Page 69 - Duct Tape Marketing

53Chapter 4: Sizing Up Competitors and Staking Out Market Share

The Product Direct Indirect Phantom
Movie theatre Competitors Competitors Competitors
Movie rentals, cable
Other movie TV, satellite services Other leisure activ-
theatres ities such as attend-
savings bonds, ing sporting events,
Life insurance Other life investment accounts, listening to live
insurance IRAs music, bowling,
brokers watching TV, doing
nothing

Paying bills, paying
tuition, buying lot-
tery tickets, gam-
bling, stashing
money under the
mattress, doing
nothing

How businesses compete

When everything else is equal, most customers opt for the product with the
lowest price. If you want to charge more, make sure that everything else isn’t
equal between you and your lower-priced competitor. Most competitors fall
into one of the following two categories:

ߜ Price competitors: These businesses emphasize price as their competi-
tive advantage. They must be prepared to offset lower profit margins
with higher sales volume. They also have to be prepared for some other
business to beat their price and therefore take away their one-and-only
competitive edge.

ߜ Nonprice competitors: These businesses charge a higher price than
their competitors. They must be prepared to compete and win based on
superior quality, prestige, service, location, reputation, uniqueness of
offering, and customer convenience. In other words, they must offer an
overall value that customers perceive to be worth a higher price tag.
(See “The value formula” section in Chapter 3.)

Winning Your Share of the Market

You win market share by taking business from your direct competitors, there-
fore reducing their slice of the market pie while increasing your own. To
advance in the market share game, here’s what you must do: