Strategies For Gaining Competitive Advantage

Competition (if you believe in it) is everywhere!

The barriers to entry for getting into business today are lower than ever before. It doesn’t really matter what business you are in chances are good you are not alone. Even more likely is there are others looking to set up in the same business next door to you in the coming months.

So what is your competitive advantage?

One of the most important marketing decisions you can make is choosing your competitive advantage and developing a marketing strategy around it.

There are essentially seven different categories for developing your competitive advantage. As you begin to make plans for 2010 give consideration to which of these seven makes the most sense.

The seven categories for developing a competitive advantage are:

1/ Price – The first area you can choose to compete on is price. Being the lowest price for your product or service is one way to gain market share quickly however there are many downsides that go along with this. The biggest challenge with a low price strategy is that you need a higher number of transactions to achieve your revenue goals. This means your marketing and fulfillment costs will be higher and ultimately your profits eroded. Plus once you are known as a low price provider you will always be seen this way.

At a seminar recently I met a lady who was selling a commonly available commodity items and she was telling me that she wanted to be one of the lowest price providers yet offer a high level of service. My response was that this might be possible while you are in start up mode and you are doing everything but as you scale the business up the low price strategy means you will not be able to fund the higher level of service and make a profit.

Personally I would never recommend to a client that they choose this strategy.

2/ Results – If you are able to produce RESULTS above and beyond your competitors with your product or service then this could be one of the most effective strategies for you to compete on. After all that is why your customers and clients come to you … they want results.

If you are going to compete on the basis of superior results then you must provide an abundance of proof to this effect. So make sure you start to gather lots of case studies, testimonials, and video testimonials.

3/ Service – Recently while I was in Atlanta I was staying at the Sheraton Hotel and the service was outstanding. You could not walk through the foyer without at least two of the staff welcoming you. Every interaction with the staff was incredible. They provided a high level of service and as a result they were really quite memorable. So much so that I am now telling you about them.

Competing on service has always been a good strategy for winning and keeping customers and clients. To effectively compete on service you need top quality staff and ensure they are well trained.

4/ Uniqueness – One of the most effective ways of competing is to make yourself UNIQUE so that you stand out. Its easy to be just another business in your category and get lost amongst the many. If there is something about you and your business though that is UNIQUE you will be memorable.

You can make yourself unique just by redefining what your business is about. Alternatively you could develop your own unique process or system for getting results. Profit Minute use this strategy. Instead of marketing ourselves as just another marketing consultancy business we developed the Attraction Marketing System and positioned ourselves as ‘Attraction Marketing Specialists’. This makes us stand out and get noticed.

One of the key reasons we like and recommend becoming UNIQUE is that you are not compared on the basis of price. If you are truly unique then who would they compare you too?

5/ Quality – Next is quality … being the best is always a good strategy as long as you price your product or service to match. Providing a quality product or service today is almost a given yet many of your competitors are probably not up to standard in this area.

6/ Cutting Edge – If your product or service relies on technology and you are the cutting edge then this can give you a unique competitive advantage. You want to promote the fact that you are breaking new ground with your technology or that your systems and processes are utilising this cutting edge technology.

Warning though … make sure in explaining your cutting edge technology that your market place understands what you are talking about.

7/ Premium – The final way of competing is to be the premium provider in your business category. This is a combination of results, service, uniqueness, quality and cutting edge all rolled into one. As the premium provider you will no doubt be the most expensive so you will want to straucture your marketing in a manner where it appeals to those customers and clients who must have the best.

Being the premium provider makes sense if you have an advantage in a number of the other areas we have just spoken about. Good news is you will need fewer transactions to reach your revenue goals, and likely be more profitable in the process.

Deciding on which basis you are going to compete is one of the most important marketing decisions you will make. Choose carefully and give consideration to who you want as a customer or client. Not all customers and clients are equal. The competitive advantage that you go to market with will determine which types of clients you will attract.

Once you have determined your competitive advantage then your next step is to develop your marketing strategy around this. A topic for another week.

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