The Value of Knowing Competitor Spending Behavior

How much are your competitors going to spend on marketing this year? And, how much will your company spend? 

A straightforward enough question, but it’s been our experience that many executives are more likely to know payroll data for the New York Yankees or Pittsburgh Pirates ($206M and $35M, respectively) than they are their own company’s marketing budget - or that of the competition. 

The importance of getting these questions answered is rather obvious, but it’s often overlooked during the marketing strategy process. Knowing a blunt force data point such as ‘spending’ does not constitute a strategy, of course. But competitor analysis can play a big role in helping to shape strategic plans that define investment priorities. Senior marketing managers are constantly being asked to do more with less, but sometimes with little or no consideration of competitor resource availability and spending behavior. 

The Pittsburgh Pirates, who haven’t had a winning season since 1992, probably understand this concept better than most. The team gets out-invested at nearly every position on the field, by practically every other team in the league. It simply can’t afford high-priced talent, so it’s unrealistic to think they can be consistently successful when going up against deep-pocketed competitors. But, the Pirates do typically win about 40% of their games over the course of a season. So the organization has found a method for surviving - if not necessarily thriving - even in an environment where the numbers almost always work against them.

You don’t have to win all of the time, or even most of the time - just enough of the time to accommodate your business model. Developing a sound understanding of the competitive environment can be a valuable first step in identifying over-invested areas of the marketplace, which maybe should be avoided, and areas of vulnerability, which can be ripe for exploitation. 

 

About East Coast Catalyst

East Coast Catalyst is a digital strategy management consulting firm that works with clients to develop innovative web strategies that drive new business and competitive advantage. For more information visit eastcoastcatalyst.com or contact Tim Bourgeois at tbourgeois@eastcoastcatalyst.com or 617-314-6400.