Product management is about making decisions among opportunities.
When going into a market, whether new or existing, it is very important to know and understand the market and your likely competitors. Sometimes the success of your product is largely dependent on the nature of the market. Is it a saturated market, is it an untapped market and are there ready-to-buy users? What does success look like in this market and what is your likely market share? These amongst others are the questions that need to be answered to enable you make informed decisions.
In this article, we will look at how to size your market, identifying your competitors and criteria you can use to evaluate them.
Market Research: Sizing the Market
A big part of product management is ensuring the market you are trying to address is big enough and worth going into.
There are two major approaches to sizing the market;
1: Top Down Approach: This involves finding the Total Market share and estimating how much of it you can capture.
Example: Imagine building a music app for Android users. The top-down approach says; We know that we have 100,000 Android users in the market and if we can get 10 percent to download the app, then we have 10k users.
The issue with this approach is that you are making assumptions that may not be viable due to certain factors.
2: Bottom-up Approach: This is about figuring out the current market share of similar products in the market and considering how much of it you can capture. This is more suitable because you are looking at trends and metrics to evaluate your share in the market. This works best if you are moving into an existing market or industry.
Tools to use for market analysis
- Google; Simply type in “industry report for X”, X being the industry
- Websites like semrush.com, similarweb.com, capterra.com, and g2.com for comparing products
- Google AdWords keywords tool
- Forums and social networks like Twitter, Reddit, etc
Introduction to Competitive Analysis.
More important than the size of your market are the competitors in the said market. Competitors are people, teams, businesses, or products that offer similar solutions, serve the same customers, or have the tendency to do either in the foreseeable future. Competitive analysis on the other hand is studying and understanding these competitors.
If you are going into an existing market with competitors doing the same thing, you must figure out if it is worth going into before you invest resources into it.
Types of competitors.
There are different types of competitors within a market. Some of them include;
- Direct Competitors; They solve the same problem as you by offering a similar solution to the same audience.
Indirect Competitors; These competitors solve the same problem but in a different way and sometimes for a different audience. They may serve a smaller subset within your target audience or include your audience in a larger audience that they serve.
Potential Competitors; They offer a serve the same target audience but they don't offer the same solution. However, these competitors have the tendency to provide similar solutions in the future.
Substitute Competitors; They solve the same problem but not in the same way and do not target the same people as your business.
In the case where you are going into a market without competitors, it is important that you also try to figure out if there are no competitors because you are the first with your solution or if it is a case of “No customer Demand”
As a PM, you are responsible for the Feature triage, which means deciding which feature is most likely to;
1. Get more users,
2. Make your users happier
3. Enhance your brand
And you can't know this unless you figure out;
1. What your competitors look like
2. What they are doing
3. What they offer
How to find competitors in your industry as a PM
Before you commence your research, ensure you create a space for documentation of the information you are about to find. You can use digital notes, notebooks, sheets, documents, voice memos, etc
To find your known competitors; you can go to Google and type the name of your company vs ...., Google will automatically suggest competitors for you. Eg. Apple versus......
To find unknown competitors, one key secret is to focus on the problems you are trying to solve. You can ask the question “What problem does this solve and for whom?”
3 easy ways to find your competitors; Go to Google.com
1. Channel the type of user and try to figure out different ways they complain about this problem. It includes searching the words, phrases, etc that they use to complain about the problem.
Google these, and you will find a few things;
- companies targeting them
- People complaining about it- this will show you how other people reacted and how the problem was eventually solved
- Google will bring similar solutions
2. Describe what your product does in detail;
You'll find a few things;
- Ads about it
- Companies that use the same verbiage
- Google's idea and suggestion
3. Search for phrases or sentences that you will personally use to pitch your product.
This will provide companies that use similar ways to describe their offering.
Five Criteria for Understanding Competitors
As a PM, always keep tabs on your competitors and strive to stay ahead. Here are 5 criteria amongst others you can use to evaluate your competitors;
1. Product Core/Team: Who is responsible for making the product and how good are they? Make strides to know how good they are. You can double down on the quality of engineering.
2. User base Size: How much of the market share have they been able to convert? How loyal are these users?
3. Design: Figure out how good your competitors are when it comes to making aesthetically pleasing and usable products.
4. Brand: People's perception of your brand and your product determines what you can do in the future. Stronger brands find it easier to gain loyalty in existing markets and new markets they decide to delve into. Figure out the strengths and weaknesses of your competitor brand and how you can exploit these.
5. Speed: How fast do they build and ship out features and products? In most cases, the first company to introduce a feature or product into the market gets the majority of the user base and it is harder to convert those users
PS: the best way to research your competitors is to use their product. Become a user and study the product extensively.
Summary;
Before diving into any market, ensure to carry out comprehensive research on the market and the possible competitors you will encounter within the market. This will help you in coming up with a great product strategy.
Competitive analysis helps you identify your competition, their strengths and weaknesses, make better and more informed decisions, and stay ahead of them.
Due to the ever-changing nature of markets, competitive analysis is not a one-time thing. It should be done frequently to stay up to date with these changes and adapt quickly.
Hope you found this helpful :)