Competitive advertising, also called comparison advertising, is a marketing technique that directly compares the features and benefits of a product to similar products that are sold by other companies. It is a style of advertising that responds aggressively to the actions of market competitors. The approach relies on the theory that consumers can be seduced away from another product by convincing them that some independent evaluation proved the superiority of one product over another.
Most companies have a limited advertising budget. The approach a company takes to marketing its products can be focused on what the customer needs or on what the product offers. A needs-based approach might focus advertising on a product's low price, tapping into a customer's need to save money. Product-focused advertising takes the approach that a product is so superior, customers will buy it regardless of any other particular need.
Companies that employ competitive advertising are taking a product-focused approach to marketing. They make a strategic decision that the most important fact about their product is how it compares favorably to a competitor's product. This is a position that is most often relevant for the product that has the smaller market share. It rarely benefits the market leader to recognize the challenger, as acknowledgment of the threat gives the challenger a certain level of legitimacy.
There are quite a few memorable examples of competitive advertising in the consumer market. Those companies that end up in a back-and-forth advertising campaign, pitting one product against the other, are said to be at “war”. Two of the most famous competitive advertising campaigns in the U.S., for example, were the Burger Wars of the 1970s and the Cola Wars of the 1980s. Products were directly compared in each instance through gimmicks such as “blind taste tests” and “independent surveys” that tried to prove that one product tasted better than the other.
The danger of competitive advertising is that it can easily get out of control. In the same way that over-aggressive competitive pricing can drive cost-cutting companies out of business, competitive advertising can easily become more focused on the battle and less focused on the needs of the consumer. The companies involved end up talking to each other, rather than talking to the consumer.
Another factor that is important to take into account when allocating a marketing budget to competitive advertising is that comparative factors may form only a part of a consumer's decision-making process. Consumers make decisions based on a broad range of factors. Sometimes, the best product is not what the consumer wants, as they may want the cheapest product, or the product they have been using since childhood. Other times, a consumer might prefer the product in the packaging that best fits on their bottom shelf. Competitive advertising can be consuming and can limit a company's marketing approach to its own detriment.