How to identify your selling points to beat your competitors | Data-driven marketing strategy that connects analysis to your next move

In marketing, the most important task is to identify the "selling points" that will enable you to beat your competitors and to create "actions that will lead to results." However, in many cases, competitive analysis does not lead to concrete strategies or prioritization, resulting in missed opportunities.

In this article, we will introduce an analytical approach that scientifically calculates the probability of gaining market share from competitors (switching rate) based on consumer awareness data.

"Which competitors should you attack?" "Which selling points should you focus on?" We hope this will help you move your marketing from "analysis" to "actions that lead to results."

Introduction: Why isn't data being used to inform strategy?

Marketers, who have the important mission of expanding their company's market share in the midst of fierce market competition, must be constantly poring over all kinds of data every day and thinking about what their next move should be.In fact, many organizations analyze data from a variety of sources, including sales data such as sales data and POS, campaign data such as advertising data and web analytics, and external data such as market research reports.

However, in many cases, the results of these analyses are not fully utilized in strategy formulation and decision-making. As a result, discussions on strategy are often dominated by subjective opinions that lack objective data, making it difficult to reach a constructive consensus.

"Competitor A is stepping up its price appeal, so we should follow suit," "No, our strength is quality, and careless price cuts will damage our brand value," "Competitor B's commercial certainly has excellent creativity," "No, this time the use of an influencer was effective," and other diverse opinions are actively exchanged, but the discussion does not converge, making it difficult to see what concrete action to take next. Isn't this a decision-making challenge that many corporate organizations face?

Such "strategic meetings where data is not utilized" can be a hindrance to organizational growth. Decisions that are not backed by data are often influenced by past successes and personal subjectivity, which can lead to the following issues:

• Budget wasting:Marketing budgets and measures are planned and proposed based on each individual's experience and intuition, but because it is unclear whether those measures will actually lead to an increase in market share, there is a risk that a large amount of marketing budget will be spent on measures with uncertain effectiveness and will not be used effectively.
• Lost opportunity:By overlooking your company's strengths that give you an advantage over your competitors and repeatedly making ineffective appeals, you may miss opportunities for growth.By the time you realize it, it may be difficult to regain your advantage in the market.
• Organizational fatigue:An unclear strategy leads to vague briefings. Abstract instructions such as "Create creative that resonates more with younger generations" or "Make it innovative" prevent partner companies and agencies from performing at their best. The result is low-quality output, frequent rework, and a decline in the motivation of team members and partners. 
• Lack of accountability and stagnant teams:The responsibility for an unsuccessful strategy falls squarely on the shoulders of the manager in charge. If you cannot provide a clear rationale for why you are lagging behind your competitors when asked by management, it will be difficult to lead your team appropriately.

If this situation is left unchecked, the organization may unknowingly lose its competitive edge and head toward a gradual decline. With competitors constantly striving to expand their market share, as long as the organization continues to rely on subjective decision-making, it will lose valuable resources and risk having its market position threatened. What is needed now is a shift away from traditional discussions that rely on experience and intuition and toward a scientific approach that uses data to identify "moves with a high probability of expanding market share" and focus management resources there.

How to derive strategies and hypotheses for gaining market share

3 steps to structure your winning strategy

Before we get into the scientific approach, let me first introduce three practical steps that build on existing analytical frameworks such as the 3Cs and 4Ps to improve the accuracy of your winning hypotheses and the quality of your discussions. These steps can be put to immediate use in your next meeting.

Step 1: Define the battlefield (Identify competitors)

First, you need to specifically define which competitor you want to capture market share from. In many cases, the effective way to compete will be different for competitor A, who has the largest market share, and competitor B, who has recently been gaining momentum.

(Ex)

• Competitor A (leader):It is a market leader, has a large customer base, and high brand recognition.
• Competitor B (Challenger):They are growing rapidly in certain segments and expanding their presence with new value propositions.

Step 2: Inventory your company's assets (4P/CX/Brand Assets)

Next, objectively list all of the "weapons" your company has, according to the following categories: 

Marketing 4P + CX:

• Product:Product features, design, rich lineup, etc.
• Price:Relatively low price, cost performance, luxury, etc.
• Place (distribution):Ease of acquisition, breadth of sales channels, quality of sales representatives, etc.
• Promotion:Touch points, campaigns, appealing points, etc.
• CX (Customer Experience):Purchase experience, after-sales support, switching costs, etc.

Brand assets:

• Functional value:Convenience, reliability, uniqueness, etc.
• Emotional value:Attachment, security, empathy, etc.

Step 3: Hypothesis = Draw a winning strategy (who to attack and with what weapon)

Finally, map the competitors defined in Step 1 with the weapons inventoried in Step 2 and build a hypothesis: "Which weapon could be effective against which competitor?"

