Competition is a cat and mouse game

Fear of competition kills 70% of ideas. Rest 29% don't start because they are not "new" and "novel". These are bullshit excuses. You can never do something new. Today, let's talk about competition.

Hahah, hola! This is Shantanu, writing on business, marketing and culture every week out of Singapore. The weather has been nice over last few days. A nice weather means a cool morning and evening - don’t assume the whole day to be great. Weather in SG switches back to hot and humid in less than a few minutes after rains. The rains can be hard and noisy. It often rains early morning between 5-7 am. I would most certainly lose my sleep when it happens. But I won’t complain about rains - they keep the SG weather sane. They also make this place admiringly beautiful. Most importantly, I love rains - everything about it except for flooding.

Life has been interesting, including ups and downs. Nevertheless, I slow down on weekends, sit down somewhere quiet to write this newsletter. I get exhausted when there are weekend activities. Worse when these are drinking activities.

How do you slow down? Write back to me (I will keep it a secret, promise 😉)

Let’s get started now. There 4 sections today -

1. Competition is cat and mouse game

2. How should a brand differentiate itself against competition?

   1. Simple ways

   2. Tough ways

3. How are we differentiating our products?

4. Stay near your competition

Photo by Marco Biondi on Unsplash

#1 Competition is a cat and mouse game.

Competition never stops. By law of nature, it should never stop. If you are worried about competition - change your mental framework. Having competitors in the space you want to set up a business or product means opportunity. The more the players, the larger the market. Sometimes, the market might be consolidated into few big players. Take Google or Facebook advertising. If you want to start a advertising software or company, you shouldn’t worry about market size. You should worry about the problem (aka pain point) you can solve for advertisers.

Competition is great, however, it needs to be quantified and qualified. Handling competition is an art like war. Here are a few things I would look at

1. Are consumers talking about unresolved pain points?

2. How crowded/consolidated is the market?

3. How strong is the competition - Are they cash rich, are they a villain?

4. In the past, how did new players fare?

5. Are your competitors making profits, are they growing?

Often large competitor welcomes new players - for eg. Unilever and P&G understand that new consumer brands will continue to be created. They invest in these brands, nurture them and when they early signs of success, acquire these brands. Google, Microsoft, Grab, Amazon and all other major players often invest in upstarts.

So, don’t fear competition. They could be your angel.

Porter’s 5 forces to evaluate competition

Competition is good. That doesn’t mean you should ignore it. Evaluate them. The simplest framework to evaluate competition is the Porter’s 5 forces. Semrush expands well into this simple framework, going into proper depth of each factor. I will stay away from explaining it here since it is not main topic for today. A quick advice - this framework is not mathematical, it is qualitative.

Porter’s 5 Forces framework. Simple but complicated.

#2 How should a brand differentiate itself against competition?

Now let’s come to crux of the topic - how can you look at differentiation? First, here are the assumptions (in short - valid for start-ups)

1. You are a new company - is planning to launch a product or is under 1 year old

2. Selling on online channels and use digital marketing

Second, differentiation matters only if that’s a real pain point of consumers. Hence as a step 1, please talk to your consumers. Ask them their issues with current solutions in the market.

Differentiation = Unsolved consumer pain points

#2a Simple ways to differentiate your brand

1. Offer price advantage - You are able to find a cheaper supplier or produce the same product cheaply. Alternatively, you decide to operate on lower profit margin to win market share. This is the easiest race to the bottom technique. Be careful, have a long term outlook - what happens when your competition reduces price, or you manage to win large market share?
   By the way, you could offer the same product at 2-3x the average market price by uplifting packaging, experience or additional services. This is called premiumization.

2. Get distribution advantage - The most underrated option. You could do magic by just finding more selling partners. The impact of being present across the sales channels with high traffic and visibility is powerful. It gives you eyeballs. It gives you credibility. Of course, choose your distribution partners with care - they must align with your brand goals.
   Offline is still the biggest revenue channel across the world. Now brands often start digital, and then move to physical stores. It makes sense given the capital and inventory needs of an offline business.
   For us, we are discovering that resellers could potentially be great partner. Will share few months later, how has it fared for us.

