What are competitive marketing strategies? How can you assure your product will outmatch your competitors’ products?
A competitive marketing strategy is a long-term plan that businesses develop to gain a competitive advantage in the market. William M. Luther provides a few strategies he swears by in The Marketing Plan.
Keep reading to learn how to be the best in your market.
Why Is a Competitive Marketing Strategy Important?
Luther explores how other businesses offering similar benefits to yours impact your market share and profits. Understanding how many competitors you have and what their capabilities are will help you determine competitive marketing strategies to outmatch them.
Luther argues that the ideal market has few competitors providing adequate substitutions for your product or service—this commonly occurs during the introductory stage of the market’s life cycle. During this early stage, potential customers are more likely to buy from you because they have less choice. This makes it easier for you to gain market share, drive your costs down, and strengthen your position before other competitors begin to invade the market. Further, customers automatically perceive your product or service as more valuable because they can’t find suitable alternatives. This lets you raise prices, increase your profits, and further strengthen your hold over the market.
(Shortform note: How can you come up with ideas for a unique product or service that has no substitutions? In Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne argue that you can achieve this by examining how you can pursue both differentiation (raising standards and creating new features) and low costs (eliminating unnecessary features and cutting costs). For example, Cirque du Soleil achieved this by adding elements of theater and cutting animal acts from their performances. These simple changes helped them to redefine circus entertainment, appeal to new customer groups, bypass competition, and generate billions of dollars in revenue.)
How to Find a Noncompetitive Market
Luther suggests that you can create these ideal conditions by finding segments in the market that are in the introductory life cycle stage. This involves splitting your target market into different groups of customers and honing in on needs that are yet to be met.
Let’s explore how this would work for your tooth whitening product. You originally decided that your target market includes eco-friendly online consumers who want whiter teeth. However, because many competitors already cater to this market, your chances of gaining market share with your current product are slim. To counter this, you further refine your target market to include customers who want a flavored version of the product. Since this is something that other competitors don’t provide, you instantly increase your odds of success.
Strategies to Succeed in Competitive Markets
While it would be ideal to find a market with few competitors, your ideal market may already be saturated with competitors. In this case, it’s possible to outmatch those competitors who have low market shares and inadequate resources by attempting to better them. Luther suggests that you can achieve this in four ways:
- Provide a better product or service by investing in business operations such as manufacturing and quality control.
- Pretend to provide a better product or service by investing in effective marketing strategies to make your product appear more valuable.
- Provide a cheaper product or service by increasing efficiency and cutting costs while maintaining quality.
- Provide better customer service by adopting policies that promote customer loyalty and repeat sales.
Establish Your Position in the Market Through Differentiation
However, Luther argues, there isn’t much point in going up against competitors that already dominate the market, because their position will be too strong to compete against—they’ll have the advantage of a favorable cost structure and will have the resources to quickly outmatch any competitive marketing strategies you use to gain market share.
(Shortform note: Luther implies that dominant competitors have more resources than you, therefore, you shouldn’t attempt to outmatch them. However, your chances of success aren’t as bad as he makes out. Some businesses use their resource limitations to inspire innovations that outperform strong competitors. For example, Southwest Airlines used its resource constraints to reposition its offering, differentiate itself from competitors, and become one of the most profitable airlines in the industry—proving that it is possible to go up against dominant competitors and succeed.)
Therefore, instead of attempting to outmatch dominant competitors, Luther suggests that you should use marketing strategies to differentiate yourself from the competition and establish your own unique position in the market. This involves marketing both your business and your products and services in a way that differs from your competitors and aligns with what customers most want. Luther identifies two ways to achieve this: Define your brand’s personality and reinforce your marketing message.
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- How to build a team and motivate them to work together
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