Marketing Tip: Avoid Direct Competition
Coca-Cola and Pepsi-Cola have been engaged in direct competition for over 100 years, which is about 99 years too long. Originally marketed as health tonics, the two products are very similar, cost about the same, cater to the same market, and have never established any meaningful product differentiation. Such protracted, intense competition would be very costly to most businesses in most industries. There’s a lesson in it for all of us, though.
aim to prosper in peace
Direct competition is an unnecessarily difficult way to do business. The level of difficulty relates to the maturity of the market and the innovative capacity of the competitors. Yet, all markets mature and it’s better to prosper in peace than to fight and starve.
identify a niche
To enjoy a more comfortable place in a competitive market, it is wise to identify and satisfy an under-served niche through differentiation from competitors. This way, you strive not to dominate the game but to dominate one particular aspect of the game – your own.
cheap like Cott
Even if your product was a knock-off of Coke or Pepsi, you could claim market share by selling it at a lower price. This way, you could attract the most price-conscious segment of the market through price-based positioning and avoid the Coke-Pepsi fight. This is how Cott has prospered in the cola market.
different like Jones
An alternative way to create a niche through differentiation is to create a strong brand image that attracts people to your product – even if the product is essentially the same as everybody else’s. The Jones Soda Company does this. Its clear-glass bottles labelled with photos taken by customers and overtly modest writing are a hit with the market segment that likes quirky originality.
position for profit
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Click on these links for more:
The Law of Focus: How to Avoid Direct Competition (part 1 of 3) (YouTube video in new window)
The Law of Focus: How to Avoid Direct Competition (part 2 of 3) (YouTube video in new window)
The Law of Focus: How to Avoid Direct Competition (part 3 of 3) (YouTube video in new window)
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