Ask yourself the following question:
"Am I the envy of my competitors?"
If the answer is anything other than a resounding "YES" then there is a high likelihood of the company not having a competitive advantage in the market place.
I define competitive advantage as:
"A unique combination of all known attributes, universal or derived, that attribute towards superior performance."
Having competitive advantage is a good start. However, competitive advantage needs to be sustainable if success is desired. Companies gain competitive advantage by utilizing one or more of the following:
- Price
- Breadth of Products and Services
- Operations
- Marketing
- Workforce
- Client Servicing
Price:
Price positioning is often a commonly used strategy where there is a lot of competition. Many companies constantly monitor their competition's prices and not only try to match but beat prices. Consumers are winners in this scenario but many times quality suffers. Customer loyalty is the lowest. Walmart is a good example.
Breadth of Products and Services:
A company can obtain competitive advantage by offering a variety of products in the same category. Rather than being specialist, the company gains advantage by being a generalist. Proctor & Gamble is a good example.
Operations:
How the company operates its business and streamlines its operations can be also a very big competitive advantage. Many companies continue to optimize operations and limit activities that do not produce the desired results. Toyota is a good example.
Marketing:
Product and service placement can also attribute towards a company's competitive advantage. Traditional media advertising, Internet only, targeting the high net worth, frequency of the campaign, etc. are a few ways companies can gain advantage over their competition. McDonald's is a good example.
Workforce:
The quality and capability of human capital of a company can also be a competitive advantage. Companies that value one's workforce and provide the right tools necessary to support the activities of their staff many-a-times gain competitive advantage over their competition. Google is a good example.
Client Servicing:
Processes and activities focused on customer issues be a great competitive advantage. This generates customer satisfaction and loyalty for the long run. Starbucks is a good example.
Use this information and identify your competive advantage.
Good Luck.
Tiill next time....
Sal
4 comments:
Hey, this is a very useful post but I was wondering, suppose if one company say "X" have pricing advantage while the other company "Y", having the similar business, have customer servicing as their advantage, in such a situation what do you thing the customer's behavior would be?
In my opinon and experience, people do not buy based on price. People value service. Look at your own buying habits. If you are treated nice at one store, and treated like crap at another with the same product but it is cheaper. Would you buy from the cheaper store? If so, how many times would you buy before you say "I deserve better"?
I hope this helps.
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