Page 68 - Duct Tape Marketing

52 Part I: Getting Started in Marketing

Knowing what you’re up against

Your business faces three kinds of competition, as illustrated in Table 4-1.

Direct competitors

These businesses offer the same kinds of products or services you do and
appeal to customers in the same geographic markets where you do business.
To increase your market share, think about how you can woo business away
from your direct competitors and over to your business.

Indirect competitors

You’re either losing sales to or splitting sales with these businesses. For
instance, if you’re selling paint, and your customer is buying the paintbrush
somewhere else, that brush seller is an indirect competitor of your paint store,
because it is capturing the secondary sale. To increase your share of customer,
figure out what kind of business is being won by your indirect competitors.
Then find a way to serve as a one-stop solution for your customers by offering
your primary product and also the secondary, complementary, or add-on prod-
ucts that your customers currently leave your business to obtain elsewhere.

Phantom competitors

No one has to buy what you’re selling. In fact, one of the biggest obstacles to
the purchase — and therefore the biggest phantom competition — is your
customer’s inclination to do nothing at all or to find some alternative or do-it-
yourself solution instead of buying what you’re selling. Taking the paint store
example a step further, if you’re offering the choice between enamel and latex
paint, and your customers are opting for never-need-paint vinyl siding, that
siding outlet is a phantom competitor capable of roadblocking your business.
For that matter, if your customers decide that their houses can go another
year without a paint job, the option to do nothing is your phantom competi-
tor. To increase your share of opportunity, think about where your phantom
competitors are hiding. Then find ways to make your product an easier, more
gratifying, more satisfying, and more valuable alternative.

Table 4-1 Examples of Competition

The Product Direct Indirect Phantom
Competitors Competitors Competitors
Log home
construction Other log Traditional housing Remodeling, motor
homebuilders
contractors, kit homes, coaches, time-share

manufactured housing offers, doing nothing