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Artificial competition

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Artificial Competition​

Definition & Summary: Creating the illusion of competition by establishing or funding a secondary entity that competes with your own offerings . This play convinces customers (and regulators) that they have choice, while you ultimately control or benefit from both options.

Detailed Explanation: The idea originates from observing that customers fear vendor lock-in. To alleviate that and avoid anti-monopoly scrutiny, a company might set up a dummy competitor or a separate brand so that it appears the market isn't dominated by one player . Key purpose: drive "oxygen" out of the market for any real third competitor by focusing the fight between two entities that you influence . Essentially, you're hedging -- you win no matter which of the two competitors a customer chooses, because both are yours (or one is secretly yours). Principles include maintaining plausible independence (customers shouldn't easily realize the two are related) and targeting the same user group with both so true outsiders struggle to gain share.

Real-World Examples:

  • Historical: The consumer electronics retailers MediaMarkt and Saturn in Europe are fierce retail "competitors" in the public eye, but in reality belong to the same holding company . This artificial competition strategy keeps customers bouncing between the two chains (thinking they have choice), effectively blocking out other entrants and keeping market share within the holding company's control.

  • Hypothetical: A dominant enterprise software firm fears a move to open-source alternatives. It sponsors an "independent" open-source project that competes with its own product, ensuring it addresses customer desire for open solutions. Customers see two options (one proprietary, one open) and feel competition exists, but since the firm influences the open project's direction and support contracts, it captures value either way and prevents a truly independent open-source competitor from rising.

When to Use / When to Avoid:

  • Use when: You have a large market share and customers or regulators are starting to voice concern about monopoly or lack of options. It's also used when you foresee a segment of customers preferring an alternative approach -- better you provide that alternative yourself than let a rival do it. Use to pre-empt new entrants by owning both sides of a competitive narrative.

  • Avoid when: Maintaining two entities is too costly or complex (not every company can afford redundant operations). Also avoid if transparency is high in your industry -- if it's easily discovered that the two "competitors" are affiliated, trust can erode badly.

Common Pitfalls:

  • Exposure: If customers or regulators discover the ruse, it can create backlash (e.g. "astroturfing" accusations).

  • Inefficiency: Running two organizations or product lines that compete can cause internal cannibalization or duplicated effort.

  • Neglect: Sometimes the artificially created competitor might underperform or be treated as second-class internally, making it an ineffective competitor and not convincing to the market.

Related Strategies: Playing Both Sides (a similar concept of benefiting from both ends of a competition), Market Enablement (in a way, you're enabling more competition -- albeit under your control), Misdirection (you misdirect customers about the true competitive landscape).

Further Reading & References:

  • Wardley Maps Forum -- Gameplay: Artificial Competition . Provides the MediaMarkt/Saturn example and discusses the purpose of giving customers an illusion of choice.

  • Wardley, S. -- On creating competing bodies . Summarizes how establishing two competing entities under one umbrella can suffocate genuine outside competition.