Competitor Analysis. Identifying and establishing criterion of quality
Sometimes business idea grows from a seed of competitor analysis. Likely some people make a decision to have an own business because of inner comparing of the products on market, comparing features, that different companies are preparing for their user.
It is really interesting what exactly drives people to make a business: strengths and obvious profit or some weaknesses and defects, that seems to them being easily improved? And to be extremely honest— we are making competitor analysis every time while we are choosing products in a market. Sure! We are making an analysis of strengths and weaknesses even while we are searching corn flakes for breakfast. And there is no big difference if you are making analysis for yourself to buy a product or you are making a professional competitor analysis for your business — in any case, you should be observational and picking up the details.
When inventing the bicycle is a bad idea
Being a hero is nice. When you face a problem and you find a solution then you are making a road by your own. But also it is a kind of stupidity when someone is losing time for making things that already exist. Competitor analysis can help you to find out what is already implemented and for what people used to. (1) The thing is that user experience of your future users is also their experience of using your competitor product. It`s logical.
Of course, your product is unique and much more different, but till you will turn your idea into reality and your business will start to work — your user is using some stuff right now. You should respect your user and you need to understand their user experience before your product. So the best time for competitive analysis is the very beginning of product life cycle development. What can you learn from it?
- Take the best ideas and solution that already exist
- Avoid the mistake of competitors
- Understand the standard and handling usability in your space
- Get ideas about improving usability
- Realize where is your business now and which direction you can move on
- Understand trends
Before you start
if we are interested it high quality of analysis — identifying your competitor in a right way is one of the most important factors. And to identify them well we can separate them by categories; direct and indirect competitor.
Direct competitor — when your products are the same or very similar. Example: two bakeries with fresh bread.
Indirect competitor — when your product is different but you are solving the same user need. Example: one bakery is selling an ordinary wheat bread, but the second one is selling lavash and pita. Products are different but they are solving the same need of a user.
One more example of direct/indirect competitor: sushi restaurant “A” is a direct competitor of sushi restaurant “B”, but both of them are the indirect competitor of the pizza restaurant.
So, first of all, make two lists — one with direct competitors and the other one with indirect competitors. You will analyze them in a different way. Some of their pros and cons were obtained through interviews and workshops with stakeholders. But deeper understanding always gives us more ideas and tricks that we can use it soon in our business strategy.
How to analyze direct competitor
To compare and to analyze we need to decide what are key UX factors for our business. However factors can be different, so you are free to choose what is more fit to you. It depends on your interest, what area of your business you want to improve. UX consultant Sanita Lustika shows us some UX factors of quality. (2)
Key UX factors:
- Navigation: does it help us to find what we are looking for?
- Calls to action: aren't they annoying? Are they attractive and related to user`s task?
- Content layout: is it easy to scan the content?
- Content hierarchy: is it comfortable to orientate there?
- Readability: analysis of types and sizes, organization of text boxes
- Signposting: is it easy to read the signs? Are they helpful and meaningful?
- Trust and credibility: is it friendly and understandable?
To analyze your direct competitor it is enough to scan according to the criterions and make some notes of mistakes or good ideas. Try to find as many mistakes as you can. Be critical. Try to understand what do users feel when they are using the service. Observe yourself — how it feels to use their product? A good restaurateur eats in other restaurants to find out how is it, to find new ideas, to know trends, to feel the atmosphere.
How to analyze indirect competitor
When everything is clear with direct competitors what we need to do with indirect competitors? What is the benefit to analyze them? And how to choose such?
The indirect competitor is an alternative purchase choice for your customer. If a person wants to quench thirst he or she can choose sparkling water or green tea. In that case, both products are a drinkable but very different category. Exactly solving a user problem — thirst — is making them indirect competitors. When you are analyzing a direct competitor — you deepen your knowledge of the product. But when you are discovering your indirect competitor — you know the market better.
Indirect competitor analysis for better User Experience
What motivates the user to change his mind and prefer another category, another solution for his problem? If we are talking about the indirect competitor — we compare not a product but need. And what is much more important — we are comparing the way of solving a problem what means behavior of our user, his lifestyle, his way of thinking. It is more difficult of course. If we are working on to improve the user experience — indirect competitor is that topic that we should pay more attention to. It is not enough to design better product than our direct competitor has, it should be better designed than the alternative at a market. (3)
Questions for analysis
There are some questions, those can give you more understanding on what exactly you need to put your attention looking on the indirect competitor:
- In which case it is obviously better/worse to use their product?
- Does it take some extra/fewer efforts to use the product?
- Which features you can implement?
- Which mistakes can you assess?
Go on as far as you can. Try to recognize what can you use and involve into your business processes. You will soon see how hilarious numbers of ideas can visit your mind while you are making indirect competitor analysis.
SWOT analysis of competitors
The basic tool to analyze your competitor is SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. The pattern is so good organized that new generation of analytics and marketers are in no hurry to change it. Really, the canvas of SWOT is a perfect tool to recognize, fix, organize and analyze the data about your competitor. The purpose of SWOT analysis can be different, for example:
- to create a marketing action plan
- to reorganize the team
- to discover a problem inside of a company
- to improve the workflow
- to motivate the team
- to find a solution
- to analyze a competitor
And so on. The tool is universal and we will explain to you how to use it especially for competitor analysis. The only difference is to convert the organized data for your future profit. So what should be under your attention for more high-profit conversion of analysis? We will consider each canvas separately.
When you discover competitor`s Strengths :
- Think which of them can you involve to your business and keep your own identity
- Think of strengths of your competitor as boundaries that you should not be lower than they are
- Make its strengths your ordinary characteristic
When you discover competitor's Weaknesses:
- Try to assess them while you turn idea into business
- Find solutions for each of them
- Remember them well and keep in mind as your own
When you discover competitor's Opportunities:
- Think why he did not yet implement them - find an explanation
- Make them real in your business
When you discover competitor's Threats:
- Avoid them
- Discover what your competitor does to avoid them
SWOT is really useful if it is done well. Pay attention to the details and make it together with your team. It is much more efficient and yeah - it gives you more and more opportunities for creativity and problem-solving.
Right now we are preparing a new article about User research, that will consist of tips and tricks for better workflow.
- Conducting a Solid UX Competitive Analysis.Danforth Media. More info here: http://danforth.co/pages/2014/03/01/conducting-a-solid-ux-competitive-analysis/
- UX design - Competitor review. Sanita Lustika. more info here: https://www.slideshare.net/SanitaLustika/competitor-re
- Marketing Competitor Analysis. Aurora Meneghello. more info here: https://interconnectedstrategy.com/marketing-competitor-analysis/