Know your competition bog post. Cyclists racing on country roads on a sunny day in the UK.

Know Your Competition

May 16, 2024

If you work for a company that sells peanut butter, you probably know a lot about the people who buy your product. Where do they live? What is their annual income? How often do they purchase? What else do they eat it with?

Similarly, if you work for a company that provides a service, like accounting, you know the demographic profile of your typical customer. You understand their motivations and challenges, and how you can help solve at least some of their problems.

But there are an abundance of options, and customers don’t have to choose your product or service. You need to really know your competition to develop effective marketing strategies.

So many choices

It’s easy to name direct competitors – businesses that offer the same products or services as you. They are interchangeable with your business in the eyes of the buyer.

Indirect competitors solve a similar problem, but in a different way. For example, airlines compete with trains, cars, and buses as options to move people from one place to another.

Disruptors threaten to replace the need for your products or services entirely. Think of mobile phones versus traditional landlines, or e-commerce retailers competing with bricks-and-mortar stores.

But some of the toughest competitors are often hidden from view.

Intangible competitors

From the buyer’s point of view, any of your competitors may be viable options. But choices are also shaped by their expectations, biases, distractions, and inertia. Often invisible or unknown, these psychological forces are your intangible competitors.

What do you know about your customers? What are their preferences and motivations? What do they want from you? Or what is stopping them from choosing you?

Expectations

In addition to competing against industry incumbents and upstarts, a business is competing against the expectations of its customers.

The best experience a customer has anywhere, becomes the minimum expectation for the experience they want everywhere. Whether they are checking into a hotel or a hospital, buying a car or a cup of coffee, using a phone or a frying pan, customers are comparing you to the best – across industries and product categories – not just those in your market niche.

  • Learn from your customers – and from the companies that are exceeding their expectations.
  • Conduct consumer research to deeply understand what they value in terms of product quality, service, and convenience (among other things).
  • Seek feedback after purchases to identify and address any gaps between expectations and reality.

Biases

Loss aversion is one powerful psychological bias that can influence consumer purchasing decisions. Research has shown people will often go to greater lengths to avoid losing something they already have, than to obtain something new. Businesses can leverage loss aversion by framing offers as potential losses to avoid.

  • Free trials can make consumers feel they already “own” a product which makes them more averse to losing it.
  • Limited-time offers create an impression of scarcity and a sense of urgency: “Don’t miss out on savings!”
  • Money-back or satisfaction guarantees reduce the perceived risk of loss if the product doesn’t meet expectations.

Distractions

We live in the age of distraction – the attention economy. Consumers are more distracted than ever due to the prevalence of digital devices and multitasking. The increased cognitive load from multitasking can decrease attention, precision, and working memory while increasing stress levels. Constant distractions also make it more difficult for consumers to build trust and brand loyalty.

  • Aligning your brand with a particular lifestyle or experience can trigger an emotional response. This acts as a mental shortcut to consideration.
  • Make it easy. Design for simplicity and convenience to reduce the mental load.
  • Consider the context. You need to understand where consumers will receive your offer so your messaging and visuals are tailored to the platform.

Inertia

Objects in motion tend to stay in motion, and objects at rest tend to stay at rest – unless acted upon by a force. It’s basic physics. It also explains one of the most difficult consumer habits or attitudes to change – the fact that they could choose to do nothing at all. People stick with familiar brands, products, or services out of habit, even when alternatives may offer better value or benefits.

  • To make the unfamiliar seem familiar requires repeated exposure to a new idea, product, or service. This exposure increases positive associations and consideration.
  • Analogies help explain unfamiliar or complex offerings by drawing parallels to concepts or experiences the audience already understands (e.g., “It’s like Uber for dog owners.”).
  • Build trust by association. Who says it is as important as what they say.

Summary

When designing products and services, understanding the invisible forces affecting human behavior is just as important as surveying the tangible competitive landscape.

You won’t find that information on a spreadsheet. If you want to know your competition, you need to understand your customers’ motivations and challenges more deeply. You need to talk to them.

For more thoughts on understanding your audience, read The River Parable.

Dan Woychick is a problem solver, creative collaborator, and owner of Woychick Design. He helps purpose-driven organizations raise awareness, inspire donors, and move people to action. Connect here: Instagram | LinkedIn | Twitter

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