Competitive advantage is the favorable position an organization seeks in order to be more profitable than its competitors. It involves communicating a greater perceived value to a selected market(s) than the competition currently provides.
In effect, competitive advantage occurs when a company acquires or develops an attribute or attributes that allows it to outperform its competitors. Notice the words perceived value and currently have been underscored above to make a point. A competitive advantage can be short-lived because of three critical factors – market perception, innovation and time.
Now, there are a plethora of ways to differentiate your product/service or company from competitors in order to gain a perceived competitive advantage. Some of the more common ways include:
- Be first to market with new products or services.
- Provide a superior product or service.
- Offer better (lower) value pricing.
- Deliver outstanding service and support.
- Extended warranty or service-level guarantees.
However, each of these common differentiators listed can be readily overcome with aggressive advertising and smart marketing, and with enough time. In our efforts to distinguish ourselves, we are also guilty of using acronyms and buzz words such as USP, CVP, best-in-class, leader and money back guarantee far too often. If we’re all saying the same or similar things, with like or similar offers, where does the competitive advantage come into play?
At the end of the day if you put all related competitive products and services in a basket, it’s basically the same stuff just repackaged and rebranded. What this reflects is that gaining a sustainable competitive advantage for most businesses is an unrealistic goal. For the rest, it is a constantly moving target based upon the ebb and flow of rapidly evolving markets, and ever-changing client demands.
In their outstanding book, Blue Ocean Strategy, authors W. Chan Kim and Renée Mauborgne, state that the way to gain competitive advantage is to “create uncontested market space and thus make the competition irrelevant”. This approach, in my opinion, may not work so well for the majority of small to mid-size businesses because of the resource commitments required to continually redefine the business and market space in order to stay ahead.
With the exception of the 900-lb. gorillas in selected markets, the competitive landscape is no longer a “blood sport” where crushing the competition goes hand-in-hand with market share acquisition and growth. Today’s marketplace, for the vast majority of SMBs, is about survival, responsible growth, partnerships and coopetition. As such, small to mid-size business owners would be wise to reconsider their views of what competitive advantage entails.
Set aside those cute advertising slogans and over-tasked buzz words, any thoughts about crushing the competition or redefining the market. Abandon those short-term actions that tend to yield only marginal results, in your effort to gain a fleeting advantage over the competition. Instead, focus your energy and resources on developing a profitable, scalable and sustainable business around these six attributes:
- Great people.
- Great relationships.
- Being consistent.
- Meeting commitments.
- Delivering value.
- Continuous improvement.
Building a successful, profitable and responsible business with staying power that consistently delivers value is a proven way to differentiate your company from the pack.
My thoughts. Please let me know if I missed anything.
Enjoy the journey!
COPYRIGHT © 2014 John Carroll