• Hypothesis for competitor A:"While Competitor A is leading the market, looking at the reviews, we know that there is a certain number of people who are dissatisfied with the quality. So, if we emphasize the 'quality', perhaps we can encourage them to switch?"
• Anti-competitive B hypothesis:"Competitor B's strength is price, but its weakness is that it is difficult to obtain. So if we emphasize 'ease of obtaining', shouldn't we be able to attract price-conscious customers?"

Which hypothesis will win? Difficulty in determining effectiveness and priority

Formulating a hypothesis using this step is an important first step in strategy planning. This helps organize discussions and align the team's perspective. However, at this point, you will face a fundamental challenge: the hypothesis you formulate is, after all, just a hypothesis.

In the previous example, questions such as, "Is the hypothesis that 'quality' is important when competing with competitor A really correct?" "Perhaps 'excellent after-sales service', which we have overlooked, resonates much more with customers?" "Even if 'ease of availability' is correct when competing with competitor B, how important is it compared to 'low price'?" At this stage, it is still unclear how reliable these hypotheses are or what impact they will have as measures.

The important thing in marketing is not just to come up with a plausible hypothesis. The key is to identify the hypothesis or strategy that will contribute most to gaining market share and to focus the organization's resources there. To do this, the validity of the hypothesis must be supported with objective data that is convincing to many stakeholders, leading to consensus building throughout the organization.

Turning hypotheses into "certainty" and applying "science" to the probability of success of strategies

From subjective hypotheses to statistical insights

To solve the fundamental problem presented above, "We don't know which hypotheses or factors will contribute to gaining market share," XICA offers a data analysis service called "COMPASSCOMPASS uses consumer awareness data to scientifically verify how many customers can be acquired from competitors by strengthening which selling points, and predicts the probability of this happening.

COMPASS does not simply put all hypotheses into a questionnaire and grasp consumer "awareness (what they think)" like traditional market research. It mathematically models the relationship between consumer awareness and behavior, and statistically calculates actual consumer "brand selection behavior (what they choose)" and its numerical impact.

The specific process of COMPASS's "Brand Switch Analysis" is as follows:

1. Consumer Data Collection:First, we conduct a survey of our own users and competitors' users on various brand evaluation items, including hypotheses (marketing 4P + CX, brand assets, etc.).
2. Uncovering the switch mechanism:Next, we use statistical models to analyze consumer awareness data and analyze the relationship (mechanism) between what evaluations consumers have and which brands they choose.
3. Calculating the switching rate:For a wide range of evaluation items, we calculate "what percentage increase in the probability (switching rate) of competitor users switching to our brand will occur if the score increases by one point."

This makes it possible to compare, using objective numerical data, whether "quality" or "price" is the more effective selling point for gaining market share. Rather than just relying on subjective opinions like "this should work," discussions can be based on objective data, such as "according to the data, appealing to 'quality' is more likely to gain market share from competitor A, and the switching rate is x%."

Data Changes the Strategic Debate: A Consumer Goods Manufacturer's Case Study: How Data Changed the Decision-Making Process

Issue: No clear solution, no consensus within the company

The market is dominated by "Competitor A," a market leader with a strong brand, and "Competitor B," an upstart that has been increasing its market share in recent years with low prices. In this environment, the company was unable to find an effective strategy to deal with either company, and opinions were divided within the company regarding the direction of action.

• “Quality-oriented” group:"Our strength is our reliability in quality. To compete with competitor A, we need to emphasize the high quality of our products more."
• "Price-conscious" group:"Young people are being drawn to competitor B's low prices. In order to prevent further loss of market share, we have no choice but to compete on price."

Because both opinions had some validity, the discussion did not converge, and the company continued to implement a wide-ranging strategy and measures that were conscious of both competitors A and B. As a result, the company was unable to take market share from either company, and gradually stagnated.

COMPASS Analysis: Data Reveals Unexpected Winning Points

To break this deadlock, the company conducted a COMPASS "Brand Switch Analysis." It surveyed users of its own company, competitor A, and competitor B to analyze why consumers choose one brand over another. The results showed a different perspective than previous internal discussions.

1. The most important common driver is "convenience"

The graph below ranks the reasons why users of competitors A and B switch to our own brand (deciding factors for switching).

Surprisingly, the biggest factor for switching from Competitor A (switching rate 21.1%) and Competitor B (switching rate 30.3%) was found to be "convenience (comfortable user experience and ease of use)" for both companies. Rather than "quality" and "price" which were considered important within the company, consumers placed more importance on "how much daily effort would be reduced and how comfortable a experience would be obtained by using the product."

2. "Uniqueness" is also a strength of the company and has been identified as an important driver

Next, we compared each factor on a map based on the company's rating and the difference in rating with competitors. The size of the bubble indicates the impact on the switch.

This map also reveals that "convenience" is an effective driver for both companies (common TOP 1), and is an element where the company already has an advantage over its competitors (a driver that should be maintained). "Product Feature 1" (uniqueness of the product) is also a driver common to both companies (common TOP 3), but because it is not different from competitors, it was identified as an element that should be developed in the future to demonstrate superiority (a driver that should be developed). On the other hand, while "low price," which was the focus of internal discussion, does have an impact on the switch (common TOP 2), it is an element where the company is inferior to its competitors (bottom of the map), suggesting that it would not be wise to compete based on this as the main axis.

