Many market research projects address the competitive challenges a company faces in its marketplace. Image and Awareness surveys usually try to measure the brand equity of the competitors as well as the entity sponsoring the research. Feasibility studies include a competitive overview component that inventories the total competitive weight that the proposed enterprise will be up against.

While this may sound like Marketing 101 and too obvious to even mention, it’s worth noting that products from even large and successful companies often fail because of competition from outside their categories. A recent example is Dell pulling back from producing netbooks, not because of competition from other netbooks or even other types of laptops, but because they were hurt by the popularity of the iPad tablet. Someone in the computer industry would probably be quick to point out the long list of differences between a netbook and a tablet, but since consumers will use the two devices for largely the same activities (or at least believe that they will) the two items compete against one another.

 One interesting and, at times, frustrating phenomenon that we have found in the Bunker is that there is a tendency for our clients to want to define their competition too narrowly. They often want to say that their competition is only composed of products or services that are just like them while downplaying the competition from those where there is a (perceived) small amount of overlap or that their industry defines as a different category. For example, a four-year college might not see a community college as true competition because the latter “only” offers two-year degrees, an assisted living facility might not view a nursing home as their competitors because they serve people along different points along the continuum of care, or a pizzeria may not see a fast food restaurant that serves primarily hamburgers as a threat to them. From the standpoint of an objective outsider, it’s easy to see how those views are too short-sighted and ignore very real and legitimate competitors, but for whatever reason, people inside industries tend to think that way about their own industries. I suspect it has to do with the fact that insiders know and care about things that consumers don’t always know and usually don’t care about. A person who is hungry and looking for an affordable lunch won’t think in terms of “Should I go to Pizza Hut, Domino’s or Little Caesar’s?” unless they are absolutely dead set on getting pizza. It’s far more likely that they would also consider diners, sub shops, burger joints, and the whole gamut of options within the same general price and convenience range.

One example of an industry that seems to get it, for the most part, is professional sports. If you follow sports in the media, you will often hear commissioners, team owners, and executives from the major leagues say that they are in the entertainment business. That language often rankles sports purists, but it’s accurate. The NBA, for example, isn’t just competing against college basketball for its fans’ attentions. And its competition is much broader than just that from other sports like football, baseball and hockey, whose seasons overlap with basketball. In reality, the NBA is competing against TV dramas and sitcoms, movies, concerts, video games, social media and any number of other leisure time activities that somebody could be doing instead of watching an NBA game on TV or attending one live at an arena.

Of course, that last paragraph represents the other extreme of defining competition and, for the practical purposes of market research, it would be impossible to study the entire range of possible competition. But, it is useful in illustrating a general principle that market researchers and their clients should remember when approaching competitive studies: You don’t define who your competition is, your customers do. Generally speaking, those customers think and behave outside the narrow category boundaries created by marketers. When defining competition, it’s always best to think like a customer.