What is Competitive Parity?
Competitive parity is an advertising strategy used by companies to ensure their products or services are seen as being on par with the competition. It involves setting aside a certain budget to match or exceed the spending of competitors in the same market. This strategy is often used to gain an edge in a highly competitive industry, as it can help to create a larger presence for the company’s products or services.
Advantages of Competitive Parity
Competitive parity can be a very effective way to gain a competitive edge. Here are some of the advantages it can provide:
- It can help to create visibility for a company’s products or services.
- It can be used to establish a presence in a crowded market.
- It can help to draw attention away from competitors.
- It can help to build brand recognition.
- It can help to increase sales.
Disadvantages of Competitive Parity
As with any advertising strategy, there can be some drawbacks to using competitive parity. Here are some of the potential disadvantages:
- Cost: This strategy can be expensive, as companies must allocate a certain budget in order to match or exceed their competitors’ spending.
- Time Consuming: It can also be time consuming to research and track competitors’ spending and to adjust the budget accordingly.
- Unpredictable: It can also be difficult to predict how successful a competitive parity strategy will be, as it depends on the spending habits of competitors.
Examples of Competitive Parity
Competitive parity can be seen in many different industries. Here are a few examples of how it is used:
- Fast Food: Fast food companies often use competitive parity to advertise their products. For example, if Burger King spends $10 million on advertising, McDonald’s may also spend $10 million to ensure they remain competitive.
- Technology: Technology companies also use competitive parity to gain an edge in the market. For example, Apple and Samsung often match each other’s spending on advertising in order to stay competitive.
- Automobiles: Automobile companies use competitive parity to advertise their vehicles. For example, if Ford spends $20 million on advertising, Chevrolet may match that spending in order to remain competitive.
Competitive parity can be a very effective way for companies to gain an edge in a highly competitive market. While there can be some drawbacks, the potential benefits can outweigh the costs.