If you are trying to drive profitable revenue growth for your business, then understanding your firm’s unique differentiators and competitive advantage is essential.
If we were to take an informal poll, the results would reveal that most small- to mid-sized business owners can say quickly who their competition is, but they seem to come up short in explaining the exact steps they’ve taken to address and overcome the competitive threat. Why is this phenomenon so prevalent?
Moreover, what If during the sales engagement process, a prospective customer asks you point blank (and you can be sure they will) “Why should I buy from you instead of from your competitor?”. Do you have a meaningful response ready that clearly differentiates you in the prospect’s mind? Do you have a handle on your competitive advantage and how to position your products and services relative to the competition?
ROAR Marketing Concepts is a marketing consultancy that delivers predictable, repeatable and scalable revenue growth to technology companies and we’ve been consistently helping our clients develop and communicate their unique competitive advantage for years. Naturally, the results of our work have provided us with some really important lessons that we would like to share. But before we do that, let’s examine how some industry marketing experts weigh in…
Kimberly Amadeo, president of WorldMoneyWatch.com, outlines in her “What Is Competitive Advantage?” article three ‘determinants’ that must be known and understood by businesses: Customer Benefits, Target Market, and Competition. She ties together these marketing fundamentals in the following manner: “To be successful, you need to be able to articulate the benefits you provide to your target market that’s better than the competition. That’s your competitive advantage.” Ms. Amadeo offers up a number of ways that companies can differentiate themselves, such as providing a unique or high-quality product or the ability to deliver it faster. A third option might be to market in a way that reaches customers better. She also states that a company with a clear differentiation strategy can charge a premium price… which leads to higher profit margins.
Need more reasons why knowing your competitive advantage will help your business? in his marketing multi-edition textbook “Foundations In Strategic Management,” University of Richmond professor Jeffery Harrison explains that a competitive advantage is best realized when a business deploys unique resources, such as labor, expertise or products that competitors would find difficult to copy. Implicit in this statement are the economies of scale and enhanced purchasing power that some firms enjoy which allow them to offer better value to customers (value being defined as Customer Benefits divided by Price).
Drawing on its extensive experience working with clients, ROAR proposes you consider three key factors when assessing your firm’s differentiators and competitive advantage:
What sets your business APART from the competition?
If you consider all facets of the “customer experience”, there are a number of tangible ways you can distinguish your business in a positive manner. These would include assets such as the ability of your marketing initiatives to successfully reach and engage your target audience, your product/service, competitive pricing, and superior customer service. Remember, you don’t have to be a leader every one of these areas (because you can’t) – pick the ones where you know you can a make a clear case for differentiation and communicate them confidently to your target audience.
Do research on your competitors
How can you compete against someone or something if you don’t know anything about them? Competitive research and analysis is an ongoing activity in which profitable firms need to be engaged. A great structure for organizing this information is through a Strengths – Weaknesses – Opportunities – Threats (SWOT) analysis. Here is an example SWOT diagram that summarizes the key points:
It should be noted that this type of analysis should be conducted for every competitor to your business. The size of this task can be overwhelming; therefore, it is smart to treat your competitive analysis as ongoing marketing activity.
Where do I find competitive information?
The digital/internet age has made getting information on competitors so much easier now. There are a number of sources both on-line and off-line where you can learn what your competitors are up to. These include:
- Marketing Collateral
- Advertising, Sales Brochures
- Articles, Press Releases
- Financial statements (publicly-held companies)
- On-line databases
- Industry trade shows
- Your sales force
- Former employees at competitor organizations
- Your own observations…
Synthesizing information from a variety of sources allows you to develop a “360 – degree” view of your competitors and enables you to carefully pick and choose the right marketing initiatives which highlight and communicate your business’ strengths in contrast to the competition’s weaknesses.
Your differentiators and competitive advantage are another cornerstone of your marketing strategy. Like your value proposition, they determine how effectively you communicate with your target audience to win customers and increase revenue. Don’t ever underestimate their importance!