Consumers make choices. Either consciously or sub-conciously, before they use your brand, they consider their options.

And let's be clear, this isn't just about purchase, it's about use. Once they buy, they still have to decide to use. And this is important because it's only after use that they can reward you with...repurchase.

Stories of brands that failed to understand their competitive set are legion. Oh most of us understand the core-category competitive set (who is next to us on the grocery aisle). It's the cross category set that blindsides you. Coca-cola and water. Primetime TV and facebook. Music and video games.

A great place to start understanding your true competive set is understanding usage occasion. Most brands have various usage occasions, not just one, so they have different competitive sets. Understanding consumer behavior inside each of those occasions is key and may allow you to better pick your battles. And this understanding will evolve with time. One key consumption occasion for recorded music (CDs) is driving/riding in a car. For decades, competition was limited to radio. Today telephone calls and texting are the strongest competitors.

And it's not enough to know who the competitors are, but what are the factors that drive choice among the competitors? Example, guys that listen to sports talk radio in the car. One usage occasion competitor is "work related cell phone calls". So what happens when the economy tanks, business goes sour and job security goes down? Guys work harder, spend more time on their phones chasing business. Sports talk usage goes down. It's not about JACK FM, its about the jacked economy.

It's not always easy to understand what to do against your cross category competitors, but you have to understand who you are fighting against to win the battle. As a marketer, your challenge is that most in your organization will fixate on core category competition. This is typically driven by the need for short term sales results, but fails to see the forest for the trees.

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Comment by Michael B. Moore on September 18, 2009 at 9:47pm
WOW - David, this is a fantastic piece. It's actually precisely the type of content that I envisioned attracting when I created The Brand Farm! Congratulations on an extremely well written, strategically sound post! :-)
Comment by DavidCrace on September 19, 2009 at 12:25am
Thanks for the encouragement. Only been blogging for two months, just finding my voice.
Comment by Preston Samuels on September 19, 2009 at 8:31am
How broadly do you define competitive set though? For example, does every show that comes on TV at a certain time compete with every other one? Does Real World really compete with CNN news or something on Home & Garden TV or Nickelodian?

That's the issue for me, I honestly have a hard time finding the boundaries. If I'm thinking about a software brand, for example, should we just be looking at exact functional replacements or anything else that a consumer could be doing on their PC at the time? If its a CPG product, is the competitive set defined by products just in that particular category or anything else that person could be eating then? For snacks, for example, do chips really compete with something like a Balance Bar?

Does Coke really compete with water? Aren't the two different enough to be considered not competitive? Are consumers really walking into the aisle at their favorite super market and weighing whether to buy Coke or bottled water? Does a $100 bottle of wine compete with Coke? How about milk or some of the healthy drinkable yogurts?

Any insight on how to think about this is very much appreciated.
Comment by DavidCrace on September 19, 2009 at 11:55am
I would start with primary usage occasion, understand needs in that occasion among target audience and walk through the consumer decision tree in that moment.

When I walk into a convenience store soft drinks and water go head to head because I am usually looking for something to sip on while I drive. After a run, I need refreshment and water replacement...soda is not in my set. The answer to competive set is going to be heavily influenced by occasion and target. Health concious consumers likely view chips as a guilty pleasure snack, Non-health concious may see them as meal replacement.

Not sure that helps, but I'd start there and try to look at the 4-5 usage occasions that are vital to the brand.
Comment by Gunnar Branson on September 25, 2009 at 2:37pm
Great piece, David. This is one of those areas that companies miss almost consistently. The assumption always seems to be that competitors are only the folks in your immediate category. Preston - I love that you brought up the Coke vs. Water question - in great part because I've always been fascinated by Coke's long standing (perhaps tongue-in-cheek), strategy to replace tap water...which I think they've made quite a bit of progress - especially since they now bottle water as well. Thirty years ago, when people were thirsty, they put a glass under a tap, and drank fresh water for less than pennies. Now, most people hesitate to drink anything that has not been packaged in a bottle or can - most likely by Coca-Cola.

This implies that David's thoughts may belong at the beginning of any companies strategies - that by defining your competitive set, you are defining your destiny.


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