Market and Competitor Research

Market research begins with clear objectives. Before collecting data or interviewing customers, product managers must establish what they need to learn and why. Research objectives guide the entire process, ensuring focused efforts and actionable insights.

When creating research objectives, consider these key areas:

• Identify specific questions you need answered about your market, customers, or competitors.
• Define the scope of your research to avoid gathering excessive or irrelevant information.
• Clarify how the insights will inform upcoming product decisions.
• Establish measurable goals for what successful research looks like.

For example, vague objectives like "understand our users better" lack direction. Instead, create specific objectives such as "determine why customers abandon our checkout process" or "identify which competitor features are driving customer acquisition."

Write down 2-3 clear, specific research objectives for your current product or a product idea. Each objective should directly connect to a product decision you need to make.^[1]

Market research has several main parts that help you make better product decisions. These different parts work together to give you a complete picture of the market and guide your strategy.

The key components of market research include:

• Overall market landscape: "Is this market worth pursuing?" Understanding the broader context in which your product exists, including market size, growth rate, and industry trends. This provides the foundation for all other research.
• Customer research: "What do users truly need and value?" Investigating who your customers are, what they need, and how they behave when interacting with products in your category. This reveals opportunities to create value.
• Competitive analysis: "How can we stand out in this space?" Examining competitors' offerings, strategies, and market positioning to identify gaps and differentiation opportunities.

For a complete picture, your research plan should address all 3 components, though you may emphasize different aspects depending on your specific objectives.

Map out the key questions you need to answer within each market research component for your product. Identify at least 2-3 questions for each component that would provide valuable insights.^[2]

Product managers gather market insights through two main approaches, each with distinct benefits for product decisions:

• Primary research involves collecting original data directly from users or potential customers, for example: user interviews, surveys, focus groups, usability testing, and field studies. This gives you firsthand insights specific to your product questions, but requires more time and resources to conduct.
• Secondary research uses existing information collected by others, such as industry reports, market analyses, competitor analysis, social media monitoring, review analysis, or published academic studies. This method is typically faster and less expensive, but the data wasn't collected with your specific questions in mind.

The most effective research strategy typically combines both approaches. Start with secondary research to understand the broader context and identify key questions, then conduct targeted primary research to fill specific knowledge gaps and validate assumptions.^[3]

Surveys are a powerful tool for collecting structured feedback from large groups of users. Effective surveys balance quantitative data (numbers and metrics) with qualitative insights (opinions and explanations). This provides both the "what" and the "why" behind user behavior.

To create an effective survey:

• Define clear objectives: Determine exactly what you need to learn and how the data will inform product decisions.
• Keep it focused: Limit your survey to 5-10 questions that directly address your objectives. Long surveys lead to abandonment and poor-quality responses.
• Mix question types: Include both closed-ended questions (multiple choice, rating scales) and open-ended questions (free text responses). This provides structured data alongside deeper insights.
• Use neutral language: Avoid leading questions that push respondents toward particular answers. For example, "How would you rate this feature?" is less biased than "How much did you enjoy this amazing feature?"
• Test before launching: Have colleagues review your survey to catch confusing questions or technical issues.

Distribution channels matter as much as the questions themselves. Consider distributing through:

• In-app prompts
• Email campaigns
• Social media
• User communities
• Customer support follow-ups

Focus groups bring together small groups of users or potential customers to gather in-depth feedback through guided discussions. This research method offers rich qualitative insights and reveals how people talk about your product in a social context. Focus groups excel at uncovering emotional responses, exploring complex topics, and generating new ideas through group interaction. Unlike one-on-one interviews, they capture how opinions form and evolve through conversation.

To run an effective focus group:

• Select diverse participants: Aim for 6-8 participants who represent your target users but bring varied perspectives. Consider including both current and potential users.
• Create a discussion guide: Prepare open-ended questions that encourage conversation rather than simple yes/no answers. Arrange topics in a logical flow.
• Choose a skilled moderator: The facilitator should be able to guide discussion without leading participants, draw out quieter individuals, and prevent dominant personalities from controlling the conversation.
• Observe and document: Record the session (with permission) and take notes on both verbal and non-verbal reactions. Consider having team members observe through a one-way mirror or video feed.

