Successful product development requires several elements.  First, you need to address a market need with an appropriate technological solution.  Next, you must ensure that features and of the new product deliver value to your customers.  Finally, your new product must attain a greater market share at a profit than your competitors.  (Read this post on Who Is Your Competition for more information.) 

Of course, I recommend a disciplined innovation ecosystem to understand customer needs and to test prototypes.  WAGILE product development is a preferred product design and development methodology as it blends the best aspects of waterfall processes (“w-“) and of the Agile approach (“-agile”).  Moreover, WAGILE builds in customer interactions through Design Thinking tools.  Learn more about WAGILE here. 

Understanding your customer needs means understanding your competitors.  Sophisticated tools, like Quality Function Deployment (QFD), provide in-depth analysis of market “whats” and design “hows”.  But, QFD has the disadvantage of requiring a trained facilitator for analysis along with a significant data set from both customers and competitors.  (Read more about QFD here.)

Traffic Light Competitor Assessment

A good substitute for QFD is a “Traffic Light Competitor Assessment” as shown in the figure.  You still need a good set of data to analyze competitive offerings, but you can use more anecdotal evidence to reach reasonable product development decisions.  Let’s look at an example. 

Bicycles range from inexpensive kids’ toys to customized racing models.  Suppose you produce mid-tier road bikes for committed recreational cyclists.  Your target customer rides daily with 100 to 200 weekly miles.  Since bicycle manufacture involves component construction you can easily move up-market or down-market using the same frame (platform). 

In cycling, new products are released annually, much as new car models are released each year.  Concept and prototype testing are often done in-house since you employ cycling enthusiasts.  But you also need to obtain real customer feedback to avoid confirmation bias. 

Competitive Analysis (Example)

As a bicycle manufacturer, you can easily obtain data to understand your market position.  In the figure above, you have assessed your market position in the mid-tier road bike market as a leader.  You have been using carbon-fiber frames and forks for some time and also know that you are a leader in lightweight and strong frames.  Your brand is well-known and demands a premium price at bicycle stores where you have exclusive relationships. 

Unfortunately, a recent customer survey indicates that your bikes are not the first choice of potential customers.  As you compare these categories (market position, technology expertise, customer position, and brand awareness) to your top three competitors, you note that you are essentially tied for market position with these other well-known brands.  This might result from the peculiarity of exclusive retail partnerships in the cycling world, but needs additional research for future new product development (NPD) project. 

You also note that other manufacturers are quickly adopting full or partial carbon-fiber technology.  In some instances, customers seem to prefer the lower pricing of carbon-fiber forks coupled with an aluminum frame.  You are, however, pleased with your position as the best known brand for road bikes in the US.  

Results of Competitor Analysis

Whether you use a full-blown QFD study or the simple Traffic Light Competitive Analysis described here, product innovation professionals must evaluate current product offerings against competitors.  The insights are huge and can reveal new designs or features for product development. 

In the example above, our bicycle manufacturer is well-known and has respect in the market for technology advancements.  The trick for next generation products is to continue to delve into customer positioning.  Is the bicycle too expensive?  Is marketing collateral geared to specialists versus casual athletes?  Is maintenance or availability an issue ?

No two competitive analysis will reveal the same information or direction for your NPD effort.  In some cases, you will clearly move towards specific features that build a competitive advantage.  In other instances, you may choose to strategically scale back a product or its derivatives based on the results of the competitive analysis. 

Learn More

Learn more about planning and designing a new product development portfolio in our upcoming Innovation Best Practices and NPDP Prep course starting on 6 October 2021.  Register here (special discounts for non-profits and unemployed). 

Also be sure to stop by and say “hi” at my booth!  I’m sponsoring the PDMA Annual Conference in Baltimore on 13-16 November.