5 Reasons Why You Should Do Competitive Analysis Before Building A Product

Building something from scratch can be a very daunting task. The number of variables, in terms of product features, prioritizations, the must-have, should have, can have features, development timeline, compliance, design language, etc. Most of these variables have to be in sync to build a product market fit.

Example: If you got a great feature but it's deep hidden somewhere that users can't find it, the feature loses its value and the product loses potential business feature.

If there is a tiny regulation around the product that needed to be taken care of but got missed, the regulators might come on you and impact the brand image.

Many times you are also unsure of the correct tech stack to use, whether the backend should be in python, node, java, Go, or the frontend should be in react, native, flutter, or js, it's on the founder to decide.

Why does the founder need to decide?

Because in high probability, there is no one else in the same.

Doing a competitive analysis comes to the rescue in this scenario. Understanding what companies offer the same or similar service to yours, can help.

1. Helps in defining product hygiene:

A fintech product has a calculator to measure returns on investment. That's not something that a user will be delighted to see. But if it's not there in your app, users will surely complain. Studying what features competitors are offering, can be as minuscule as a slider image, or a button and gauge if it should be there in your product rather than ideating and thinking over the same hygiene features yourself. Identifying current customer pain points:

 2. User Reviews:

Your competitor has a mobile app with 10000 plus downloads and 250 user reviews. These 250 reviews are low-hanging customer feedback about your service. Study customer reviews of competitors, and see what features are being praised, what is being met with not-so-positive responses, and what modules are the customer stressing the most. This helps in identifying the gaps in existing features that you can incorporate into your product to have a small advantage.

3. Customer Journey:

Does your competitor ask for a 2FA to log in to a user? Does he ask for payment and credit card information on signup? Does he provide a chatbot to reply to customers or does he provide a chatbot to engage with the customers 24/7? When the customer logins, what is the first screen he is shown by the competitors?  In high probability, your competitor has put enough thought into the above and many more questions and has accordingly set the user flow and information architecture. Studying competitor's apps help in gaining knowledge about what is the current flow the users are accustomed to and what can be made better. Instead of starting on a bare slate, read through the competing apps and you will slowly be able to build a mental visualization of the product yourself.

4. Tech stack:

Is your competitor hiring JAVA developers for the backend? Or there is some new interesting tech he is using that helps in scaling faster. Now you might not be able to use the same tech stack, but it's something good to know of. Maybe for one of your solutions/product features the stack or tool might come in handy. A question often arises: how do you know what stack the competitor is using? If it's a small team of less than 20 folks, check what profiles they hired for, check on angel.co, LinkedIn etc. By a general sense of logic, the hiring profiles will match the tech stack.

5.  Industry Trends:

Now, let's give some respect to competitors. They have built, probably scaled and are doing business in an industry that you are about to enter. Surely there are some gaps that you are looking to cover in your product or a game changing USP that will blow the minds of everyone. But there’s some competition from the competitors who first built a base for you to bring in your USP. Studying about what all things competitors have done till date, is definitely helpful in adding to your existing concepts.

Sometimes products fail not because they were bad, they fail because the product focused on a local maxima instead of a global maxima of the curve. Prime example: Blockbuster Vs Netflix. Blockbuster wasn't bad, it simply failed to observe where the industry was heading to. It simply kept on focusing on its local inflection point. Had it taken note of what Netflix was doing, it would have gone digital faster and better than Netflix

Conclusion

In ancient times, there was a culture of Guru’s in India. Guru’s were folks who had mastered an art and passed on information to their disciples. The ancient times are gone.  The gurus need more money and have taken the form of your competitors.