Focus groups are particularly valuable for:

• Testing concepts before development
• Exploring user reactions to competitors
• Understanding purchasing decisions
• Generating ideas for new features
• Identifying pain points and workarounds

Effective trend analysis combines both quantitative data (market statistics, adoption rates) and qualitative signals (emerging behaviors, sentiment shifts) to form a complete picture. The goal is not just to observe what's happening, but to understand why it's happening and predict what might happen next.

Key sources for identifying market trends include:

• Industry reports and forecasts: Publications from research firms like Gartner, Forrester, or industry-specific analysts often highlight emerging trends.
• Sales and usage data: Both your own metrics and publicly available data about competitor products can reveal shifting patterns.
• Search trends: Tools like Google Trends show changing customer interests and information-seeking behaviors.
• Social media and forums: Conversations in communities relevant to your product often surface emerging needs or frustrations.
• Technology adoption cycles: Understanding where technologies sit on the adoption curve helps predict mainstream acceptance.

When analyzing trends, look beyond the surface-level observations to ask:

• What's driving this trend?
• Who is adopting it first, and why?
• What barriers might slow its progression?
• How might this trend affect user expectations for your product?
• What second-order effects might emerge if this trend continues?^[4]

Effective competitor analysis begins with accurately identifying who your true competitors are. This isn't always as straightforward as it seems. Competitors extend beyond companies with identical products to include alternative solutions that solve the same customer problem.

A comprehensive competitive landscape includes three types of competitors:

• Direct competitors: Companies offering similar products to the same target market. These are usually the most obvious alternatives that customers compare you with.
• Indirect competitors: Companies solving the same problem but with a different approach or product category. These competitors may not look like yours but satisfy the same customer need.
• Potential competitors: Companies that could easily enter your market based on their existing capabilities, customer base, or strategic direction.

To identify your full competitive set:

• Ask customers: During user research, ask which alternatives they considered before choosing your product (or which they would consider if switching).
• Follow the money: Research where venture capital is flowing in your industry to spot emerging competitors.
• Monitor industry news: Track announcements, product launches, and acquisitions that signal competitive movement.
• Search like a customer: Use the same search terms potential customers would use to find solutions to their problems.

A competitive analysis matrix organizes information about competitors in a structured format, making it easier to compare products across key dimensions. This visual tool helps product teams identify competitive gaps, prioritize features, and craft differentiation strategies.

The most effective competitive matrices go beyond simple feature checklists to include qualitative assessments of how well competitors execute on different aspects of their product and business.

To create a useful competitive analysis matrix:

• Select relevant dimensions: Choose evaluation criteria that matter to your customers and influence purchasing decisions. These typically include: key features and capabilities, pricing structure, target customer segments, marketing positioning and messaging, strengths and weaknesses, and user experience and design.
• Gather accurate information: Research competitors through their websites, product demos and free trials, customer reviews and testimonials, and social media discussions.
• Use consistent evaluation criteria: Apply the same standards to all competitors, including your own product. Consider using a simple rating system (1-5 scale) alongside qualitative notes.

SWOT analysis is a strategic planning framework that helps product managers evaluate their product's position in the market. The 4 components of SWOT analysis work together to create a comprehensive view:

• Strengths: Internal attributes that give your product an advantage in the market. These might include unique features, technological advantages, strong brand recognition, or expertise in your team.
• Weaknesses: Internal limitations that put your product at a disadvantage. These could include feature gaps, resource constraints, technical debt, or areas where competitors outperform you.
• Opportunities: External factors that your product could capitalize on. These might include emerging market trends, underserved customer segments, competitor weaknesses, or new technologies.
• Threats: External factors that could cause problems for your product. These include new competitors, changing regulations, shifting customer preferences, or technological disruptions.

To conduct an effective SWOT analysis:

• Be honest and objective, especially about weaknesses
• Include input from multiple stakeholders with different perspectives
• Support each point with specific evidence or examples
• Prioritize the most significant factors in each category
• Consider how factors interact (e.g., how a strength might help capitalize on an opportunity)^[5]

The most valuable insights often come from the intersections between categories. For example, identifying a strength that directly addresses an external threat or recognizing an opportunity that could help overcome an internal weakness.