Trout & Partners - Global Leaders in Strategic Positioning

Trout & Partners

Global Leaders in Strategic Positioning

The age of competition
A survival guide in an increasingly competitive world

We live in a world where everyone is after everyoneís business. And itís a world in which, if you lose your business, you never get it back. A few numbers make the case.

Consider global trade as a percentage of gross national product which is an excellent measure of the global economy. In 1980 the percentage was about 12%. By 2013, the percentage tripled to around 28%. In other words, about one-third of what is being produced around the world is sold globally. Thatís a lot of business and a lot of competition.

But what really is painful is that success breeds competitors like rabbits. With todayís technology and lawyers, even a patent doesnít seem to slow them down. I once sat in a meeting where their lawyers were proudly stating that they had gotten around, not one but, twelve patents on a competitorís product. A little change here and there was all they needed. This means that new competitors will arrive probably sooner than later so you had better get launched and get going in a hurry. But be thankful you are not in Russia where a highly visible success can lead to losing your business to one of Mr. Putinís friends. The rule of law isnít what it should be in Russia.

If you look at the number of products and variations being offered in each category from the 70ís to the late 90ís, once again you are looking at doubling or tripling. For example, bottle water brands went from 16 to 50, breakfast cereals from 160 to 340, pain relievers from 17 to 141. Whatever category you are in, you have a lot of competitors trying to take away your business. So what do you do? Here are some guidelines.

  1.  Avoid strength. Attack weakness.

    This is the overriding principle to staying out of trouble. What you want to avoid is wishful thinking. But to do this requires a change in philosophy.

    The classic definition of marketing leads one to believe that marketing has to do with satisfying consumer needs and wants. Marketing is ďhuman activity directed at satisfying needs and wants through exchange processes,Ē says Philip Kotler of Northwestern University.

    Marketing is ďthe performance of those activities which seek to accomplish an organizationís objectives by anticipating customer or client needs and directing a flow or need-satisfying goods and services from producer to customer or client,Ē says E. Jerome McCarthy of Michigan State University. Marketing people traditionally have been customer-oriented. Over and over again they have warned management to be customer-rather than production-oriented.

    Ever since World War II, King Customer has reigned supreme in the world of marketing.

    But itís beginning to look like King Customer is dead. And marketing people have been selling a corpse to top management.

    Thatís because today, every company is customer-oriented. Knowing what the customer wants isnít too helpful if a dozen other companies are already serving the same customer. General Motorís problem is not the customer. General Motorís problem is Ford, Chrysler, and the imports.
  2. Competition is the first thing to analyze in a strategic plan.

    To be successful, a company must become competitor-oriented. It must look for weak points in the positions of its competitors and then launch marketing attacks against those weak points.

    There are those who would say that a well-thought-out marketing plan always includes a section on the competition. Indeed it does. Usually toward the back of the plan in a section titled ďCompetitive Evaluation.Ē The major part of the plan usually spells out the marketplace, its various segments, and a myriad of customer research statistics carefully gleaned from endless focus groups, test panels and concept and marketing tests.

    In the marketing plan of the future, many more pages will be dedicated to the competition. This plan will carefully dissect each participant in the marketplace. It will develop a list of competitive weaknesses and strengths as well as a plan of action to either exploit or defend against them.

    What does all this portend for marketing people of the future? It means theyíll have to be prepared to wage marketing warfare. More and more, successful marketing campaigns will have to be planned like military campaigns.

    Strategic planning will become more and more important. Companies will have to learn how to attack and to flank their competition, how to defend their positions, and how and when to wage guerrilla warfare. They will need better intelligence on how to anticipate competitive moves.

    Itís all about pursuing the right competitive strategy. Itís all about understanding the four types of marketing warfare. They are defensive, offensive, flanking and guerilla warfare and my book entitled Marketing Warfare explains it all.
  3. The mind is the battleground.

    Positioning is how you differentiate yourself in the mind of your prospect. Itís also a body of work on how the mind works in the process of communications. (Iíve written a number of books on this subject.) In essence, you must deal with the fact that minds are limited, minds hate confusion, minds are insecure, minds donít change and minds can lose focus. The biggest competitive mistake usually made is that of trying to be everything to everybody in the mind. Itís one idea to a customer in the mind and once you begin to blur up what you are, the weaker your position becomes. This only opens up the customerís mind for your competitor.
  4. Countering a price attack.
    A low price is a big draw but there is an inherent problem with this strategy. Competitors have pencils so they can mark down prices instantly which makes price a very bad differentiating idea. When attacked by a low price competitor, the best counter strategy is to push quality and reliability. This move sets up the benefit of longevity. Paying more for a product that lasts longer makes sense to most people. It also puts your price competitors on the horns of a dilemma. Adding more quality to their products only raises their cost structure. Itís hard to be cheap and high quality at the same time.
  5. Staying ahead of competitors.
    The best weapon for a strong brand is ďnew and improved.Ē You canít just sit there and become a target.

    No other company in the history of marketing can match Gilletteís efforts in the razor blade world. They are constantly adding blades and features to products that often replace existing products in which they have invested heavily. Today they have over sixty percent of the razor blade business, a number they have held for decades. They also have very few competitors because most have discovered that taking on Gillette can be costly and not very productive. If there were a competitive hall of fame, Gillette would be at the top of the list.
  6. Stay nervous.
    Finally, paranoia is the key to success. What I mean is that constant diligence is critical in a competitive world. As I said, everyone is after everyoneís business, so a good worrier is a good marketer.

    The biggest mistakes Iíve witnessed are companies that didnít take their competitors seriously until it was too late. The level of competition in todayís world is exceptional and only getting better. It is truly the survival of the fittest.

    What people have to realize is that flexibility is a necessary mind-set if you want to succeed. You canít predict the future so you must be ready to adapt.
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