B2B Product Management: Competitive Analysis

April 7, 2024

As a product manager, I have experience working across various company stages, industries, and geographies. One common approach to competitive analysis is to gather hundreds of screenshots of competitors’ products, map out their feature bundles, and build a comparison table to identify missing features.

However, this approach is not enough. Features should align with a product strategy. We should not blindly build features without properly understanding or, at the very least, hypothesizing our competitor's strategy and how it compares to ours.

In this article, I will cover a simple way to structure this information using two widely-used tools that have helped me conduct a competitive analysis, which informs my product strategy.

Why Competitive Analysis?

1. Stay informed about industry trends and changes: Conducting a competitive analysis not only helps you keep track of what your competitors are doing but also provides insight into the latest industry developments and emerging trends.

2. Identify strengths and weaknesses: Analyzing your competitors' products is a great way to gain a deeper understanding of your own product's strengths and weaknesses. By identifying areas where your product is lacking, you can focus on improving those areas and creating a stronger overall offering.

3. Uncover opportunities for innovation: By examining your competitors' products, you may discover new and innovative features or approaches that you can adopt in your product. This can help you differentiate yourself from competitors and provide unique value to your customers.

4. Assess pricing and positioning: A competitive analysis can help you determine the best pricing and positioning strategy for your product. By analyzing your competitors' pricing and positioning, you can get a sense of where your product fits in the market and how to make it more competitive.

🛠 First Tool: The 4 Fits Model

Developed by Bryan Balfour from Reforge.com, you can find a more detailed explanation of the framework here. The summary is that Product-Market fit is not enough and to build a successful product you also need to ensure that Distribution Channels and the Business model (how you charge for your product) are also aligned and balanced.

What I like about this framework is that it helps you think about your product through two different approaches; one regarding what the user wants (Product and Market), and what works for the business (Channels and Model).

In the article I shared above, each part of the 4 fits model has its frameworks but I only use the high-level structure to present information in a more simple way that is also easier to maintain on a frequent cadence.

During my live sessions on this topic, I compared visual collaboration tools such as Miro, Mural, and Whimsical. However, in this article, I will provide a summarized version and guidelines for you to work on independently. It's important to note that almost all the necessary information can be obtained from the product's homepage.

The tools and processes I use help structure information and build a hypothesis about how competitors think about each part of the 4 fits model. It's essential to emphasize the hypothesis part because the only way to gain 100% certainty of another company's strategy is by joining them.

Once you finish this comparison, you can make more informed decisions about whether to build a feature based on the customer and market served. For example, if you are a Whimsical Product Manager and you find out, via a feature comparison table, that you are missing the +2,000 advanced diagramming options that Miro offers, you could skip this feature for now. These advanced shapes are likely tailored for enterprise users, while Whimsical is focused on SMBs.

💡 Second Tool: Positioning Maps

I’d recommend this article from Harvard Business Review, it’s from 2007 but as I mentioned lines above I’m not reinventing the wheel and introducing brand-new tools.

The idea behind positioning maps is to identify a few customer-valued attributes and position yourself and competitors based on how customers perceive them. Pricing is the most common attribute used for positioning maps, but as shown in the example below, you can use any important attribute.

This is an inexpensive way to understand your positioning relative to the competition on the attributes that matter. I usually perform this type of analysis qualitatively, with some high-level support. In my opinion, it is more important to have structured information to make quick decisions, rather than getting bogged down in the details of the process.

Don’t Forget To Map Alternatives

In this section, I'll briefly cover a concept I explained in my previous article B2B Product Management: Inertia and Alternatives. The concept of alternatives refers to how users solve their problems without your product. One example I like to use is Close.com, a CRM similar to Salesforce or HubSpot.

Although popular tools like MS Excel and Google Sheets are used to manage sales pipelines and prospects, they break at scale. Close.com has a blog post explaining how to build a CRM with those tools, which raises the question: why would they do that? The answer is simple: alternatives are cheap and easy to use, but they lack scalability. Therefore, it's important to keep them in mind during competitive analysis or when interviewing users about how they solve certain issues. You should think about how to provide a 10X or 100X experience with your product.

I particularly like how the Close.com team phrased it in their blog post:If you're a solopreneur or just testing the waters with your sales efforts, a spreadsheet can be a good choice, and in that case, you should download our (free) ready-to-use Excel CRM template. And if you're ready to try the CRM that can help you scale your results without scaling your efforts?

💡 Key Takeaways

Screenshots and feature comparisons are good but not enough. The 4 fits model helps us to reverse-engineer their strategy.

1. Home and Pricing pages are a good starting point, focus on details as even a plan name can give you leads on who they are designing for.

2. Distribution channels and monetization models represent the business side of the product. Be aware of any inconsistencies (e.g Sales channel for a social product).

3. A positioning map is helpful to visually identify where your product stands vs the competition, try to stay away from the 'messy middle'.

4. Alternatives are a different type of competitors, they are cheap and easy to use but the challenge comes at scale. Your products need to deliver a 100X scalable experience.

5. In the end, there's no perfect framework. I presented one way to organize competitive information to help you make your hypothesis.

Gonzalo Sáenz

I’ve worked at all stages of the customer journey and several company sizes (from seed to pre-IPO). I’ve been doing advisory in Product for the last 8yrs, most recently at On Deck and Rappi, including hiring and training Product Managers, career planning, and supervision on projects as a fractional HoP.