Know Your Competition

in Competition

Every week before a game, professional football coaches and players spend hours and hours preparing for the next week's game. In addition to the time they spend working on their own skills and plays, they spend an enormous amount of time studying their opposition. They analyze their competition's strengths and weaknesses, look at their own strengths and weaknesses, and then formulate their strategy based on that. If their team has a great running game, and the opposing defense is horrible against the run, they will choose to highlight their ground game. They have to first understand themselves, and then understand their competition to properly formulate a strategy.

The same is true in business. It is essential that you know your competition. Sometimes it's easy to identify and combat your competition, but let me point out to you 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: direct competitors, indirect competitors, and the dreaded "inertia." To illustrate these three kinds of competition, let's use weight loss products.

Let's say you're marketing an all-natural weight loss product that a person takes in the form of pills that metabolically "melts" fat away. Remember there are three categories of competitors -- direct, indirect, and inertia. Who are your direct competitors? First of all, the other 50 to 100 products on the market that are pills that metabolically melt away fat. There are a ton of them. You could also include similar products, like weight loss shakes, weight loss skin patches, products that you drink, and things like that. These are all products that the customer could buy instead of yours that at least claimed to do the same thing.

What about indirect competitors? Indirect competitors are products that the prospect could buy instead of yours that aren't the exact same kind of product, but that offer the same benefits and results. So, ask yourself this question: What is the end benefit of using your product or service? Then, ask yourself, what other kinds of products offer the same end benefit? That's your indirect competition. For weight loss there are tons of them: Since the end benefit you're promoting is weight loss, think of all the other products that can do that, including weight loss clinics like Weight Watchers & Jenny Craig, books, audio & video tapes, personal trainers, doctors, chiropractors, acupuncture, health food, fitness equipment, sports equipment, membership gyms, and some options that don't even cost money, like exercising at home. These are all things that your prospect could do or buy instead of buying your product. These are your indirect competitors.

And what about the "dreaded inertia?" This is a tough competitor to combat. It's called "DOING NOTHING." Your prospect could just not do or buy anything. In the case of our diet aid, it means staying fat -- 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, he has already proven that he's really good at doing it.

So why do you want to know your competitors? Because then you can design your marketing and advertising strategy to address and combat them. And the advertisements would be different, depending on the competition. Now that we've identified each of the three kinds of competitors for the weight loss pill, let's determine how that would effect our advertisements. First, if you were selling against direct competitors, you'd have to articulate all the reasons why your formula was superior... whether that means better or more scientifically proven ingredients, higher doses of certain nutrients, cheaper prices, it has to be taken less often, the pills are smaller, the supply last longer, less side effects, or whatever. The specifics are up to you.

But what 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 message won't carry much weight. They'll hear 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--which is an indirect competitor. But for the weight loss, you could talk about how much easier the pills are than going to the gym, or how much cheaper they are than buying an expensive piece of exercise equipment that you'll hang clothes on and then sell in a garage sale in 2 years. You could talk about how much cheaper the pills are than going to Weight Watchers, and how much less painful than going to the acupuncturist. And so on.

Think about what your strategy would be if you were selling against inertia...or in other words, 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 that they're doing nothing is they perceive all their options to be too hard, too expensive, or too time consuming. You would be introducing a way to lose weight that overcomes all those problems. You probably wouldn't even need to mention direct competitors.

Let me give you a real life scenario. There is a company that sells a franchise-like business opportunity in the e-commerce industry. So let's say that you're going to write and place ads with the intent of finding people who are interested in investing in starting their own business. Who do you compete against? Direct competitors? Indirect competitors? Inertia? Do you know? The answer is that it depends on where you advertise.

One place that people who are in the market for buying or starting a business go to find ideas is Entrepreneur Magazine. There are tons of ads in there for businesses -- over 300 different opportunities, in fact. So in this case, advertising in Entrepreneur Magazine, they are competing against direct competitors--or in other words, all the other business opportunities vying for the business. So in this case, we hit the prospects head on with a headline that said, "Headline."

On the other hand, we also do a lot of radio advertising to find people who are interested. In this case, however, we would be competing against 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. They're not thinking, "Oh, I hope I hear an ad for a business opportunity. I sure would like to drop 20 g's on something today." No, they're not thinking that at all. In this case, you have to create the interest from scratch and turn them on to the idea of making more money by getting involved in a business. You have to say things that get that fuse lit just a little bit. You can't just say that this opportunity is superior to other opportunities and here's why. It wouldn't make any sense. Could you say those things to the Entrepreneur magazine crowd and have them make sense? Absolutely. But not the radio audience. See how that works?

Now I know you're not selling a franchise, and I know you're probably not selling a diet pill. The point, though, is to identify your competition. Ask yourself the questions we just went over and make a list of these things:

1) Who are your direct competitors?

#2) Who are your indirect competitors? Remember, you find those by asking, first, "What is the end benefit of using your product or service? and then, second, What other kinds of products offer the same end benefit? And finally,

#3) Does the prospect have the option of doing nothing, and if so, what would you have to say to get him to take action?

To give you a hint on this one, it needs to be really low-risk. For example, with the furniture store and the Inventory Update List, they are not only against other furniture stores, but also against inertia. Think about it, it's easy to not go to any furniture stores at all. Remember how the solution involved offering the low-risk option of signing up to be on the update list? Can you apply this into your business?

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Lee Hale has 1 articles online

I'm probably a lot like you. As a young man, I used to sit and dream of being rich someday. Big houses, fancy cars, trips to exotic places, and everything else that goes with it. Most of all, I wanted the freedom that came with having money... the ability to do whatever I wanted to do whenever I wanted to do it. About halfway through my tour in the US NAVY, I had to make a decision: should I go into the workforce and get a JOB when I complete my enlistment, or should I try to start my own company?

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Know Your Competition

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This article was published on 2010/04/04