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Use Competitors To Anticipate And Profit From Powerful Trends

Mar 24, 2008
Chances are that you see competitors as those you must best. In sales calls, your sales force is good at explaining why nobody does it better than you do. When you drive by their facilities, you are probably struck by how meek and unimpressive they are.

Just because you are trouncing your competitor doesn't mean that your competitor cannot teach you important lessons that will expand future profits.

Recognize that your competitors' actions, both effective and ineffective, can be one of your biggest sources of irresistible force information and help give you the insight to develop a competitive edge. Take Kentucky Fried Chicken (KFC) versus Church's Fried Chicken, for example.

In the 1970s, KFC's largest competitor was comparatively quite small, so it would have been easy to ignore. But Church's had several interesting characteristics: The company had a higher profit margin (profits divided by sales), lower prices to consumers for their chicken, higher sales per restaurant, and provided customers with larger pieces of chicken than did KFC.

You might call that performance list the smoking gun, things that KFC should have noticed. On closer study, the magnitude of the opportunity to improve KFC became obvious. Many of KFC's successful profit improvement programs in the 1970s had their beginnings in those competitive benchmarking studies of Church's.

Having a methodical competitor that always operates the same way makes it easier to analyze its actions and take advantage of what it demonstrates about existing irresistible forces. Procter & Gamble (P&G) once had a highly predictable pattern.

P&G's competitors from different categories occasionally exchanged notes on what had worked to derail P&G's marketing programs. More and more companies learned that you could tell when P&G was about to enter a geographically limited test market with a new product.

If the market test didn't pay off according to P&G's plan, its brand managers would retire for more study (for up to two years) before making another move. If the competitor hit that test market with everything it had, the competing enterprise had a good chance to deter P&G for awhile.

The cost of losing a fortune in the test market was much less than the cost of defending against a wide-scale product expansion, so it was well worth taking the chance. Eventually P&G changed the way it test-markets products to avoid this vulnerability.

Even if your competitor isn't that predictable or superior, you can use its tests to give you a sense of new trends that you need to take into account.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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