Competitor analysis in Product Discovery: a strategic guide

Imagine setting off on a road trip with no map, no GPS, and no idea where the nearest gas station is. That’s what launching a product without competitor analysis feels like. Sure, you could stumble upon the perfect route, but wouldn’t it be smarter to check where others have already driven?

Competitor analysis isn’t just about spying on rivals—it’s about understanding the landscape. If competitors exist, that’s actually good news: it means there’s a market. Studying them gives you a jump-start, helping you identify best practices, avoid common pitfalls, and find gaps they haven’t filled yet. It’s much easier to catch up and innovate than to wander into the unknown with no reference points.

So let’s explore why analyzing the competition is a critical step in any successful product strategy.

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Competitors shape user expectations — whether you like it or not

Think about the last time you used an app. Did you instinctively swipe left or right? Tap a magnifying glass to search? Expect autocomplete suggestions as you typed? These interactions feel natural not because they were always obvious but because Someone before you made them standard.

Take Tinder, for example. The simple swipe gesture became so iconic that it transcended dating apps. Now, we “swipe” through products, job listings, even news articles. When a feature works, it spreads. Users come to expect it, and any new product that ignores these expectations risks feeling outdated before it even launches.

But it’s not just about interaction patterns. Competitors invest heavily in refining their experiences. Giants like Google and Duolingo don’t just roll out features blindly; they test, measure, and iterate. A/B testing, user research, behavioral analysis — these companies validate their decisions with real-world data.

As a design agency, we don’t just observe this from the sidelines — we dig in. Our competitor analysis process includes:

Analyzing open data: Looking at public reports, product roadmaps, and user feedback.‍
Reading expert overviews: Tapping into insights from both industry-specific and design thought leaders.‍
Testing solutions in-house: Experiencing the products firsthand to uncover strengths, weaknesses, and opportunities.

By doing this, we don’t just see what competitors are doing — we uncover why they made those choices and what trade-offs were considered. This foundation helps us build smarter hypotheses, making product decisions that are informed rather than just inspired.
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Not all competitors are created equal: understanding the scale

When analyzing competitors, it’s tempting to look straight to the industry giants. After all, if Amazon or Atlassian is doing something, it must be worth copying, right? Not necessarily. While global players offer valuable insights, the most relevant lessons often come from companies that operate at a similar scale to yours.

We categorize competitors into different levels based on their market reach and resources — let’s call it the scale of incorporation:

Small-scale competitors: These are niche players focusing on a specific category or audience, often operating with high agility and a willingness to take risks. Think Allbirds (direct-to-consumer sustainable footwear), Feastables (MrBeast’s snack brand), or Toggl (simple time tracking). Unlike larger companies that must navigate legacy systems and brand consistency, small-scale competitors can experiment boldly — testing unconventional design choices, unique visual styles, and disruptive user experiences. Whether it’s playful branding, unexpected UI patterns, or viral marketing tactics, they push boundaries in ways that larger competitors often can’t.
Mid-size competitors: These brands have established themselves but aren’t global behemoths yet. Sephora (beauty retail), Beats (audio hardware), and Asana (project management) fall into this category. They balance innovation with structure and often have the best mix of agility and validation.‍
Industry giants: At the top tier, we have Amazon, Coca-Cola, and Atlassian — companies with deep pockets, global reach, and the ability to set industry standards. They can access extensive research and user behavior data, but their solutions are often designed for scale rather than niche effectiveness.

When conducting competitor analysis, the most valuable insights come from those in the same tier. Why? Because these are the companies working with similar constraints — budget, team size, and access to tools. Their design solutions are often the most achievable and relevant.

That said, it’s still useful to look at the giants for long-term trends and small startups for fresh, innovative approaches. A well-rounded competitor analysis takes insights from all levels but prioritizes what’s most actionable for the product at hand.

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Decoding competitive advantages: value vs. design

In the quest to stand out, companies often leverage two primary types of competitive advantages:

Value and Functionality: These advantages are rooted in offering superior product features or better pricing. While they can provide an immediate edge, they're often easy for competitors to replicate. For instance, if a company introduces a new feature that gains popularity, rivals can quickly develop similar functionalities, leading to a cycle where no player maintains a lasting lead.
Design and Brand: This category encompasses the visual appeal, user experience, and the emotional connection a brand fosters with its audience. Such advantages are inherently unique and challenging to duplicate. A distinctive design or a strong brand identity can create a lasting impression, making it difficult for competitors to mimic effectively.

Investing in design isn't just about aesthetics; it serves as a strategic lever that can drive substantial business growth. A comprehensive study by McKinsey & Company, which analyzed 300 publicly listed companies over a five-year period, underscores the profound impact of design on financial performance.

