How A Big Competitor Can Increase Your Sales
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?
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?
- 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.
- 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.
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.
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.
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