Finding Success in Highly Competitive PPC Markets

She deserves one of these cheeseburgers after working that hard.
She deserves one of these cheeseburgers after working that hard.

Online marketing is awesome! You can reach people based on the keywords they search, how old they are, where they live, what television shows they like, what sites they’ve visited and so much more. However, more and more companies have been getting their crap together and doing a better and better job of marketing online. And that means competition. Competition isn’t necessarily bad because it keeps you on your toes. But it you let your game slip you’ll find yourself with more red ink on your hands than black.

So how do you stay competitive? Consider these 3 tips gleaned from the fast food business (which is about as competitive as it gets).

Compete On Price

This is the least efficient way to compete, but the most common because it’s easy. It relies on basic economic theory that lowering the price moves you further to the right on the demand curve, thus increasing sales.
Supply and Demand
However, since there are more people buying product A, some of them chose A instead of B. Therefore the producer of product B will likely lower their price to keep customers. This leads to a price war and too often all the participants lose (while consumers win).

Consider the $5 Fill Up Box from KFC. This product has been very successful by offering 5 items for $5:
KFC $5 Fill Ups
The response from Wendy’s was to go even lower with their 4 for $4 promo:
Wendy's 4 for $4
And the response from Burger King was the 5 for $4 offer:
Burger King 5 for $4
It’s not hard to see how these restaurants are in a race to the bottom on price. So how do you compete more wisely?

Add-On Items

This is a subtle variation of competing on price. You offer something that is viewed as price-competitive with other offers, but find ways to increase the purchase amount with add-on items. In keeping with our fast food example, I recently came across the $5 Bonafide Big Box offer from Popeye’s:
Popeye's Big Box
This is an obvious stab at KFC as they use a box for their deal as well. However, they sub out the cookie for a side to make the meal “feel” more substantive. You’ll also notice that a drink is not included at Popeye’s. However, for just $1 extra you can add a drink to your meal. Thus Popeye’s sells a 3 piece tenders meal with a drink for $6 while KFC sells it for $5 due to the add-on item.

If your product is viewed more favorably than the low-price competitor you can get people to buy from you using the same price for a similar (though not identical) item and then making if more profitable with add-on items.

Build The Brand

The idea here is to avoid the price as a competitive advantage and focus on the brand instead. This is the strategy you see from restaurants like Chipotle. Ordering through their website, a simple chicken burrito (no sides, no drink) costs $6.50. How in the world do they get people to pay that when they could get more food for less at another fast food restaurant? Branding, like this:

  • “RESPONSIBLY RAISED® MEAT OR ORGANIC TOFU” as they say
  • “Food with Integrity” like “vegetables grown in healthy soil”

This brands Chipotle as a restaurant that cares about where their ingredients came from. So now when a customer is deciding where to eat, they are looking beyond the price. They want to eat at a restaurant that aligns with their beliefs and values. They now feel great dropping $11 on that burrito, chips & drink. Success!

Conclusion

If competition has you down, consider these 3 strategies and how they might help you succeed. And remember, just because a competitor does something (even if they’re a really big company) doesn’t mean it’s the right move for your business. You’ve got to do the research and test it.

Leave a Reply