Insight #20: Know Your Competition

Sometimes it’s easy to identify and combat your competition. But, there are a few scenarios you may not have considered when sizing up your competitors and formulating your strategy. You can classify competition into three general categories:

Let’s use a common product - a weight loss pill - to illustrate these three kinds of competition. Assume you’re marketing an all-natural weight loss pill that metabolically “melts away fat”. Consider the three categories of competitors - Direct, Indirect, and Inertia.

They’re the companies with other similar products on the market that have the same claims backing them up. These could include another 50 to 100 diet pill labels, each product promoting its ability to metabolically “melt away fat”. There’s a ton of them. You could also include similar products like weight loss skin patches, special shakes, etc. The list goes on. These are direct alternative products, products a customer could buy instead of yours. All of them claim, at least, to do the same thing.

Indirect Competitors are slightly different products or services a prospect could buy instead of yours. They’re not in the same exact category, but they offer the same benefits and results. So ask yourself this question: “What are the other kinds of products or services that offer the same end benefit that your product or service offers?” These are your Indirect Competitors. For weight loss, there are tons of them. Since the end benefit you’re promoting is weight loss, think of all the other products and services that can do that. The list includes Weight Watchers, Jenny Craig, Curves, books, audio & video tapes, CDs & DVDs, personal trainers, doctors, chiropractors, acupuncture specialists, hypnosis practitioners, health food, fitness equipment, sports equipment, membership gyms, clinics, weight-loss rehab retreats, as well as some options that don’t even cost money, such as exercising at home. These are all things your prospect could do or buy instead of buying your product. These are your Indirect Competitors.

It’s also called the “DOING NOTHING” competitor because it’s a function of someone’s complacency, inactivity, lack of motivation, and selective ignorance. Your prospect could simply decide to do nothing or to buy nothing. In the case of the diet aid, it means the individual is resigned to staying fat and taking no action whatsoever. That’s a tough competitor to beat because it costs the prospect nothing and it’s really easy to do. Plus, the prospect has already proven that he or she is really good at doing it.

Because you can custom-design your marketing and advertising strategy to address and combat them individually. For each of the three types of competitors, the advertisements should be different. Having identified each of the three kinds of competitors for the weight loss pill, let’s determine how that would affect the advertisements.

First, if you were selling against Direct Competitors, you’d have to articulate all the reasons why your formula was superior. That could mean better, more, or new scientifically-proven ingredients, greater purity, higher doses of certain nutrients, more nutritive processing, cheaper prices, fewer required dosages, smaller, more palatable pills, more easily digestible pills, longer lasting supply, fewer side effects, or whatever.

The positioning of the marketing is very different if you were advertising and competing against Indirect Competitors. First of all, your target audience better not be all that familiar with the Direct Competitors or your strictly Indirect Competitor message won’t carry much weight. They’ll hear just your comparisons against Indirect Competitors and wonder why - or if - you’re any better than the other pills on the market. It would be like advertising that a BMW is better than a bike. True enough, but people would be wondering why it wasn’t being compared to another luxury car (a Direct Competitor) rather than a bike (an Indirect Competitor). But when orienting your marketing message against an Indirect Competitor for weight loss, you could mention how much easier and more convenient the pills are than spending time and energy going to the gym. Or, you could mention how much cheaper pills are than buying an expensive piece of exercise equipment (that will collect dust and be sold 2 years down the road in a garage sale). You could talk about how much cheaper the pills are than joining Weight Watchers, and how it’s not at all painful compared to going to the acupuncturist. And so on.

Think about what your strategy would be if you were selling against Inertia - a.k.a. the mindset of prospects doing nothing at all. What would you say? What would your slant be? First, you’d probably talk about the benefits of being thin. Then, you’d compare the benefits of your products against INDIRECT competitors (for example, easier, cheaper, less work, etc.). Why? Because the reason they’re doing nothing is that they perceive all their options to be too hard, too expensive, or too time-consuming. So, you’d be introducing a way for them to lose weight that overcomes or minimizes all those problems. You probably wouldn’t even need to mention Direct Competitors.

One Monopolize Your Marketplace client sells a franchise-like business opportunity. Let’s assume they’re going to write and place ads with the intent of finding people who are interested in investing to start their own business. Who do they compete against? Direct Competitors? Indirect Competitors? Inertia Competitors? Do they know? The answer is...it depends on where they advertise.

People who are in the market for buying or starting a business often find ideas is Entrepreneur magazine. People who read this magazine are part of a Defined Market. Their particular business interests are similar and narrowly focused. Tons of business ads are in Entrepreneur – typically over 300 different opportunities per issue. Advertising in Entrepreneur magazine means competing against Direct Competitors - all the other business opportunities vying for the entrepreneur’s attention. So an advertiser could hit the prospects directly with a headline that says something such as, “The 3 Biggest Reasons Why Many New Businesses Fail And How You Can Immediately Grow and Safeguard Your Business.”

On the other hand, a lot of radio advertising could be done to find people interested in starting their own business. However, in this case, the biggest competitor would be Inertia. Someone who’s listening to the radio probably isn’t doing it so they can hear an advertisement about a wonderful new business opportunity. Radio listeners are part of a wide and varied audience with a variety of dissimilar needs and interests. These listeners are what we call prospects of an Undefined Market. With this medium, you’re casting a broad net to capture a few interested prospects. When selling to them, it’s necessary to create interest from scratch and turn them onto the idea of making more money by getting involved in a business. It would be necessary to say things that get the fuse lit just a little bit.

Going into detail about how one opportunity is superior to others, and giving the reasons why wouldn’t make any sense. That kind of approach is more appropriate for prospects who have already “raised their hands”, so to speak, and are already actively looking to buy into a business opportunity. Could this more detailed approach be presented to the Entrepreneur magazine crowd and make sense? Absolutely. They’re part of the Defined target market. They’re already actively looking around. That’s not the same case with most of the radio audience.

You’re probably not selling a franchise or a diet pill. The points illustrated above are to show you how to identify your competition. Ask yourself the questions just discussed and make a list of your Direct, Indirect and Inertia Competitors. Find the answer to those questions by asking: 1) What is the end benefit of using your product or service? 2) What other (dissimilar) kinds of products or services offer the same end benefit? 3) When your prospect has the option of doing nothing, what would you have to say to get him or her to take action? Here’s a reminder hint for #3, the last one: It needs to be really low risk!.

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