The Marketing Lesson I Learned from Game Theory

  • Jan 21, 2020

There is an important principle in game theory: Assume you have an intelligent opponent. This means that you must assume that, when you do something, your competitor will make the best decision he can to counter.

Say you decide to offer a 15% coupon to stimulate business.Your competitor may not give up some market share without kicking and screaming. They might offer a 25% coupon  and lose money on every order  to retain  existing customers.

So you can't just make a move to grow your business that your competitor can also do, and maybe do better. But you can do something he cannot do or something he may not want to do.

When I first started selling printing online I chose the newest and hottest thing: Laser forms like invoices, checks, and statements. The problem was that everyone had the same idea. There was just too much competition.

Then I changed to manual forms: These are  multi-part forms you hand write. Most of the big boys did not care about this relatively small maket  but I did. It was a large market for little me. And it did well for me.

When McDonald's offered a fish sandwich Burger King promptly did the same. But when Burger King started advertising that their burgers were grilled and not fried (like McDonald's were), there was nothing McDonald's could do about it. You may have capabilities or products that your competitors can't duplicate. 

Keep in mind it's the perception in the market that counts. People believe that grilled food is healthier than fried. If you are a small guy many will believe they will get better service from you than from a large company. On the other hand, some will believe a big company will be better equipped to serve their needs. Play up your attributes and present them as better than your competitors'. And think carefully about what your competitors can and may do to counter your marketing moves.

 

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