Competitive analysis — how to do market research in software development projects

When looking for an app idea, it's not like you have to come up with a completely new solution that will revolutionize the market. Sometimes, you just need to look at existing products and build a slightly different app that will help your customers solve their problems in a bit better or more convenient way to get traction and make your project successful.

That’s what competitive analysis is all about. An in-depth research of competing apps will help you find flaws in these products and lacks in features, and get to know their audience needs. Basically, if you want to be well prepared to run your software project and have a good chance of success, you need to do the competitive analysis. 

Why competitive analysis is crucial for your project to succeed

Competitive analysis will help you:

• identify opportunities to outperform the competition by knowing their strengths and weaknesses and using this knowledge to determine your business strategy,
• find out what the industry standards are — the market research is crucial to get to know what are the industry trends and what product or service is actually needed,
• determine what is valuable to your target market — apart from knowing who are the users competitors' products, you’ll find out what are their needs and what value should be provided to them,
• get to know how you can stand out from the crowd with your solution so that you become a strong competitor to all the similar apps and the users won’t hesitate to choose yours.

How to execute the competitive analysis

So what should you look for when doing a competitive analysis? Prepare a simple spreadsheet or blank sheet of paper and write all the below information down for each app that can be identified as similar to your idea.

Gathering information about the target audience 

One of the main results from the market analysis is a determined target audience — people who are/will be using your product or service and their needs. You cannot create an app that would be useful for everyone. If you try, it’s likely you’ll end up with no audience at all. Every product is made for a particular group and so should yours. 

When preparing a competitor analysis, answer the following questions about their products:

• Who are they trying to reach with their app? 
• Who are their customers? 
• What does their user persona look like?
• How do they communicate with users? 

Competitors’ value proposition research

By the definition, a value proposition is a promise of value to be delivered, communicated, and acknowledged. A value proposition is part of a company's overall marketing strategy. It basically tells what the company’s brand stands for and what it has to offer to its customers. Determining the features of your product starts with identifying the potential customers and providing them with a relevant value proposition.

Doing the market research, focus on these things delivered by competing apps:

• What value does their app promise to deliver to the users?
• Why should their clients choose to purchase their product?
• In your opinion: do they deliver the promised value?

Market analysis concerning the business model

What your competitor’s business model includes is valuable knowledge because it will help you understand what model you should consider in order to make your solution profitable. 

That’s why you decided to create the app — to gain profits for your business. But it’s not like launching the app is enough for it to become a bestseller. You need to determine your business model, decide what is to be done to make money on your product.

Competitive analysis is there to help with that too. So let’s answer these questions when searching through different competitors’ apps:

• What is their plan for making a profit? 
• What monetization strategy have they chosen?
• Features and feature gap — what features can you find in these apps? What features are missing in your opinion and in comparison with other similar apps?
• What are the core functionalities? 

Rates and reviews in market research

Rates and reviews will help you identify industry trends and customer needs, give you an overall view of existing solutions and a clear understanding of the market you want to target. What's more, you'll get a handful of ideas on how to improve your own product and tailor it to customer needs. Check reviews in mobile stores and social media platforms, they can be full of valuable insights. Any direct and indirect feedback you find will work. Check out the ways to know users’ opinions about your mobile app.

About competitive apps, answer questions about users who review the apps:

• What do the users say about these apps? 
• Are they satisfied? 
• Do they point out missing/unnecessary features? 
• How would you rate each competitive app?

Results of competitive analysis

The most important result of competitive analysis is that you’re finally prepared to determine the features for your app. No matter if you have an in-house team or hired a software development company, the next thing to do is plan the overall design of the product with the team. 

Knowing your competitors, their products and the target market you want to hit, and then the strengths and weaknesses of your idea, you can effectively adjust to all the conditions and start creating your own solution. 

Business owners often skip the competitive analysis, thinking only about improving their idea and creating a flawless product. Let’s not forget that apart from a great product, you need to gain a competitive advantage to beat them all and encourage customers to download and use your app. 

Staying competitive after the release

Remember that after your product is released and when it already serves your customers, you still need to look for ways to stay competitive. At least once in a while you should execute competitive analysis to check what your product looks like on the market. To do that, use the above guide — search through different competitive apps and compare their features to your product. You can also track different mobile app metrics to measure the success of the solution.

You can use this information to set up a marketing strategy, to implement the right improvements and to plan further development and updates.