Action: Implement a unified strategy based on data, centered on "convenience" and "uniqueness"

This objective data provided a catalyst for resolving the internal debate, which had been going nowhere. The company broke away from its previous mindset of "quality or price" and instead focused on the common strategic points shown by the data: "convenience" and "uniqueness," and the entire organization agreed to aim to take market share from both competitors.

1. Review your communication strategy

• Changes to advertising messages:Rather than focusing on "quality" or "price," the company emphasized the value of "making daily life more comfortable and reducing hassle." This message resonated with users of both competitors A and B.
• Consolidated selling points:In addition, by combining this with "uniqueness," the message "Such a unique product can be so comfortable to use" was reflected in the communication as a hook to both competitors (especially competitor B, which has a high switching rate).

2. Optimizing product usage experience

• Eliminate friction: Thoroughly eliminate any "difficulty to understand" or "hassle" that users may feel when first starting to use the product or while using it (e.g., improving product packaging and strengthening support systems).
• Expansion of experiential content:We will expand our experiential content (e.g., in-store demos and customer review videos) that intuitively conveys the specific benefits of "convenience" and "uniqueness" both in-store and online.

Such data-based decisions provided concrete guidelines for prioritizing initiatives and allocating resources, dramatically improving the speed of previously vague investment decisions and the implementation of initiatives. However, even more decisive changes than these initiatives were seen in the company's internal decision-making process itself. The objective data provided by COMPASS became a common basis for decision-making that transcended differences in department and position, and internal discussions evolved into constructive and strategic ones focused not on "which opinion is right," but on "how can we win?" Through these changes, the company is steadily improving the accuracy and speed of its decision-making, while aiming to further expand its market share.

Data brings confidence and leadership

In this way, using COMPASS will significantly advance strategic decision-making, going beyond the limitations of traditional research methods and enabling precise decision-making based on objective data.

Of course, traditional qualitative and quantitative research, such as group interviews and questionnaires, also plays an important role in understanding consumers, formulating strategies and hypotheses, and verifying them. However, when it comes to the mission of expanding market share, each method has its own unique characteristics and limitations.

• Characteristics and limitations of traditional qualitative research (such as group interviews):
  It is an extremely effective way to delve deeply into issues and insights from consumers' real voices and to gain suggestions, and is an essential method for formulating strategic hypotheses. However, what is obtained is merely an individual's opinion, and it is difficult to quantitatively demonstrate the impact that hypothesis will have on the market as a whole.
• Characteristics and limitations of traditional quantitative surveys (questionnaires):
  It is also useful for numerically grasping trends in the overall market's awareness and for "verifying hypotheses." However, even if you can see that "the quality item is highly rated," it does not answer the question of the impact on results, such as "If the quality rating is increased by one point, what specific percentage of customers will be acquired from competitor A?" While it is effective for understanding the current situation and analyzing trends, it is difficult to use it as a reliable basis for decision-making.

The value of COMPASS lies in the fact that it goes beyond simple opinion surveys and uses statistical models to link consumer "awareness" with actual "brand selection behavior" and calculate the "probability of share acquisition (switching rate)" that each factor brings. This "switching rate" makes it possible to clarify priorities for investing in factors that will most efficiently gain market share.

Utilizing this objective data, known as "switch rate," will bring about the following changes in decision-making:

• Overwhelming persuasive power in meetings:When asked, "Why this strategy?", you can confidently explain, "Based on data showing a switching rate of XX%, we determined that this appeal was the most effective." Data, not personal opinion, will support the strategy.
• Streamlined budget acquisition: The simulation results, such as "If we invest in this measure, we can expect a certain percentage of customers to switch from competitor A," provide effective evidence for prioritizing budget allocation and explaining the situation to management in order to gain approval.
• Contribution to the organization and leadership:A clear, data-driven strategy eliminates confusion for your team and allows you to communicate specific instructions to your agents. By focusing resources on the most important areas, you directly contribute to increasing market share, increasing the value of your entire department and earning credibility as a data-driven leader.

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Identify your selling points to beat your competitors
Using analysis to make the next move: Explaining data-driven strategies to increase market share

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Take the next step: Turn your hypothesis into certainty

Will the hypothesis you have formulated really work in the market?
"Which hypotheses/factors should we prioritize investing in?"

If you would like to verify these using objective data, please contact us. For over 10 years, we have worked with over 300 companies on analysis that supports marketing decision-making. Utilizing various data science tools, including COMPASS, we will accompany you in developing optimal data analysis and feasible action plans, even in unique market and organizational environments.

We also accompany our clients from the beginning, clarifying business issues such as "how should we formulate hypotheses in the first place?" Through "useful analysis," we enhance our clients' decision-making capabilities and provide support that directly leads to business results.

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XICA Co., Ltd. Marketing Team