Why Competitors’ Strategy may not work for you?

Businesses often make the mistake of either over-estimating the efficacy of competitors’ marketing strategies or emulating them without really understanding the reasons for their success. For product managers, an important part of the product planning process is understanding the total market environment in which customer needs are being served by competing products too.

Understanding should not, however, mean imitation.

There are a number of reasons why the strategy of even the most successful competing product may not work for yours.

Different objectives. If one product aims to go global within a year of launch while the other wants to consolidate in one large market and achieve profitability first, can their strategies be similar? For instance, in the highly competitive gaming industry, Sony’s strategy has been to bundle console games with their Blu-ray optical drives, thus encouraging price sensitive customers to purchase the PS3. However, Nintendo’s strategy is altogether different – it has created a console and games that appeal to ‘casual gamers’ who were ignored by Microsoft and Sony (which appeal to hardcore gamers.) If Nintendo were to copy Sony and Microsoft and target the hardcore gamers, it has little chances of success since its gaming console is much simpler and would not fit their preferences.

Cause and effect. The successes that you see in the market may not necessarily be the result of the strategy that your competitor discusses publicly. For instance, some products sell in large numbers at heavily discounted prices, but the success may be attributed to entry into a new market or identifying new features with high customer appeal; the real reason is not evident until much later when the financials are published.

It is important to identify the real reasons for success (or failure) by listening to customers, not competitors or media reports. Why are customers buying, or not buying?

Time of market entry. If your product fulfils a need in a completely new way, you may need to adopt ‘pioneering’ strategies such as educating customers and selling the product concept. If you are a late entrant in a crowded market, your marketing strategy will reflect that. There is no one-size-fits-all strategy or ‘golden rule’ that holds true for every situation.

Without imitating competition, there are still many valuable things one can learn from competing products, but that should be a subject for another post!

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