How to perform Competitive Research

Competitive research is a core skill that most product managers misunderstand. The trap is focusing on features and trying to out-feature your competitors. You cannot win a feature war because for every feature you have that they don’t, they have one you don’t. Instead, the actual job is to understand your competitive positioning at a deeper level — how your product delivers value differently, how your market dynamics shape your strategy, and how you can build sustainable differentiation.

This lesson teaches you how to think beyond features. It centers your analysis on the customer’s situation and the business impact — not just product specs.

Competition influences markets in five dimensions

Michael Porter’s Five Forces is the classic framework to identify competition beyond just direct rivals. It shows that your competition includes forces you might overlook:

• Threat of New Entry: How easily can new competitors enter your market? Barriers include patents, capital requirements, expertise, or market saturation.
• Threat of Substitution: Are there alternative products or services that satisfy the same customer need? For example, margarine competes indirectly with butter.
• Supplier Power: How much influence do your suppliers have? If suppliers are few or essential, they can squeeze your margins.
• Buyer Power: How much power do your customers have? Large buyers or low switching costs increase buyer power.
• Competitive Rivalry: The intensity of competition among existing players, influenced by factors like product commoditization, customer loyalty, and switching costs.

As a product manager, these five forces should be your go-to tactic to identify current or potential competition for your product.

Competing is about more than product features

Potential strategies to compete in your market include:

• Product: Build better or different products.
• Pricing: Compete on cost or value.
• Distribution: Access customers through unique channels.
• Positioning: Craft a distinct market identity.
• Promotion: Communicate your value effectively.

Of these, product is the one you have full control over. The rest depend on external factors and company capabilities.

But even product competition is not just about features.

The trap of the feature war

Most product, marketing, or sales teams default to a feature comparison matrix when asked about competitors. This matrix lists features in rows and products in columns, marking which product has which feature.

But this approach treats features as “how” a product works, not “what” it does or “why” it matters.

Contextual competitive analysis is a more insightful approach. It compares customer business situations and the impact or results your product delivers versus the competition.

The question is: What is the customer trying to accomplish, and how does your product help them succeed better than alternatives?

Features come last — as proof points of value, not the value itself.

Contextual competitive analysis through the customer’s eyes

The best competitive analysis convinces your prospects, customers, and colleagues that you understand market and business dynamics better than the competition.

This means:

• Mapping customer jobs-to-be-done and pain points.
• Comparing how your product and competitors solve those problems.
• Highlighting differences in outcomes, not just features.
• Understanding the “why” behind customer choices.

Identifying direct and indirect competitors

Direct competitors offer similar products or substitutes in the same geographic area, targeting the same customers.

Indirect competitors satisfy the same customer need with different products or services. For example:

• A manufacturer of eyeglasses competes indirectly with contact lens makers.
• Butter manufacturers compete indirectly with margarine producers.

In fragmented markets with many competitors, apply the 80/20 rule: focus on the 20% of competitors who account for 80% of market revenue.

Keep monitoring for new entrants or shifts that could change the competitive landscape.

Developing competitive strategies based on analysis

Once you understand your competition and your position, you can:

• Identify your competitive advantages and disadvantages.
• Develop strategies to build on strengths and minimize vulnerabilities.
• Plan how to reduce the value of competitors’ strengths.
• Communicate your strategies internally to align teams across R&D, production, marketing, and sales.
• Establish procedures to keep your competitive intelligence current.

Competitive research is ongoing. Markets shift, new players emerge, and customer preferences evolve. Regular updates are essential.

Feature comparison matrices are useful but insufficient

A feature table can help identify gaps in your product relative to competitors. It typically includes:

• Features listed in rows.
• Importance of features annotated.
• Your product and competitors in columns.
• Rankings showing how well each product satisfies customers on each feature.

This helps you prioritize which gaps to close.

But features are the icing on the cake. They convince stakeholders you understand how to use products to grow profitably — after you have proven you understand the customer and market context.

Test yourself: The competitive research challenge

Field exercise: Conduct a mini competitive analysis

Where to go next

• If you want to deepen your understanding of customer needs: User Research Methods
• If you want to learn how to translate insights into strategy: Product Vision and Strategy
• If you want to master prioritization with data: Metrics and KPIs
• If you are preparing for competitive analysis interviews: PM Interviews — Market and Competitor Questions

PL alumni now work at Razorpay, Meesho, Swiggy, Flipkart, PhonePe, and other leading Indian companies.