For those businesses that have risen above the rest, the one thing they have in common is competitive advantage. From IBM and Apple, to Rolex and Google – each has something that sets them apart in customers’ minds and makes them better than whatever else may be on offer.
Business scholar and researcher Michael E. Porter identified two types of competitive advantage: the cost advantage and the differentiation advantage. Delivering exactly what your competitors are delivering but at a lower price is one way to gain an advantage in the marketplace (cost advantage). Conversely, you may not be cheaper, but you may be delivering benefits that exceed those of competing products or services (differentiation advantage). Either way, you’re offering superior value for your customers via a comparative or absolute advantage. Although the theory behind competitive advantage (sometimes also referred to by some as a USP) is simple, it can be hard to define. Here are some factors which can help.Defining Your Competitive Edge.
- Know your product or service inside out: Whatever you offer – be it a product or service – you need to determine what its inherent value is. What are the advantages of your particular offering? How does it differ from whatever else is out there? What are its advantages, over and above what a competitor may be offering? Be aware of the trends that may affect your product – especially new technology – and be prepared to adapt and hone what you offer so that it remains relevant to customers.
- Know your target market: Customers are the core of your business – and it’s they who decide whether they feel you offer a competitive edge. People queue up for the latest Apple (AAPL) iPhone because they have a deep connection with the brand and its products. To leverage any advantage, you need to know exactly who buys from you – and why. Armed with this knowledge, you can then work out ways of fulfilling their specific requirements. For example, once younger people began consuming their news more online, newspapers realised that their target audience had edged towards an older audience, and they were able to adapt. For this reason, it’s important to continually keep tapped into who your target market is – and whether it’s changing. Being simpatico with your audience is the best way to figure out what approach to adopt – in marketing, product offering etc – to increase demand and drive economic growth.
- Know your competition: Although it’s vital to literally be aware of everything your competitors are up to, it’s also important to cast an eye back towards your customers and see what other things they do (or where they go) in order to fulfil their requirements. For example, if you’re an eReader producer and a competitor produces a fully waterproof version, does this make a difference to your sales, or is it something customers don’t seem bothered by one way or the other? Read blogs, articles, reviews and gather any other information to inform you as to whether this one element may be providing an advantage to your competitors.
Having a full understanding of the above determinants will then inform you what benefits you provide to your target market that are superior to your competitors’. Knowing this, you can then reinforce your competitve advantage in every communication you have with your audience – from PR events and advertising campaigns, right through to how your sales staff interact with customers.Think For The Long Term.
Finally, it’s critical to ensure that you have a sustainable advantage. While a temporary cost advantage via a price reduction may work short-term, any genuine competitive advantage needs longevity – which means clear-cut goals and strategies. Do this, and you’ll be able to keep customers flocking to you, over your competitors.
If you are looking for rapid growth and you are also the very best in the world at what you do, passionate, full of energy and bold or a captain of industry of a leading or seriously ambitious challenger business or brand - get in touch to find out more ›