Key Findings from the McKinsey Report:

Revenue Growth: Companies that ranked in the top quartile of the McKinsey Design Index (MDI) experienced a 32% higher revenue growth compared to their industry counterparts over the five-year period. McKinsey & Company+1McKinsey & Company+1
Total Returns to Shareholders (TRS): These top design performers also achieved a 56% higher TRS over the same period, highlighting the significant value that design excellence can contribute to shareholder wealth. McKinsey & Company
Consistency Across Industries: The positive correlation between strong design capabilities and superior business performance was consistent across diverse sectors, including medical technology, consumer goods, and retail banking. This consistency suggests that the benefits of good design are universal, irrespective of industry focus.

These findings illustrate that design is not merely a supplementary aspect of product development but a core driver of long-term business success. Companies that integrate design into their strategic framework are better positioned to innovate, meet customer needs, and differentiate themselves in competitive markets.

By prioritizing design, businesses can gain significant and measurable financial benefits, leading to sustained growth and resilience against competitor.

II. Stage-by-stage guide to Competitive Analysis in product UX/UI Design

The best time to conduct a competitive analysis depends on the product development stages:

Early Stage (Product Discovery): Identifying key market opportunities and user expectations.
Mid-Stage (Prototyping & Validation): Testing competitor workflows to refine UX decisions.
Late Stage (Pre-Launch Optimization): Fine-tuning based on competitor pitfalls and user feedback.

The best way to conduct a competitive analysis by selecting right methodology for each individual case.

Competitor Matrices: seeing the market from a bird’s-eye view

A competitor matrix is one of the most effective ways to map out the competitive landscape. Rather than listing competitors in isolation, we visualize them in relation to each other based on two key factors. Typically, we create two matrices: one for direct competitors (businesses offering similar products or services) and one for indirect competitors (alternative solutions competing for the same audience’s time, attention, or money).

Choosing the Right Axes

Every industry has unique dynamics, so we tailor the matrix to match the specific market. However, some of the most effective axis combinations include:

Market Focus (B2C ↔ B2B) vs. Innovation Level (Conventional ↔ Disruptive)
Price Positioning (Budget ↔ Premium) vs. Product Complexity (Simple ↔ Feature-Rich)
Customer Reach (Niche ↔ Mass Market) vs. Brand Strength (Emerging ↔ Established)

Competitors with the closest resemblance to our client’s product tend to cluster toward the zero-zero coordinates—the bottom-left of the matrix—where competition is highest. |
Gaps in other areas may indicate untapped opportunities.
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Case study: project ‘Horizon Shift’
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For one of our clients (let’s call them Horizon Shift), we built a competitor matrix to evaluate saturation in their niche. Initially, they aimed to launch a B2C solution, assuming that was the most viable market. However, once we mapped out the landscape, it became clear that the B2C segment was oversaturated, with well-established players dominating the space.

On the other hand, our matrix revealed a significant gap in the B2B segment — a space where our client had a competitive edge but had previously been overlooked. This insight led to a shift in the core strategy, refining the product positioning to focus on business clients rather than individual consumers.

This methodology doesn’t just help validate assumptions — it actively challenges them, leading to sharper, more competitive market strategies.

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Comparing competitors side by side: the power of Data Tables

A competitor matrix gives us a strategic overview, but sometimes, we need to go deeper. That’s where comparative data tables come in. This method is all about collecting and structuring as much relevant data as possible — both quantitative (measurable numbers) and qualitative (insights into strategy, messaging, and positioning).

We typically build tables with at least seven key categories:

Core Features (Yes/No)
A breakdown of product capabilities across competitors. Which features are standard? Which are unique? Where are the gaps?
Financial Reports (Public Data)
Revenue, profitability, funding rounds, and investor activity. These numbers indicate market traction and financial stability.
Marketing Channels & Ad Spend
Where do competitors focus their marketing? Do they invest heavily in social media, content marketing, paid search, or offline campaigns?
Messaging & Positioning
What’s the tone of their brand? Are they emphasizing affordability, innovation, luxury, or something else?
Geographic Reach
Which markets are they in? Are they expanding or retreating from certain regions?
Pricing Strategy
Subscription vs. one-time payment, freemium vs. premium. How do they structure their offers to drive conversions?
Customer Reviews & Sentiment Analysis
Understanding how users feel about competitors is crucial.

We analyze reviews from platforms like App Store, Google Play, G2, Capterra, and Trustpilot for software products, while e-commerce businesses benefit from insights on Amazon, Reddit, and specialized review blogs. Social media also plays a key role — Twitter (X), Instagram, TikTok, and LinkedIn often reveal unfiltered opinions, customer frustrations, and emerging trends. By spotting patterns in common complaints (e.g., “too many ads,” “confusing UI,” or “lack of customer support”), we can identify pain points to avoid.
Likewise, consistently praised features give us a blueprint for what users truly value.
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From data to actionable insights

After compiling this table, we don’t just stare at numbers — we analyze, combine, and transform them into meaningful insights. Patterns start to emerge: strengths we can learn from, weaknesses we can exploit, and gaps that signal untapped potential.

