What is a good strategy to understand Competition?

I will start with the basics to solve this challenge.

• Competition: 

Let's try to understand who are the competitors. In some cases, it is difficult to find out which companies or products are competing with you.

Consider Google marketing business where business can market their products through Google's website (Google search, Youtube etc). Now Google won't consider Amazon's Echo (a home speaker) as a competitor for their marketing business but they still launched Google Home. The reason lies in understanding customer behaviour. If customers switch to Amazon Echo to find what they need, they will less frequently use Google Search and that is a threat to Google's business model.

You need to find out who your customers are and their behaviours. Think about the substitutes to your product or service. Once you know the competitors, you can map them using certain ways. This will help you understand market competition and relative market share. 

• Products

1. Value drivers: Value drivers helps a company to find out how the customer is going to compare products in the market. There are three value drivers: Technical, Functional and Emotional. Customers will measure this against the price of the product and compare it with a competitor's product. 
2. Price ladder: Price ladder is a method where you can compare a product feature and its price in the market. It allows understanding the consumer's psychology with product features. You can use a competitor's price to measure their product's value drivers.
3. Product lifecycle: Now to find out the more about competitor's you can look at product lifecycle. 

• Customers

You can learn more about the customers using some basic research. Below is a link which lists of techniques you can use to learn more about customers:

Customer Analytics

How to know if customers are moving from your company's product/service to a competitor's?

You can use several metrics for this purpose, some trends can be co-related to this phenomena.

1. Change in sales or revenue over time: Look at revenue of the company's revenue and revenue from a certain market, the revenue of the category of product, the revenue of product.
2. Change in Market Share and Growth Share: These will indicate if the customer is moving to other competitors.
3. Growth rate: If the company's growth rate is less than the industry's growth rate than this can tell the decline in customers.