Chapter 6

How to use a competitive market analysis to prioritize product features


Product managers know that prioritization never stops. It’s something they have to know how to do throughout every phase of a product’s lifecycle. Prioritization starts with deciding what features to build for an MVP during the introduction phase of the product. Then it becomes a pivotal process when the product decides to scale and grow by going beyond the basics and must-haves.

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

Part of that qualitative prioritization involves analyzing your market position using a feature competitive analysis.

What is a competitive market analysis?

This type of analysis goes beyond just assessing which of your competitors have the features you’re interested in building. The point is to quantify the value of those features based on how they’ll help you differentiate your product from that competition.

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

When you don’t differentiate your product features, you’re not providing much of an incentive for potential customers to use your product over a competitor’s. You also lose sight of the unique customer problems you’re trying to solve—and your users will notice and jump ship once they realize your product is no longer trying to solve their unique problems.

A competitive analysis + customer conversations will help you make more informed product decisions. Product planning starts with interviewing users.
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Why conduct a competitive market analysis for a product feature?

Looking at how your competitors are tackling a feature (or how they aren't) will help your sales and marketing teams sell your product, by equipping them to clearly articulate how your product is better than the competition. It’s your job to help them stay up to date on how you win/lose.

Business-savvy PMs often create short, sales-ready documents (battle cards) for their sales teams to outline a competitor’s product information, strategy and value propositions to use when selling (or “in battle”) against competitors.

Secondly, performing a competitor analysis will help you make decisions to differentiate your entire product and stay competitive. In this case, “different” means providing a similar feature in a way that is better for your users. This can mean serving up a more seamless user experience, or meeting an underserved need, or something entirely different, depending on your product and users.

As an example, both Google Local Guides and Yelp run off of 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 your phone push notifications, but the notifications are triggered by different actions.

Google will ask you to leave a rating after you’ve searched for a business and your phone’s GPS coordinates confirm you’ve visited the location. On Yelp, you have to “check in” to the location before the app sends you a “How was Business X?” prompt. In the user’s journey, Yelp actually creates an added step that a user might not otherwise take (to check in), whereas Google follows the natural actions that a user takes (search for a business location and then visit the business), before asking for a review.

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

That’s just one feature, but it shows how well you differentiate your features will determine how loveable your product is, and ultimately how well your product performs in the market. According to BrightLocal, Google consistently outperforms its competitors in this area, as shown below.

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How to do a competitive market analysis for a product feature

Use a spreadsheet or a competitor analysis tool like GetApp to house your findings. If you’re just starting out, don’t worry about including every single one of your competitors. Look at three to five direct competitors, which are companies that offer a similar product to serve a similar group of users.

Below are a few 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 also easily shareable). The types of information you collect will depend on your product and your market.

Imagine you’re a PM for a navigation/mapping platform—your main competitors are Google Maps, Waze (which is now owned by Google) and Apple Maps. You want to introduce a feature that will allow users to submit incidents on the road (road closures, accidents, police, etc.)

This product competes against other free ones, but you’ll also want to compare pricing information. Take note of how your competitors market their product/feature, and try to identify the demographic they hope to attract by their tone/language.

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

Competitive market analysis example

Direct Competitors: A comparison of the overall product

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Below, this product feature competitive analysis takes a closer look at a single feature.

Test out your competitor’s feature by signing up for a free trial, and then note all the ways that their feature operates. Your analysis’ headers will depend on which feature requirements you think are most important for your users. For incident reporting, that includes how you’ll display the incident to the user, how users submit incidents on the road and the options for different kinds of incidents, so the example below compares these items among your top three direct competitors in your mock 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 are, you might even want to record gifs of the feature in action and append it into your analysis.

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

Direct Competitors: A comparison of a single product feature
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If one of your top competitors doesn’t offer your proposed feature, do they have a workaround solution to accomplish the same task? If you can’t find competitors who have this feature, congratulations—you may have stumbled upon an amazing product idea for an underserved or completely untapped segment of the market. The disappointing alternative could also mean that your competitors have done their research and concluded there’s no customer demand for the feature.

When you’re testing your competitor’s feature, pay special attention to use cases that might be out of scope in your own. Gaps in their feature can point to opportunities in your product, and it’s okay to be inspired by what your competitors have produced—as long as your product leapfrogs them.

You’ll also want to take note of how your competitors are marketing their feature and their product as a whole. In the example above, Google uses phrases like “discover the world,” to offer an experience to users, rather than a product. Google Maps goes on to highlight several of its unique features, including how it’s available on multiple devices. Waze, on the other hand, markets itself in a much more straightforward way and emphasizes that the app is “community-based.” Each product’s marketing copy will signal to you who their target users are, as well as the features they consider most important for them. Identify your own key differentiators and sell the crap out of them.

Lastly, it’s important to keep tabs on your competitor’s major acquisitions, extra funding, patents, or product launches. Setting up Google alerts is a quick and easy way to ensure that you never miss a thing.

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What insights can you extract from a competitive market analysis?

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

For the product team:

Within your product team, share your analysis and decide on the feature components that are important for your team to build, and which ones aren’t. It’s okay to exclude functionality that won’t be relevant for your target user, even if it’ll be useful to another demographic. Your target user’s use cases will be more important than having a super feature that can do everything.

In cases where a single feature is going to be the key selling point and differentiator for your product, keep investing in and building out that feature to ensure that it’s 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 learnings should be shared as short, sales-ready documents. Arm your sales team with quick dismisses—the top three things to know when talking about a competitor—to have more productive conversations with customers. (e.g. Product X is has a clunky user experience, is the market’s most expensive product and doesn’t have incident reporting.)

Let your marketing team know how your competitors are talking about their product/features and let them decide how they can highlight your own unique value proposition—whether it’s one feature or multiple ones that set you apart. Remember that your feature is only one part of your product and should elevate your product as a whole. It’s your product that is being stacked up against your competitors, not just a single feature.

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

Ready to start planning out your feature? Try our ready-to-use product roadmap template.

Our guide to prioritization

We know good PMs are always looking for ways to improve their product prioritization process. So we created a guide for those PMs who are always on the lookout 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 product backlog prioritization pitfalls
  4. How to make your product prioritization more data-driven
  5. How to prioritize features using weighted and unweighted scorecards

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