. We defined these terms as below:

• Competition refers to companies that provide services or products similar to yours. Your competition serves the same market as you. For example, Paystack and Flutterwave offer similar products within the same markets.
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• Industry refers to a group of companies that offer similar products, solving the same problems. For example, fintech industry provides financial services through technology. Flutterwave, Paystack, Interswitch, and similar companies make up the fintech industry in Nigeria.
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• Users are the people who use your product. There are different categories of users. For instance, for B2C products, your users are also your buyers, while for B2B products, you may have users who aren’t buyers.
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• Market is a combination of the industry and users. Economists define market as a place where value (good and services) are exchanged. Markets are typically categorised by demographics such as geography, age, gender etc., and quantified in relation to the general population. For instance, the Nigerian market.

Now, let’s talk about competition.

First, who is your competitors?

Your competitors are companies that serve the same market as you and offer similar products as you. There are different types of competitors, some more important than others. Not to confuse you, every competitor is important, but depending on factors like your company size, and product stage, and market type, you’ll need to pay attention specific types of competitors more than others.

• Direct Competitors : These are companies that sell the same products as you and serve the same markets. They may have slightly different variations of your product, but their product clearly solves the same problems your does and offer similar value to consumers. These are the companies that first come to mind when you think of your competitors. If you were to draw a 4-Quadrant competitive analysis matrix, they’ll be in the same box as your company. Let’s use food examples because everybody eats right? Labule is a local themed restaurant chain in Lagos, Nigeria. They’re known for their amala (abula). Their direct competition include – Olaiya, Yakoyo, White House, Amala Yahoo etc. These businesses all have similar offerings – they are mid-level restaurants that sell local food as fast food. Some of them position differently, for instance, Labule positions as a spot for the ‘cool’ crowd, some incorporate varieties into their menus, but at the core, they all offer very similar products and serve the same niche.
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• Indirect competitors : These are companies that offer products that solve the same problems but not the same products as you per se. Continuing with the example above, Labule’s indirect customers are other restaurants who don’t necessarily carry the same products (in this case, amala) but they sell food, which solves the problem of feeding hungry people. Examples of Labule’s indirect competitors include Bukka Hut, BlackBell, Chicken Republic etc.
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• Replacement Competitors : These are companies that offer products that can serve as an alternative to yours. Examples of replacement competitors for Labule are healthy food restaurants, food delivery services with no physical locations, etc. The main difference between replacement and indirect competitors is usually in how they solve the problem. Labule’s indirect competitors are basically restaurants with physical locations and varied menus, while their replacement competitors solve the same problem of feeding hungry people by delivering to their homes or feeding a specific niche who have specialised needs.
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• Potential Competitors : These are companies that are not yet your competitors but have the capabilities to offer products similar to yours. They currently exist and serve the same markets as you, but they don’t offer products like yours yet. They have a low barrier of entry. Example of Labule’s potential competitors are grocery stores that sell the raw versions of the food.
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Once you’ve identified your competition, it’s important to figure out your competition strategy. How do you intend to compete?

Michael Porter identified three strategies for achieving competitive advantage – cost leadership, differentiation and segmentation.

• Cost leadership means pursuing the efficiencies of economies of scale with aims of achieving the lowest possible production costs. The end game is to offer your products at the lowest market prices.
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• Differentiation means creating a unique selling point that sets you apart from your competition. Differentiation can be achieved through brand identity, product value and quality, or having an exceptional team. The end game is to create a perception of value to your consumers that transcends the impact of your price.
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• Market segmentation means serving specific niches. You’re building products that solve specialised problems. This can also be thought of as a form of differentiation but focused on a niche market segment.

Here’s a great summary of Porter’s competitive strategy and Five Forces.

Why and when should you research your competition?

