I’ve been in the marketing business for over 40 years. I’ve seen the good old times and the difficult new times. When people ask me what has changed, my response is one word: competition. What I thought was a competitive marketplace looks like a tea party today. Everybody is after everybody’s business.
Because of this ugly fact of life, the key to survival is to start every marketing plan with your competition in mind. It’s not what you want to do; it’s what your competition will let you do. These survival tips will help lead the way:
1. Avoid a Competitor’s Strength and Exploit His Weakness
When a competitor is known for one thing, you have to be known for something else. Quite often, a competitor’s built-in weakness is the something else that you can exploit. If McDonald’s strength is that of being a little kids’ place, Burger King can exploit that by being a grown-up kids’ place. For years, Detroit’s automobiles were perceived as not being very reliable. Toyota was able to exploit these perceptions and take ownership of the attribute of “reliability.”
But remember, we’re talking strength and weakness in the minds of the marketplace. Marketing is a battle of perceptions. What you’re really doing is exploiting perceptions.
2. Always Be a Little Bit Paranoid About Competition
We’re living in a world where everyone is after everyone’s business. You have to realize that one of your competitors is probably in a meeting figuring out how to nail you in some way or another. You must be constantly gathering information on what your competitors are planning. This can come from an astute sales force, a friendly customer or from some research.
Never underestimate your competitors.
In fact, you’re safer if you overestimate them. AT&T, DEC, Levi’s and Crest are testimony to underestimating the kind of damage competitors can do even to market leaders.
3. Competitors Will Usually Get Better, If Pushed
Companies that figure they can exploit a sloppy competitor make big mistakes. They ridicule their product or service and say they can do things better. Then, lo and behold, their big competitor suddenly improves, and that so-called advantage melts away.
No. 2 Avis did indeed try harder, but Hertz quickly improved its efforts. Then one day it ran a devastating ad with this headline: For years, Avis has been telling you they are No. 2. Now we’re going to tell you why.
Then Hertz went on to lay out all its improvements. Avis never quite recovered. Never build your program around your competitors’ mistakes. They will correct them in short order.
4. When Business Is Threatened, Competitors Aren’t Rational
Survival is a powerful instinct in life and in business. When threatened, all rationality goes out the window. I have a favorite story about this tendency.
A startup company came up with a unique packaging system for baby carrots that produced a decided price advantage over the two big suppliers already in the business.
To get on the supermarket shelves, the company entered the market not with better carrots but with a better price, which the established brands immediately matched. This only forced the new company to go lower, which once again was matched by its competitors.
When a board member asked the startup’s management to predict what would happen, the management predicted that the two big companies would not continue to reduce their prices because it was “irrational.” They were losing money because of their older packaging technology.
The board member called me about the prediction. I advised him that they would continue to be irrational until they forced this new upstart out of the market. Why would they make it easy for a new company that threatened their stable business?
At the next board meeting, the startup’s management was encouraged to sell its new manufacturing system to one of the established brands–which it did for a nice profit.
So much for companies being rational.
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