Submitted by chuck on Tue, 05/11/2010 - 14:25
For years the phrase “competitive advantage” is never far from our minds when thinking of developing marketing plans, product development or adding a new product or service. Business schools love to lecture on using “competitive advantage”, but the game has changed. I'll explain a little later.
The question we always pose is “What is it really that gives our products or our company a competitive edge and how long can we hold on to it?” Competitive advantage means being able to do something that others can't or won't do. To understand competitive advantage you must recognize that its only purpose is to define the market and the number of players. If your business operates in a market with no (or very low) barriers (AVON, MARY KAY or Ebay Seller), it is almost certain that no competitive advantage can last very long. In those markets, the only things that might matter are operational efficiencies and product pricing.
If your business segment has limited players, it is always a good practice to establish your own niche, stick to it and understand the impact of what you do in this market . (Tour Company that offers Ghost Tours; Real Estate company that specifically represents a geographical location; Food Establishment that offers a specific type of menu (seafood, “green”, etc.). An example of how “niche” marketing and gaining competitive advantage is to look at companies like General Electric who have clearly stated that their goal is to operate only those businesses where they are the number one or number two player in the market. They exit the business where they cannot establish a real competitive advantage. How does this mindset or objective apply to small businesses product or services? While you do not have the resources of a GE, GM or IBM, you gain the same competitive advantage by using the power of the Internet to compete. Most businessman in the past have tended to examine only one competitive advantage factor of their business and as an example: I sell shoes and what kind of shoes am I selling? In today's Internet marketplace, a business person must look beyond just one factor but how they can broadcast their message on the Net to gain competitive advantage. Here are some factors to consider:
1. Customer Service: How are you doing and what are others saying about your company (Facebook, Twitter and other interactive sites that allow someone to post a comment)
2. Price: How does my price compare to the competitors? If my price is higher, what value-added services/products am I providing. How does my location compare? How strong is my website and does it contain the information demanded by a visitor to my site?
3. Product: Why is my product better? What makes it different?
(Tip: Create a box chart and on the top, list all the services/qualities/etc that you can think of, and on the left side (vertical) list all your competitors. As you review the services (include all of the Internet options: Google ranking; YouTube, Social Media, etc.), mark or X the competitor box if they currently provide this...make sure you also mark yours). When done, you will see what others are doing that you are not. It will give you an idea of who has the competitive advantage. If you are not there, start thinking and take appropriate action.
I could continue add more factors but I believe you understand where you need to go.
When you complete your internal review do not focus on one single dominate factor but think about how the company can create an advantage for itself by combining a number of factors without needing to excel in every one of those. Your product or service might not be the best , but is good enough and meets the customer requirements. Your price may not be the lowest but is competitive enough. Your customer service is very good. You are using the Internet options effectively. You are moving in the right direction, especially if your competitors are content to focus on just one key factor.
Remember, gaining competitive advantage is not a business principle but a way of thinking “outside-of-the box” and the Internet is your limo ride to success.
--As always, if you have questions email me at chuck@sysconn.com or call 356-9920.