When it comes to building a great business, many of entrepreneurs ignore what seem to be the obvious basics. We live in an increasingly competitive and noisy world and we need to find ways to differentiate ourselves from our competitors to ensure survival. The internet has made this even more challenging with successful retail websites from one part of the world being able to have a massive impact on local retailers. A company like Amazon in the United States can dramatically impact the sales of bookshops in France.
Two Key Terms Every Business Should Know
Competitive Advantage
Do you know what makes your service/product unique? What is it about your business that is a noteworthy difference between you and your competitors, is it personalisation? Quality? Price? Convenience? Availability? Ease of doing business? Your message?
Successfully marketing a product or service involves careful planning. You need to develop a competitive advantage. This is the ‘edge’ that you have over your competitors. It is a point of differentiation in some aspect of what you offer that enables you to sell more. For it to be effective in the long run, it needs to be an advantage that is sustainable and therefore hard for competitors to compete against.
What is Your Competitive Advantage?
Competitive advantage can come in many different forms. Below are some of common areas where you might have a competitive advantage:
• A unique service or product – a particular feature of your product or service that only you have.
• Positioning – perceived as a superior product in the mind of consumers, or the best value or some key perception that customers have about your product.
• Superior Technology – your product may at this point be highly innovative and therefore not something that others can offer.
• Patents / Intellectual Property – You have a patent on a design feature of your product or a protected trademark or copyright that gives you an advantage.
• Price – perhaps you have a great buying power that enables you to sell your product for less than your competitors. This is a common advantage amongst big retailers who can buy vast quantities of a product for less and therefore keep their prices very low.
• Convenience – perhaps your product makes people’s lives easier or saves them considerable time.
• Availability / Distribution – some companies have such vast distribution networks that they can compete first hand. I saw this first hand when I worked for Coca-Cola in the 1990s. They had such a large distribution network, that when they released a new product, success was almost guaranteed by virtue of the ability to distribute the new product so widely.
• Location – your business may have a spectacular view or be so convenient that people choose your business over a competitor.
• Image – perception is a powerful thing and your particular product may be seen as conveying a strong image.
• Your Message – if we were honest most businesses aren’t all that different and therefore the points of differentiation may be less obvious. However through your communication and marketing materials you can come up with a suitable distinction from your competitors.