In summary: Your competitors are not who you think they are. Marketing science — from the Ehrenberg-Bass Institute onwards — demonstrates that all brands in a category steal customers from each other in proportion to their market share. Beating the competition does not mean differentiating more or retaining existing customers: it means being more mentally and physically available to light category buyers. Every strategy that ignores these empirical laws burns budget.
The Problem with the Question "Who Are My Competitors?"
Every entrepreneur, every marketing director, every consultant has a ready answer to this question. They usually list three or four names — brands they see at trade shows, ones customers mention during negotiations, those that appear in the same tenders. It's a human, understandable answer, and almost always wrong.
At Deep Marketing we work with an evidence-based approach. This means that before defining any competitive strategy, we look at data — not opinions, not gut feelings, not what the latest consultant says in their LinkedIn threads. And the data tells us something uncomfortable: competition operates according to precise empirical laws, discovered and validated over decades of academic research, and most "competitive" strategies on the market ignore them entirely.
This article is an act of transparency. We explain how Deep Marketing thinks when a client asks us to analyze their competitive market. We use the same marketing laws we apply internally. If at the end of this piece you feel like you've just thrown away years of intuition-based strategy, welcome to the club — it's the first step toward something that actually works.
The Empirical Laws of Competition: What Research Actually Says
The Double Jeopardy Law: Why Small Brands Are Always at a Disadvantage
Let's start with an uncomfortable fact for anyone managing a niche brand or a small-to-medium company. According to Ehrenberg, Goodhardt and Barwise (1990), there is a universal rule called the Double Jeopardy Law.
The principle is brutally simple: brands with lower market share suffer a double penalty. They have fewer buyers compared to leading brands, and those few buyers purchase them less frequently and show less loyalty. It is not a matter of product quality, price, or poor communication. It is a statistical law that replicates across almost all product categories studied — from fast-moving consumer goods to financial services, from automotive to B2B.
The practical consequence? You cannot compensate for low penetration with greater loyalty. Small brands that bet everything on retention, community, and "loyal customers" are fighting against physics. Loyalty only grows as an effect of growth in penetration, not the other way around.
The Duplication of Purchase Law: Your Customers Are Also Your Competitors' Customers
According to Colombo, Ehrenberg and Sabavala (2000), the Duplication of Purchase Law states that every brand shares its customers with competitors in proportion to each competitor's market share. In other words: brand A loses customers to brand B in the same proportion that brand B is large in the market.
This has devastating implications for anyone building competitive strategies around "we need to take customers from X." Your customers are not yours. They are category buyers who, during this period, are also buying from you. And the proportion in which they will buy from your competitors is already written in the relative market shares.
As we explain to our clients at Deep Marketing: stop thinking of customers as resources to retain and start thinking of category buyers as the ocean in which you all swim. Your mission is to be present — mentally and physically — every time a category buyer enters purchase mode.
The Natural Monopoly: Why Large Brands Attract More Light Buyers
There is a third element that completes the picture. According to Sharp and Sharp (1997), brands with higher market share attract a greater proportion of light buyers — people who rarely purchase the category, don't think about it much, who are not "enthusiasts."
This phenomenon, called the Natural Monopoly, explains why strategies built around "ideal customers" and "hyper-specific buyer personas" tend to fail at scale. Brands that grow do not grow because they found a niche segment with high loyalty. They grow because they became sufficiently present — mentally and distributionally — to intercept even those who buy the category once a year with no strong preferences.
SOV, SOM and the Formula That Predicts Growth
Back to the practical point: how do you beat the competition, in light of all this? The most operational answer that research offers runs through the concept of Share of Voice (SOV) and its relationship with Share of Market (SOM).
According to Jones (1990) and subsequent elaborations by Danenberg et al. (2016), there is a measurable predictive relationship:
ESOV (Excess Share of Voice) = SOV − SOM
If your SOV is greater than your SOM, your brand is on a growth trajectory. If it is lower, you are ceding ground to competitors — even if your revenue seems stable in the short term.
In practice: if your brand has a market share of 15% but your Share of Voice in the category is only 8%, you are underfunding your presence and competitors who invest more are slowly eroding your position.
Differentiation vs Distinctiveness: The Most Expensive Myth in Marketing
If there is one thing that evidence-based marketing literature has demolished over the past twenty years, it is the dogma of differentiation. According to Sharp (2010) in How Brands Grow, perceived differentiation among consumers is surprisingly low even among brands that consider themselves deeply different. Consumers do not memorize product differences. They buy based on mental availability — which brands come to mind first in a given purchase context.
