The success of a new product is critically dependent on whether there is a market for it.
Each year, about 30,000 new products become available to consumers — and an estimated 95 percent of those new products fail.
Understanding which products succeed (and why!) is therefore as essential to the product development process as a strong, market-driven product idea — which is where competitive analysis comes in.
What is Competitive Analysis?
An inherently powerful tool, competitive analysis for product development comes down to researching the key players in your space to gain insight into how they operate, the ways they are meeting market demand, where they are winning and losing — and then determining how you can best position your development process by using this data to your advantage.
Benefits of Competitive Analysis in Product Development
Effective competitive analysis can make or break the launch of a new product because it allows you to uncover your competitors’ strategies and prepare your business to defend against competitive threats in the market after launch. Further, for a product to do well on the market, you must give your audience a reason to choose it over similar items.
Product-based market research allows you to:
- Identify market trends. The data collected in a competitive product analysis can help forecast future market trends to ensure your product stays on top during shifts.
- Understand competitors’ strengths and weaknesses. Knowing where your competitors are weak can help you avoid what does not work and in turn build a better product design overall. This also applies when developing your marketing strategies.
- Optimize your product design for the customer experience. Understanding any potential problems that exist in the target market for similar products allows you to adjust your brands in order to create more effective solutions.
- Answer key competitive questions. What products do they produce, and what is their overall success rate? How do they rank in the market? What are their strengths, and where do they fall short? Where are the opportunities for your brand and product(s) to gain an advantage?
Methods and Tools for Competitive Product Analysis
Various methods can help you conduct a thorough analysis. While all the methods below can be completed with ease and efficiency through a market insights solution like TraQline, let us break down three different concepts: market research, SWOT analyses, and competitor benchmarking.
Market Research for Product Development
When you are diving into new product development, market research is critical in helping identify opportunities and determine whether the market can support your product concept.
As a quick overview, you can break down market research into four categories:
- Quantitative – Focuses on what is measurable, such as how many people would be interested in the product and the average amount they might be willing to spend
- Qualitative – Takes the quantitative numbers and gives them meaning. Why would consumers buy this product?
- Primary – Analyzes raw data directly from customers
- Secondary – Analyzes existing data from the market and competitors
One of the most challenging parts of market research is knowing how to collect data. What tools will you use for primary research? Surveys, questionnaires, or focus groups are some options. You can also look at social media comments and read reviews for secondary research.
Today, there are plenty of technology-based tools that package and deliver market research data into digestible and interactive dashboards for product developers and other business functions. These tools, like TraQline, all have proven methods of collecting and analyzing this data — methodically taking the guesswork out of deciphering the market.
SWOT Analysis: Better Understand Competitor Products
A strong SWOT analysis will give you an overview of how your product compares to others on the market.
SWOT is an acronym for strengths, weaknesses, opportunities, and threats. It is a type of market research that involves building a framework to evaluate your competitive position using a fact-based, data-driven system. A SWOT analysis consists of a four-quadrant table. Each quadrant represents an element of the analysis.
When reviewing each element, consider both internal and external factors. Internal factors might include operational efficiencies. External factors might include supply issues and market changes.
Questions you should ask during a SWOT analysis include:
- Strengths – What are the differences between our product and others? In what way is our product superior?
- Weaknesses – What is the competition doing better? Where do we need to strengthen our products, strategy, or pricing?
- Opportunities – Are there demographics we are missing when considering product development? Are there features that are on the rise that we have yet to implement?
- Threats– Is the market too saturated for this type of product? Does a particular competitor have an impenetrable hold on one segment of the market?
Competitor benchmarking involves comparing your product with other offerings on the market and is an integral extension of any market research or SWOT analysis. You will take a closer look at the competition to evaluate their business and product development strategies and determine how their approaches are better or worse than yours.
When benchmarking, you want to answer key questions, such as:
- What does their product offer consumers?
- How much does their product cost?
- What is the current market share?
You’ll also want to complete informative tasks, such as:
- Compare the top similar products and note any differences between them. What does one do that the other doesn’t?
- Research the top brands to see if consumers trust them and why.
- Look at the marketing for top-selling products. What has been effective? What isn’t working?
- What features might you add to your product that consumers need?
- How often do the brands update their products?
TraQline Market Insights Solutions: Your Answer to Actionable & Streamlined Competitive Analysis
Without conducting a competitive product analysis, you run the risk of launching a new product that fails to meet consumer demand or deliver any market advantage for your business.
If you’re in the consumer durables space, you can tackle competitive analysis with ease and efficiency with TraQline at your fingertips. Our market insights solutions are designed to give you a clear and comprehensive view of your market — helping you better understand your competitors’ product strategies so you can be better positioned to improve yours.
Get the data you need to increase your competitive advantage, find new opportunities, and build products that align with market demand.