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.