Case study: project ‘Nova Launch’
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For another client (let’s call them Nova Launch), a mobile app startup, this approach revealed a clear market opportunity in a few overlooked countries. By analyzing competitor presence, we identified regions with demand but little competition, allowing the client to expand smartly.
Beyond location insights, the data also exposed design cues that resonated with the target audience — leading to aesthetic refinements that made the app feel more appealing.

Finally, by evaluating marketing spend and channel effectiveness, we pinpointed a low-cost advertising approach that maximized reach while keeping acquisition costs low.

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Why this method matters

The full data table helps us see the big picture, but a simplified version becomes an invaluable quick-reference tool throughout the product’s lifecycle. Whether refining strategy, justifying decisions to stakeholders, or adjusting based on new market shifts, this data-driven approach ensures every step is backed by solid insights.

Understanding competitive testing

Competitive Testing entails conducting user evaluations where participants interact with multiple design solutions, including our own and those of key competitors. This method allows us to benchmark our designs, identify strengths and weaknesses, and uncover opportunities for differentiation. By understanding how users perceive and interact with various products in the same category, we can make informed decisions to enhance our design strategy.

Our approach to competitive testing

User Testing and In-Depth Interviews: we begin by recruiting participants who represent our target audience. These users engage with our product and selected competitor products, performing tasks that reflect real-world usage. Through direct observation and follow-up interviews, we gather qualitative data on user behaviors, preferences, and pain points.
Affinity Mapping: to synthesize the collected data, we employ affinity mapping — a collaborative technique that organizes insights into meaningful patterns.
The process involves:
- Data Extraction: transcribing key observations, quotes, and feedback from user sessions onto individual sticky notes.
- Grouping: collaboratively arranging these notes on a workspace, clustering similar items to identify emerging themes or issues.
- Labeling: assigning descriptive labels to each cluster to encapsulate the core insight or concern.
- Prioritization: evaluating the significance of each cluster to determine which insights warrant immediate action in the design process.

This structured approach enables us to distill complex data into actionable insights, ensuring that user feedback directly informs our design decisions.

Case study: project 'Spatial Health'
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Consider our work with Project 'Spatial Health', a platform designed to track environmental impacts on physical and mental well-being. Initial user testing revealed that while the data presented was valuable, users found it challenging to interpret.
To address this, we conducted competitive testing focusing on health and fitness trackers, notably the WHOOP device.
WHOOP effectively simplifies complex health metrics into accessible daily statistics, such as strain and recovery scores, while offering detailed data for users seeking in-depth analysis.

Inspired by WHOOP's design, we restructured Spatial Health's interface to feature aggregated daily insights prominently, with comprehensive data accessible in subsequent screens. This redesign improved user comprehension and engagement, leading to a higher adoption rate.

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Bonus: international competitors – expanding horizons

For businesses with a strong physical presence — retail, logistics, or products reliant on supply chains — international competitor analysis can be a powerful tool. It helps in two key ways:

Experience Transition – Understanding which elements of a competitor’s success can be effectively adapted to local markets.
Preparation for Expansion – Identifying best practices and market expectations before entering a new region.

Avoiding the biggest pitfall: overextending research

One of the most common mistakes when analyzing international competitors is casting the net too wide. With countless global players, research efforts can become inefficient, leading to wasted time and budget.

To keep research focused and cost-effective, we recommend a tiered approach:

Market Scan – identify the broad niche that aligns with the business goals.
Niche Refinement – define the most relevant subcategory (e.g., "luxury cosmetics" instead of just "beauty industry").
Competitor Selection – focus only on top-performing companies within that refined niche.
Deep Dive Analysis – apply previously discussed methods (data tables, competitive testing) to extract actionable insights.

Case Study: project ‘Talent scout’

For our client Talent Scout, a recruitment tech company, direct competitors included various European hiring platforms. However, analyzing the entire recruitment industry was impractical. Instead, we narrowed the research to sourcing tools — a critical subcategory within recruitment.

By focusing on just two key competitors, we uncovered best practices for local market adaptation while ensuring product-market fit. This helped refine Talent Scout’s positioning, aligning their offering with proven international trends while maintaining a laser-sharp focus on their unique value

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Using scientific research to elevate competitive analysis in product design

Competitive analysis isn’t just about tracking rivals — it’s about understanding the broader forces shaping your industry. By studying competitor strategies through a scientific lens, we can uncover patterns, validate market assumptions, and fine-tune product design with data-driven insights.

A key resources in this process is overview studies, like "Competitive analysis strategies of marketing – overview" (ResearchGate), which explores structured methodologies for competitive research. While its primary focus is on marketing, many of its frameworks can be adapted to product design and UX strategy. The ability to recognize trends, analyze competitor strengths and weaknesses, and identify market gaps can directly influence design decisions, from feature prioritization to user experience refinements.

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But what if you don’t have competitors? Does that mean you’ve struck gold or that no one wants what you’re building? We'll answer this questions in next article.

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