3. Introduce product innovation (novelty) - Everyone’s most favourite, my least favourite method. Product innovation can be achieved by changes to product format, formulation, packaging, and any lever associated with the product. However, I believe this is hardest to come by. You must realise that there are countless other smart people who are trying to innovate. It is tough to start by differentiating. However, if you start with the normal product and build experience and understanding, you could actually innovate right.
   A curious example of useless innovation are “healthy ice-creams”. People consume ice cream for the taste. If you make it healthier by dropping the taste, people won’t consume it.

#2b Tough ways to differentiate

I say tough, because it is. These take consistent long term effort and upfront spends are considerably higher. Here are there the tough ways -

1. Innovate marketing - Shein leveraged Tiktok to run “Shein Haul” campaigns with influencers. Look at this shein haul video compilation. Absolutely amazing!

2. Spend lots of marketing money - Imagine paying loads of money to grab eyeballs. Get a famous personality as brand ambassador, say Messi, or buy large number of ad slots in NBA game league or IPL. Vivo and Oppo captured market share in India by sponsoring IPL, the largest sports event in the world!

3. Offer wider selection - You could become the one stop shop for more need states. Consumers would then come to you for product availability, allowing easy crossell.

4. Target niche consumers - Lululemon, the yoga brand, became super big by focusing on a niche audience of yoga and fitness enthusiasts.

5. Offer an unparalleled customer service - Uber won over the taxi market by offering a customer experience never seen in taxi industry before.

6. Introduce a new business model - eg. subscription vs regular purchase; online vs offline.

7. Finally, induce a new behavior - May God help you 🙏

Bard offered the best summary on the topic -

Be clear about your target market. Who are you trying to reach with your products? Once you know your target market, you can tailor your products and marketing to appeal to them.

Do your research. What are your competitors doing? What are their strengths and weaknesses? Once you understand the competitive landscape, you can identify areas where you can differentiate your products.

Be creative. Don't be afraid to think outside the box and come up with new and innovative ways to differentiate your products.

Be consistent. Once you find a successful differentiation strategy, stick with it. Don't try to change too much too quickly, or you'll confuse your customers.

#3 How are we differentiating our products?

We keep it simple. There are three pillars of differentiation

1. Niche consumer base - We focus on Biohackers. They do not need education about specialised supplement ingredients. They are early adopters, do their own research and search specific ingredients for health needs.

2. Affordable price - Supplements are known to be exorbitantly priced. We break this. We are priced lowest. One product is 80% lower priced (also because our main competition is in US market).

3. Direct distribution - We are building our own webstore and selling via marketplaces. Marketplaces provide a ready audience to capture interest. Our own website removes the “distributor tax”. Finally, we are partnering with online distributors and resellers.

Our brand is Xandro Lab. Look at the price benefit.

Our hero product - NMN powder. The price advantage is crazy!

#4 Stay near your competition

This is Satay street in the financial hub of Singapore. All these shops sell the same food - Satay. Staying closer together is actually good business for them. It attracts higher traffic. This is also called “clustering effect”.

Image credits - Javan Ng, a Getty images contributor

So, competition is good. Use it wisely.

Lastly, competition is an always-on game like life. Be prepared to play it everyday.

Thanks 🙏

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Here are the other two editions I wrote this week.

First 60-day marketing playbook for a consumer brand

Refresher on 15 weeks of consistent writing

Thank you for reading till the end. I am grateful 🙏

In another news, Singapore has caught Taylor Swift fever. The ministers are great marketers here. The education minister has thrown a challenge to students to get Taylor to perform in their school and in lieu, get a day off. Smart move! 😎

Have a great weekend, and a perfect week! ❣️

No, I have not deserted Jisoo. She is deep in my heart🤭. Goodbye now!