What You Don’t Know About Your Competitors

How purchase data gives a broader view of your competition

When you’re sizing up your brand’s competition, where do you typically look?Sometimes, we look at the category through the lens of product features. For example, ice cream competitors can be divided into the different formats (tubs, bars, cones, etc.). Still, in this case, you could also look at the competition in terms of the audience segment (health conscious, millennial, moms, etc.).

However, identifying your competitors through product features or audience segmentation can prevent you from seeing how broadly your brand competes.

The reality is that consumers do not exclusively buy a product format (i.e. ice cream bars) or a product designed for their audience segment (i.e. organic). Instead, per a previous blog post “5 Lies We’ve Been Fed About Brand Loyalty,” most consumers are occasional buyers who will buy ice cream bars on one occasion and opt for the organic offering on another. To understand the true buying behavior of a product, Byron Sharp recommends using “duplication of purchase” analysis to see the overlap of buyers in a category. Below is an example of duplication of purchase analysis for the ice cream category:

The Duplication of Purchase Law indicates that the degree of buyer overlap in a category aligns with a brand’s penetration in the market. In other words, a brand shares a greater percentage of buyers with the biggest brands in the category and a smaller percentage of buyers with the smallest brands in the category. In the example above, you can see that all of the brands in the analysis share the most buyers with with the largest brand, Carte D’Or (second column) and the least number of buyers with the smallest brand, Mars (seventh column).

Key Takeaway: Sharpe’s research tells us that a brand’s competition is not based on how it is positioned in the market, but by the other brands purchased in the category.

Moving forward we should supplement our competitive audits with purchase data to understand the structure of the market and guide the category definition so we can keep our brand distinct.

Sharp, B. (2010). How Brands Grow: What Marketers Don’t Know. Oxford: Oxford University Press.