Why is it important? As product manager you are in charge of what your product looks like and what customer requirements it is meeting. Customers are doing competitive analysis every day, from buying a sandwich, over getting a new phone to acquiring a new car. Do you know what competitors your customers are looking at? And what needs those competitors are fulfilling?
A first step is always identifying your competitors, this might not always be so obvious and in some industries the competitive landscape changes faster than one would expect. A valued customer today could be a competitor tomorrow or a new entrant could appear in the market. An identified competitor might not actually be fighting for the same customers as you are or employ a totally new business model that disrupts the way you make money and the way customers look at your products.
How do you do it? There are many different sources for competitive information once you have identified who your competitor is. Think of annual reports, competitor websites, industry journals and press, competitor vacancies, sales or directly from customers, published or bought market research, etc… You have to decide what is right for your particular competitive situation.
So to ensure that you as a product manager bring the most competitive products to the market make it your policy to be pro-active, keep a continuous eye on your competition and ensure your competitive information is up to date and available to sales and your management.