- Differentiation: the product has objectively different characteristics from competitors. Requires the consumer to notice, evaluate, and remember those differences.
- Distinctiveness: the brand has unique visual, auditory, and associative elements that make it immediately recognizable, independent of any rational evaluation.
At Deep Marketing we insist on this point because it is one of the most frequent mistakes we see in SMEs: investing enormous resources in product development to "differentiate" and almost nothing in building distinctive assets — the logo, colors, tone of voice, recurring visual formats.
Mental Availability and Category Entry Points: Where You Really Win
The most precise answer that research offers runs through the concept of Mental Availability, formulated by Sharp (2010).
A brand has high mental availability when it comes to mind to category buyers in a wide variety of purchase situations — what researchers call Category Entry Points (CEP). The more CEPs a brand covers, the more likely it is to be remembered and chosen.
How do we use this at Deep Marketing? Before any campaign, we map the client's category CEPs. We then analyze which CEPs the brand is already present in consumer memory for, and which it is not. The strategy is built to cover CEPs where competitors are absent or weak.
Physical Availability: The Factor Nobody Wants to Hear
Physical Availability is the ease with which a buyer can find and purchase the brand at the time and place they want to. A brand with high mental availability but low physical availability loses sales to less well-known brands that are more easily reachable.
According to Krasnikov and Jayachandran (2008), a company's marketing capabilities correlate at 35% with its overall performance — more than any other business function analyzed in the study.
Customer Profiles Resemble Each Other Across Competitors
According to Hammond, Ehrenberg and Goodhardt (1996), brands competing in the same category tend to have very similar demographic and psychographic profiles among their buyers. Strategies that seek to "own" a specific consumer segment are destined to overestimate loyalty and underestimate customer permeability toward competitors.
How Brands Really Grow: Penetration, Not Loyalty
Growth comes from penetration, not loyalty. Brands that grow do so primarily by acquiring new light buyers — people who buy the category infrequently. They do not do so by increasing the purchase frequency of existing customers or retaining heavy buyers.
How Small Brands Can Compete
Smaller brands can erode leaders' positions by focusing on two specific levers:
- Superior perceived quality: a small brand with objectively higher quality than the leader can attract light buyers who choose based on quality signals.
- Product or format innovation: introducing a novelty the leader does not offer creates a reason for a light buyer to try the smaller brand.
At Deep Marketing we often work with SMEs that have excellent products and zero mental availability strategy. The problem is not the product. The problem is that the market does not know it exists.
Frequently Asked Questions
Doesn't differentiation serve any purpose?
It does, but less than you think. Distinctiveness — being recognizable — is more durable and scalable than product differentiation.
Does the ESOV model work for SMEs too?
Yes, but it must be calibrated to the category and the actual competitive perimeter. SOV must be measured in the relevant category, not the total national market.
If loyalty is an illusion, why does everyone talk about customer retention?
Retention is a legitimate metric, but it should not be the primary objective at the expense of acquisition. Research shows that brands grow through penetration.
How are Category Entry Points measured?
Through qualitative and quantitative research. Exploratory interviews to map spontaneous CEPs, followed by quantitative surveys to measure which brands are associated with each CEP.
How much does marketing matter compared to other business factors?
According to Krasnikov and Jayachandran (2008), marketing capabilities correlate at 35% with business performance — more than operations and R&D.
Should indirect competitors be considered?
Yes, and they are often more dangerous than direct ones. The Duplication of Purchase Law tells us that customers move between brands in proportion to each brand's market share.
Sources and References
- Ehrenberg, Goodhardt, Barwise (1990). Double Jeopardy Revisited. Journal of Marketing.
- Colombo, Ehrenberg, Sabavala (2000). Diversity in Analyzing Brand-Switching Tables. Canadian Journal of Marketing Research.
- Sharp, B. (2010). How Brands Grow. Oxford University Press.
- Hammond, Ehrenberg, Goodhardt (1996). Market Segmentation for Competitive Brands. European Journal of Marketing.
- Krasnikov, Jayachandran (2008). The Relative Impact of Marketing on Firm Performance. Journal of Marketing.
- Danenberg et al. (2016). Advertising Budgeting: A Reinvestigation. Marketing Science Institute.