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Home Marketing B2C Marketing

The competition you’re ignoring is costing you customers

April 7, 2025
in B2C Marketing
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Most marketers define their competition too narrowly — and it’s costing them. They deal with corporations that supply similar services or products, but customers don’t make decisions based on industry categories. They care about outcomes. 

If you want your positioning to resonate — and drive real growth — you must redefine who you’re competing against.

What Rachel Chu can teach marketers about competition

One of my favorite comedy movies is “Crazy Rich Asians.” In it, NYU economics professor Rachel Chu thinks she’s just going to Singapore to satisfy her boyfriend’s family for a marriage. She doesn’t realize until she lands that Nick Young isn’t only a professor; he’s heir to one in all the biggest fortunes in Southeast Asia. 

Suddenly, Rachel isn’t just competing with other women for Nick’s attention — she’s up against a social class system, generations of tradition and, most significantly, Nick’s formidable mother, Eleanor, who is actively working to push Rachel out.

At first, Rachel tries to win by playing the expected game. But then she realizes that her real competition isn’t other women, it’s Eleanor’s deeply ingrained beliefs about who is worthy of her son. Knowing that, Rachel changes her technique to take control of the narrative, which changes the whole lot and ultimately makes a joyful ending possible.

Marketers make this error on a regular basis. They assume they’re competing against direct rivals — the Apple to their Microsoft. But like Rachel, many don’t realize that their real competition is entirely different. And that blind spot is costing them a fortune.

Modern positioning mistakes

If you’ve studied marketing, you’ve been taught positioning means how customers perceive you in comparison with the competition. This is absolutely true. The problem is how we define competition. 

Traditionally, competition means anyone offering the identical services or products: 

  • Burger King competes with McDonald’s. 
  • Cinemark vs. AMC. 
  • Facebook vs. X. 

It is smart, but that’s not how customers think.

Customers don’t make decisions based on industry categories or market definitions. They care about outcomes. They don’t need a quarter-inch drill. They need a quarter-inch hole. The failure to know that ends in position strategies built on the unsuitable definition of competition. That’s when corporations don’t just misjudge their rivals — they miss the true threats to their top-line revenue. 

Dig deeper: 3 steps to an authentic brand — Identity, intention and implementation

The hidden competition you’re ignoring

Businesses face two varieties of competition — what Bob Moesta calls “supply-side” and “demand-side.”

  • Supply-side competitors offer the identical services you do, but deciders deal with outcomes, not industries or suppliers.
  • Demand-side competitors are the alternatives your customers weigh against you based on the outcomes you deliver.

Here’s what I mean: As my wife and I arrived on the airport after a vacation, we discussed where to eat before our 90-minute drive home. We didn’t want our trip to finish at some crummy fast-food joint. We wanted a pleasant, sit-down meal. Our options: All-you-can-eat Japanese BBQ and sushi versus Italian. Italian was too far and my wife wanted sushi, so we selected BBQ.

When we got there, the BBQ place was closed. Now we’re in search of “supply-side” direct competitors — other all-you-can-eat Japanese BBQ places serving sushi nearby. After finding an appropriate substitute, we discovered it had a two-hour wait time. 

Now, we had to contemplate “demand-side” competitors and re-evaluate our situation. We were so hungry we could eat our own hands, so we searched for something nice-ish but fast. We considered Jimmy Johns and Café Rio and ultimately selected Café Rio.

The marketing Hunger Games

This illustrates a vital concept of competition and positioning.

We position ourselves against anyone who does what we do. We construct a fortress and moat to maintain anyone from doing what we do. But, as my experience shows — it’s an incomplete picture that usually leads marketers to miss the positioning mark.

Dr. Rita McGrath’s “Arena” model is far simpler. Rather than constructing a static fortress, corporations are like gladiators in an enormous arena — where the principles and competitors consistently change. Survival is determined by adaptability, not firm size or brand recognition. 

The only constant is the shopper’s desired end result — what Clayton Christensen called their “jobs to be done” (JTBD). Understanding your actual competitive set means recognizing that customers aren’t only comparing you to direct competitors — they’re weighing any alternatives that get the job done. Those alternatives are your competitive set and who you should position against. 

Dropbox’s ‘arena’

Take Dropbox, for instance. Most early cloud storage corporations assumed they were competing with one another. Dropbox didn’t. They asked, “What tools are customers using each day to do that job?”

The answer was USB thumb drives and email attachments, not cloud storage providers. That’s who their competition was. By positioning themselves against the alternatives, they redefined their competitive set, created an answer that resonated with customers and created massive growth.

Dig deeper: How storytelling results in lasting brand impact

Finding your competitive set

How do marketers discover the competition in the world? In the short term, you ask, “What alternative tools do my customers use each day to get the identical results?” Consider alternatives outside your industry. And don’t buy into the parable of “non-consumption.” People found ways to simply share information before Dropbox, they usually’ll do it after the corporate is long gone.

You aim to create a hypothetical competitive set that features supply-side rivals and demand-side alternatives, like passing thumb drives backwards and forwards or attaching files to emails. You can test the list in one-to-one customer conversations once the list is complete. These conversations will validate your competitive set and supply additional insights.

In the long run, developing this type of customer curiosity must grow to be a part of your organization’s culture and identity — especially the marketing team. Establishing processes to repeatedly monitor your competitive landscape through customer conversations gives an ongoing competitive edge. It will help you stay on top of emerging trends, spot recent competitors early and maintain a feedback loop that keeps your strategies and tactics agile.

Intercom’s rapid AI response

Perhaps among the finest examples is Irish SaaS giant Intercom. Specializing in customer support software, Intercom’s team conducts regular customer interviews to remain agile and informed about its competitive set.

This proactive approach meant they may quickly recognize and reply to the emergence of ChatGPT — inside just 4 months. While competitors were still pushing traditional chatbots, Intercom unveiled a customizable LLM-based customer support AI agent capable of coaching on a firm’s specific policies, procedures and products.

Winning the Hunger Games

Business success has at all times hinged on appropriately understanding your competition. Unfortunately, most marketers define competition solely along rigid industry lines. But that’s not how customers think or how you should think. Instead, competition needs to be determined by the outcomes your customers are searching for.

As Rachel Chu’s journey in Crazy Rich Asians, Dropbox’s pivot away from traditional rivals and Intercom’s rapid adaptation to AI demonstrates, redefining your competitive set to incorporate supply- and demand-side alternatives is key. It allows you to effectively position your brand against the true threats to your revenue. It also helps you avoid common pitfalls, stay agile in a rapidly changing environment and unlock opportunities for innovation and sustainable growth. 

Ultimately, the query isn’t just who your competition is today — it’s who your customers will replace you with tomorrow. If you can’t answer that, your customers will and you won’t like their answer. 

Dig deeper: Building a brand strategy: Essentials for long-term success

The post The competition you’re ignoring is costing you customers appeared first on MarTech.

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