Competing alongside the competition…
How to use a competitor as a basis for a realistic trade strategy
By Brian Moore, Global retail consultant and CEO EMR-NAMNEWS & Kamcity.com, mailbox@namnews.com

With product, company and customer all going through different stages of different lifecycles, and the competitive profile changing in respect of all three, simultaneously, it is little wonder that companies are tempted to evolve a policy of ‘ignoring’ the competition and marketing to a customer as if it were the only route to the consumer, with each customer receiving this ‘exclusive’ treatment in the name of a ‘tailor-made’ approach.

Moreover, given the current degree of media and data saturation, it has become increasingly difficult to help the consumer to appreciate the subtle differences in a brand’s ability to meet individual need better than the competition.  These difficulties can be compounded by a fixation upon the competitor, amounting in some cases to face-to-face confrontation, with the only result being a dilution of energies and reduced focus upon the satisfaction of consumer need.

Placing the competitor in context

The competitor is not, and should not be treated as the enemy.  Each is competing for the mind of the consumer, and a focus upon consumer perception of the available alternatives will be more productive in terms of the optimisation of supplier resources.  Thus competing alongside, within a realistic acknowledgement of the competitor’s relative appeal, will be more productive. The supplier is thus merely using the competitor’s offer as a reference-point, focusing upon usable differences and then demonstrating to customer and consumer how the brand offer can more effectively meet the target consumer’s need, cost effectively.  The emphasis should be on how one can capitalise upon the short period which a market allows before a better, cheaper, more effective alternative offer is thrown up in opposition…

Incidentally, if a competitor fails to emerge as a threatening alternative, a more fundamental question has to be asked regarding the assumed ‘unique advantage’ over the competitive offering in attempting to meet real need in the marketplace…  In expressing the offer to the customer it is only realistic to bear in mind that the buyer is merely interested in maintaining a competitive advantage over other categories and departments, and perhaps with other retailers in a macro sense.

Meeting the Buyer’s macro-need

The buyer wants to maintain a fair-share balance within the category that is generally ‘right’ and allows the category to compete as a whole with other categories and with other retailers’ version of the category as part of the total shopping experience.  The buyer should not be expected to operate at SKU level.  It is therefore a pity when availability shortfalls provide a negative trigger that detracts from appreciation of the overall proposition. 

Within this set of priorities, expressions of ‘petty’ differences between brand propositions become a waste of effort and are ineffective in terms of providing a basis for securing in-store compliance.  Equally, it is important to keep the buyer focused upon the category within a total aisle experience versus that of competing retailers.  Again the emphasis should not be upon merely copying or attempting to neutralise the competing retailer’s approach, but instead, the competitor’s offer should be used as a reference point from which to establish a ‘unique’ shopping experience, in-store.

Capitalising on out-of-stocks

Focusing upon getting the Marketing Mix basics right will then allow the supplier to take advantage of inevitable out-of-stocks, changes in brand-switching rate by consumers and any performance shortfalls of even the most daunting of competition, within an agreed ‘fair share’ balance of brands and own-label in the retailer’s version of the category.  On balance, competing successfully is less about seeking and exploiting ‘secret’ information or matching a competitor’s moves blow by blow, and more about identifying real points of difference between perceived alternatives available to the consumer wanting to satisfy a need.

Success is then about meeting that need faster and in a more effective manner than the competition, operating alongside, SKU by SKU, in the aisle…

Simplifying the brand’s Marketing Mix…

Positioning and making a product proposition can be made more effective by placing it in a real-world context of available competition.

Essentially, it is important to reduce an offer to a simple expression of the brand’s Marketing Mix in order to then realistically compare this with the competition through the eyes of the target audience.  This striving for simplicity will help to reveal ‘unique’ differences and advantages that can be emphasised.  It may also reveal insights being used by the competitor that have been missed by others in the rush to market.

Effectively, competitor-based marketing means starting with the consumer and assessing the product, in terms of performance related to real need, price as the total perceived cost to the recipient, presentation in terms of all non-price expressions of the offer, and place as the ability to make the entire package available to the consumer-shopper, within a real-world competitive context.  This approach has been used in designing a free tool to help identify perceived differences between competing offers, available on www.kamcity.com/namcalc/BMA/BMA.htm

Converting shoppers into buyers

Given that most consumers attempt to satisfy their needs in-store, the ability to convert shoppers into buyers in the aisle, alongside the competition, defines real success in marketing…  Turning shoppers into buyers means taking a realistic view of the brand versus available alternatives, optimising shopper insight and using it as a blueprint for in-store work, in terms of both creative application and execution.  In turn this provides a way of measuring the results of combining consumer insight and shopper insight, taking into account that individual behaviour alters radically in-store and acting accordingly.  This means analysing shopping behaviour and using the results to drive innovative in-store marketing, which can in turn be used to produce a quantifiable and acceptable ROI by effectively combining marketing and selling, in the aisle.

In order to optimise the retailer’s competitive edge, it is important to also conduct a Buying Mix Analysis from the shopper’s perspective, comparing the retailer’s offer (again see tool below) with those of other retailers available to the consumer-shopper, so that the retailer can optimise performance alongside real-time competitor retailers, ‘in the street’…

The role of shopper marketing

Because of the ability to combine retailer and supplier consumer-shopper initiatives, shopper marketing has become a productive forum for retailers, brand-suppliers and agencies.  By focusing upon sales uplift at store level, it facilitates the design of workable plannograms, and validates in-store TV (Wal-Mart/Tesco), besides helping to improve evaluation of promotions. In other words, it links initial and repeat purchase, meeting the requirements of the acid-test in consumer persuasion…  However, in the process, it raises several issues for suppliers including who pays, for what, who talks to whom, about what, and in general, how does the role of Sales change, and who assumes overall responsibility for results?

Effective shopper marketing also means treating the retailer as a communications medium, optimising the use of basic and emerging in-store media including posters and sampling, floor-posters in the aisle, trolley adverts, adverts on milk cartons & fruit, interactive kiosks and screens, and retailer TV including advertisements and editorial via in-store plasma screens.

Shelf-level realism

In practice, since the retailer uses the brand to draw people to the store and into the aisle, there to be confronted by a fair share presentation of alternative brands and an own-label in any one of four generations, it is important that the supplier maintain a realistic perception of competitors’ relative pulling power throughout the process.  Moreover, since the retailer does not much care that a shopper switches to alternative brands/private labels in the category in the event of out-of-stocks occurring on a first choice, the supplier also has to focus upon ensuring minimal availability issues with the brand, at all times.  If this approach seems difficult, it is perhaps worth bearing in mind that the consumer-shopper has very little perception of competition as such, and merely sees barely distinguishable versions of the same ‘need-satisfiers’ in their repeating product-rotation within the category.

Competitor-based key account management can help to break the loop…..

 Free Buying Mix Analysis tool at  www.kamcity.com/namcalc/BMA/BMA.htm