David vs. Goliath: There’s a reason why we root for the underdog. But when you’re a scrappy young company, does it help or hurt to explicitly mention a large dominant competitor in your sales and marketing?

why having a big competitor increases your sales

An intriguing new study by professors at Georgetown and Harvard examined why naming a big competitor leads to more sales.

The underdog effect

How you ever wondered why brands explicitly name their competitors in ads?

Advertising research has found that when a low-market share brand compares itself to a high-market share brand, the low-market share brand can benefit because it becomes perceived as similar (in price, quality, etc.) to the high-market share brand by consumers.

This research has found that consumers like to support brands that have an underdog image: although they’re starting off at a disadvantage, they’re determined to overcome it and win. Why?

  1. Schadenfreude: Consumers may view a large dominant brand as undeserving of its advantage and want to punish it for having too much power by boycotting it.
  2. Purchase activism: In addition to price, quality, and value, consumers are also motivated to express their views and influence the marketplace through their purchase choices. This is also known as buycotting: supporting brands that represent a value or ideal they personally hold.

How the underdog effect increases sales

Professor Paharia and colleagues examined this underdog effect in a series of 6 B2C studies.

why competition increases your sales

Their results found that consumers were more likely to support the underdog when:

  • a big competitor was explicitly named
  • the big competitor was local/nearby
  • consumers personally identified with the smaller company

Should you name a big competitor when selling?

This research only looked at the behaviour of B2C customers who made an emotion-based choice to pick a smaller company over its big competitor because they wanted to express their personal views and have an impact in the marketplace. Would it work in a B2B context?

It’s unknown. But we do know that B2B customers feel more emotionally connected to the brands they purchase than B2C customers.

B2B customers feel more emotionally connected to brands

Additionally, there’s a lot of talk these days of the empowered buyer. Deliberating choosing a smaller company over a big competitor is an intriguing avenue for B2B buyers to increase their personal identification with a brand and display their purchase activism.

Explicitly naming a big competitor in your sales and marketing can be a risky strategy, but as the researchers point out it’s a less costly one compared to strategies such as price discounting and offering better customer service.

So what do you think: Should you choose Ideal Candidate to hire salespeople? Or LinkedIn? Tweet us @recruit_smarter.

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Ji-A Min

Ji-A Min

Head Data Scientist at Ideal
Ji-A Min is the Head Data Scientist at Ideal. With a Master’s in Industrial-Organizational Psychology, Ji-A promotes best practices and data-based HR. She writes about trends and research in talent acquisition, people analytics, and workplace diversity.
Ji-A Min