There are several factors needed for a business to succeed, one of which is competitive edge product analysis. A competitive product analysis is something that should be carried out by every company. It is an evaluation and comparison of competing products and how your own products meet up the requirements or even stand out. Many companies neglect this factor; hence, they offer non-standardized products or services to consumers.
Whether you're starting a new dropshipping business or running an existing one, this article will educate you on how to do a competitive product analysis in e-commerce as well as introduce some tips to help you ward off your competitors.
Importance of Competitive Product Analysis
As you are already aware, there is intense competition in e-commerce. Therefore, any retailer looking to succeed will need to offer a good value that is relative to its competitors. Competitive product analysis involves looking at various aspects of a product, including reliability, functionality, and use cases as well as defining the goals that will give you an edge for success in your niche.
A competitive product analysis is not mainly about reducing the price of what you offer. No, a product or service can be more expensive than its competition if consumers see a good reason to pay the higher price. However, when the product is the same – in terms of quality and value – most consumers will not be willing to pay more. Through a competitive product analysis, you will know how to focus your efforts and get maximum impact from your hard work.
5 Easy Steps to Do a Complete Product Analysis
Based on the competitive product analysis definition above, we know that this significant undertaking will help you to determine whether your business outperforms your competitors or not, and what you need to do. This may sound difficult to do but we have listed 5 steps that will help you out.
The first thing you need to do is to understand your competition. Are they selling similar products and services that you offer? Do they operate in the same geographical location as you? If yes, are their products aimed at satisfying the same geographic areas as you? Ensure that you get a list of your direct competitors before moving on to the next step.
2. Begin your research
The next thing to do is to conduct a professional market research study for each competitor. These are just a few of the questions you need to answer while performing your research.
- What kind of products or services do they offer?
- How distinct is their product from mine?
- What are the marketing and promotional strategies of my competitors?
- Are my competitors profitable, expanding, or losing market shares?
- What are their strengths and weaknesses?
- How do consumers see the products that are being offered by my competitor?
- How is their customer service like?
Answering these questions can be helpful, yet, you still need to gather more information about your competitors. With deep insight into your competitors, it will be easier to outperform them and command a larger market share.
3. Gather and analyze your research
Conducting a detailed analysis of your competitors is tough if you don't have the right resources at your disposal. We recommend that you identify your competitor's objectives and what strategies work for them. You can get information about your company via reference books, sales brochures, search engines, quarterly or annual financial reports by the government, advertisement, word-of-mouth, etc. This will provide helpful details on how well they are performing and how you can better them. Now, you will be loaded with information on how your competitors establish themselves, increase their market shares, or maximize short- or long-term profits.
4. It's time to develop a working competitive strategy
As soon as you have identified your competitors' goals, strengths, weaknesses, marketing, and sale strategies, you will need to create your own competitive strategy. The information gathered should be helpful to map out what you need to do to distinguish your business and what you should do to make your business more valuable than your competitors.
Some possible strategies are:
- If your competitors are offering higher prices for their goods and services, you can reduce your prices.
- If your competitors are not covering the target market, focus your advertising campaign on those areas.
- You may buy out a competitor to increase customer base and market share. For instance, Facebook purchased WhatsApp and Instagram to kill future threats.
- Use technology and innovations to improve your product.
- If you observe that your competition has a bad online presence, you can optimize your website and enhance your social media presence.
- Expand your distribution coverage if you notice that your competitors are not doing well to reach out to target markets.
5. Don't stop there – continue your product research
At this stage, you must be getting good results. However, your ability to be consistent is the only guarantee of long-term success. Every passing day, new businesses are established. Doing a competitive product analysis just once is the shortest route to failure or short-term success. Every now and then, improve your business plans and review your strategies. This will help you to improve your ranking within the industry, boost sales and production, and even give your business a better chance at success.
7 Useful Tips for Doing a Competitive Product Analysis
A competitive analysis will help you to identify competitors' strengths and weaknesses. These helpful tips will improve your chance of success.
1. Start with the flagship product
For companies that have numerous products, we recommend that you start your analysis from the product that makes the most sales and generates the most attention.
2. Benchmark your own products
While you analyze your competitor's product, do the same to your own products as well. This will help you identify your strengths and weaknesses and help you to improve on them accordingly.
3. Improve your website
Customers are inquisitive to know more about the product before making a purchase. As such, ensure to add relevant information about a product on your product page. You can also provide a question and answer section as well as live chat to ensure clarity on the product.
4. Create quality product videos
Product videos are more attention-grabbing and engaging than pictures. Potential buyers want a live description of how to use a product before making a purchase. You will do well to create quality videos for your products.
5. Get customers reviews
Reviews or ratings are like e-banks where customers deposit their experience. Getting feedback and reviews about your product or companies and displaying it on your website is a great tool that convinces customers more than your marketing campaigns.
6. Also consider your marketing strategies
A competitive product analysis shouldn't be focused on the products alone, but also the marketing strategies. Understanding the problems of your target market and how to present your product as a solution requires a level of functionality and effectiveness.
7. Monitor changes to identify product direction
Look forward and ask yourself, where your product will be in the next six months or one year. Identifying potential changes e.g. pandemic, inflation, government policy changes, etc. will help you strategize and fix potential challenges before time.
Top Takeaway: Steal Findings of SaleYee's Market Analysis with Competitive Product Analysis
If you have a hard time doing market research which includes the competitive product analysis, don't miss SaleYee's best-seller market research which is available on SaleYee blog. Meanwhile, there are also market size, trends, competitor analysis, customers' concerns, recommended sales platforms, barriers to entry, and so on for your reference.
Call to Action
Analyzing your competitors' products can be overwhelming, so before you delve in, make sure you follow the recommendations above. There are many high demand low competition products 2020; so ensure to learn everything about your product, your competitor, and their products. There are enormous benefits of performing a competitive edge product analysis. If done the right way, you should see your business succeeding within the industry.
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