Gap analysis is a critical component of any product strategy, designed to align business goals and product visions. It’s all about looking at the current state of your business compared to where you’d like it to be—and how your products can help you get there. A product-focused gap analysis specifically assesses a product’s viability, feasibility, and desirability, and matches it against the company’s business goals and long-term growth plans.
But an often overlooked aspect of gap analysis is competitive analysis. Competitive analysis is using available intelligence and actual products of direct and indirect competitors to compare their offering to your strategy. It’s basically a mini product strategy brief about each competing product. It’s also a key component to completing a robust gap analysis and, by extension, a strong product strategy.
While gap analysis compels you to look deeply at your own business—its current state and future aspirations—competitive analysis demands you look outside of it, at the competitive landscape, and then determine how your product might stand out from the crowd.
Three Critical Areas of Gap Analysis
Before we talk more about competitive analysis, let’s take a quick look at the three core areas of gap analysis: business viability, customer desires, and technical feasibility. These are generally considered the key criteria for successful innovation.
Business viability is about ensuring your product will drive profit. This is based on the potential demand for the product from its expected value to customers, relative to current and future competitors, and as compared to company costs and revenue models.
Customer desires, or desirability, focuses on whether your product is solving a real problem and if the solution fulfills a true customer need.
Technical feasibility is looking to make sure that the value can be built affordably and with accessible technologies. An example is building a home-sized nuclear reactor. It’s possible, but it becomes infeasible when you look at dealing with the waste at scale.
Establishing a Product’s Competitive Differentiation with Competitive Analysis
Now that we’ve talked all about gap analysis, let’s talk about why competitive analysis is so important to it.
Competitive analysis falls under the business viability component:You can’t get a good idea of profitability without considering what you’re competing with to gain market share. But this is where product teams can stumble, especially when it comes to digital technology products. Teams often focus on creating customer value solely through innovation — especially technical innovation.
It becomes easy to fall short of getting a clear view of the competitive landscape and how your product compares when you confuse technology with competitive advantage. You want to avoid this kind of myopic mindset. Competitive analysis can become the reality check companies need, supporting gap analysis by giving you a more complete picture of the world any product you create will live in (and fight for audience share and profits in).
We’ve seen a couple of common issues when companies have their innovation blinders up and don’t fully understand the competitive landscape, so keep these tips in mind:
Pay attention to how your competitors are innovating: Too often, ambitious product teams innovate, develop, and create in a vacuum. By digging deeper, you might be surprised to find that a competitive analysis shows that what you thought was blue ocean innovation is really a space with heavy competition. Or it’s one that’s been heavily explored and abandoned after other companies weren’t able to gain any traction. Before moving forward with product strategy you might want to step back and understand why. Product development is ultimately a process of optimism coupled with factual context borne out of strategic analysis.
Consider alternate product variables: Even if you are doing something truly innovative with a product, it may not be what drives purchases within your market segment. Another product could offer users more for their money, and it’s possible they care more about price than advancements in a certain feature. Or maybe it’s about the user experience. Customers might be drawn to a product that offers a simpler interface and is easier to understand than the competitors’. In situations like this, where ground-up innovation isn’t the best differentiator, it may be more beneficial to focus on things like cost, efficiency, or customer experience.
Thorough competitive analysis gives you the insights you need to determine how your product will stand out from the crowd. From there, you can apply those insights to create a robust product strategy that sets you up for success.
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