Market Analysis

Market analysis helps a PM understand the environment in which a product competes. Before building anything, a PM must know who else is solving the same problem, how large the potential customer base is, and what trends are shaping customer expectations.

What Market Analysis Covers

Market analysis answers four key questions:

• How many potential customers exist? (Market size)
• Who are the competitors, and how do they solve the problem? (Competitive analysis)
• What external forces are changing the market? (Trends and forces)
• Where does our product fit in the market? (Positioning)

Understanding Market Size

Market size tells you how big the opportunity is. PMs use three measures:

TAM: Total Addressable Market
     Everyone who could ever want this product
     (Example: all people who eat food = 8 billion)
          ↓
SAM: Serviceable Addressable Market
     The part you can realistically reach
     (Example: all people in your country who order food online = 50 million)
          ↓
SOM: Serviceable Obtainable Market
     What you can realistically capture today
     (Example: users in your city = 500,000)

A PM uses SOM to set realistic goals and TAM to show investors the long-term opportunity.

Competitive Analysis

Competitive analysis means studying every product that solves the same problem your product solves. The goal is not to copy competitors — it is to find where they fall short and where your product can do better.

How to Run a Competitive Analysis

• List your top 3–5 competitors.
• Use each competitor's product yourself.
• Read their customer reviews (especially the 2 and 3-star ones — those tell you what frustrated users).
• Identify their main strengths and main weaknesses.
• Find the gap your product can fill.

Competitive Analysis Table Example

This table shows at a glance where your product is ahead and where it needs work.

Market Trends

Markets change. Customer habits shift. New technologies appear. A PM must track trends that affect the product's future.

Questions to track trends:

• Is this product category growing or shrinking?
• Are regulatory changes coming that affect us?
• Is a new technology changing how customers solve this problem?
• Are customer expectations rising because of what other products do?

Example: A PM building a navigation app in 2009 needed to watch the rise of GPS-enabled smartphones. Those who spotted this trend early built products that took advantage of it. Those who missed it built products that became obsolete.

Porter's Five Forces (Simplified)

This framework by business professor Michael Porter helps PMs understand how competitive and attractive a market is. Think of it as five pressures pushing on your product from different directions.

                [New Entrants]
                      ↓
[Supplier Power] ← [Your Product] → [Buyer Power]
                      ↑
                 [Substitutes]
                      
                [Industry Rivalry]
               (existing competitors)

• New Entrants: How easy is it for new competitors to enter your market?
• Supplier Power: Do the companies you depend on have too much control over you?
• Buyer Power: Can customers easily switch to a competitor?
• Substitutes: Can customers solve their problem a completely different way?
• Industry Rivalry: How fiercely do existing competitors compete?

Finding Your Market Position

Market positioning answers the question: "In a world full of choices, why should a customer pick your product?" The best position is specific and grounded in something real.

Weak positioning: "We are the best app for everyone."

Strong positioning: "We are the only invoicing app designed specifically for freelance designers who need to get paid in multiple currencies without extra fees."

Strong positioning targets a specific customer with a specific benefit that competitors do not clearly offer.

Key Takeaway

Market analysis is not a one-time exercise. PMs revisit their competitive analysis every few months and track market trends continuously. The PM who understands the market makes decisions that keep the product relevant and competitive.