Every product aims to succeed by whatever metrics are in line with its defined vision. To succeed, the product needs to have a competitive advantage. Defining your competitive advantage requires you to understand the competitive landscape in the first place. A great framework for evaluating the competitive landscape is Porter’s work on forces driving industry competition. He identified 5 forces that affect competition in any industry –

• Threat of new entrants
• Bargaining of buyers
• Bargaining of suppliers
• Threat of substitutes products
• Rivalry among competitors
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So why should you research your competition? The answer is obvious right? To achieve competitive advantage.

When should you research your competition? Every time!

Whether you fear new entrants in your industry, or economic realities are predicting a shift in bargaining power of buyers and/or suppliers, or you fear the threat of your competitors, keeping tabs on what your competitors are doing is always important.

Every product manager must (yes, must) be a master at analysing their competing products and figuring out how to get a leg up in line with their product and company vision.

How to identify your competitors.

Earlier we mentioned direct competitors are those who jump to mind when you think about your competitors. Beyond these top guys, we’ve identified 5 ways to identify your competitors.

1. Google search. One of the easiest ways to find your competitors is by doing a google search.
2. Actively listening to your customers and prospects will usually give you insights into their alternatives.
3. Use social media. Posts about the problem your product solves will mostly give you ideas of who your competitors are. Checking the social media pages of known competitors will also influence the suggestions that the algorithms show you.
4. Check app stores. App stores will typically show you alternatives for any product you search.
5. Find and leverage existing research.
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For a successful search, you should

1. Put yourself in your customers’ minds. What will they type into the search bar? Think about this from the perspective of the problem they’re looking to solve. For instance, to find Labule’s competitors, you’ll probably type – amala spots in lagos.
2. Do a keyword research. Use Keyword research tools like Google Keyword Planner to find top keywords for your product or industry.
3. Search for your brand or product alternatives. E.g. Labule alternatives, amala alternatives
4. Search for alternatives to your known competitors. E.g. Yakoyo alternatives
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What information about your competitors should you pay attention to?

Without a strategic approach to competitive analysis, you are likely to be overwhelmed with a lot of data. Focusing on every information you come across can be counterproductive. You want to pay close attention to key information that actually contribute to your competitors’ advantage. Remember the purpose of this exercise is to figure what they’re doing better or worse and how you can learn from their mistakes and/or get ahead of them by gaining more of the market share.

Below are 7 key aspects of your competitor you should focus on to help you understand the key contributors to their competitive advantage.

1. Their vision. A company’s or product’s vision tells you where they’re going, what problems they’re trying to solve, how they measure success and how they want their customers to perceive them.
2. Their USP. A product’s unique selling point is that thing that makes it valuable. Understand how their customers value them by analysing their USP. Understand how they want their customers to perceive them by how they craft their USP.
3. Their brand identity. The value of a brand contributes largely to the rate of adoption of their products. If your competitor has high brand equity, chances are they require less effort to gain more market share.
4. Their SWOT. What are their strengths and weaknesses? What opportunities and threats affect them. You’ll be surprised at how these will differ by company even though you’re in the same industry and serve the same markets.
5. Their team. This is usually covered in SWOT, but we’ve called it out because it needs special focus. Teams make or break products and organisations. Pay attention to the people they hire – their past experiences, their successes and failures.
6. Their infrastructure. In the case of tech products, your competitors’ technology stack is one of the most important aspects to evaluate them on. Their ability to out-build you is dependent on their infrastructure and their team. Learn what they have and how they use it!
7. Their customers. Users are the single source of truth for any product. Find out what their customers say about the product. Check reviews. They almost never lie (except when they’re doctored 🤣).
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How to find information about your competitors.

There are several sources for finding information about these 7 key aspects of your competitors we highlighted above.

• Company websites.
• Product reviews.
• Customer feedback.
• News
• Marketing channels

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The next instalment of this series will explore

• more on finding information about competitors
• tools and methods for effective competitive analysis (also called competition research),
• purpose driven competition research and ideal templates and techniques for specific outcomes,
• converting the data into strategy

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