Competitive Advantage: Finding Your Business Edge
Competitive Advantage: Finding Your Business Edge.
If you don’t have a competitive advantage, don’t compete. – Jack Welch
A competitive edge separates your business from the competition, especially in the minds of the consumer. History shows that being number one in a market category minimizes the risk of being labeled a commodity, which can be factored into premium pricing and boost profit margins.
The trouble most businesses experience is clearly identifying a real authentic competitive advantage, then articulating this edge through marketing and branding.
So, most businesses remain a me-too brand and battle it out with the rest of the competition for a tiny portion of market share.
After all, it is one thing to know what your business does better than anyone else’s. However, if you struggle to communicate your competitive advantage, then you’ll miss out on sales.
So how does a business create an indispensable competitive advantage?
1. Competitive advantage starts by identifying the underlying psychology of your target market. 2. Establish an understanding of how your competition is positioning their products and services to the customer. 3. Ensure you have developed a product and or service that is going to demonstrate real value to customers. 4. Determine the lens through which your business will communicate this value to your target market.
To have any lasting impact, it is imperative that each one of these steps is coherently tied together, or else you risk “making noise” and deterring your potential customers away.
COMPETITIVE ADVANTAGE: IDENTIFY THE UNDERLYING PSYCHOLOGY OF YOUR TARGET MARKET
There are many ways to go about understanding the underlying psychology of your target market to establish their buying habits. Established businesses have the benefit of tapping into their existing customers to find out what motivations drive them to purchase.
Customers are looking for a solution to some external challenges. For instance, someone looking for a contractor to build their home really needs a home built. However, their internal motivations for selecting a contractor are determined by something much more primitive. Perhaps these customers are motivated by status, which means they will invest their dollars with a contractor who aligns their competitive advantage with quality, reliability and using state of the art materials in their construction.
Whether you are building homes or designing software, tapping into the psychology of consumers in this market segment is a great place to allocate resource on the front end of developing a competitive advantage.
In addition to interviewing you core customers, you can tap into market data from companies like ibisworld.com. Their reports are incredibly comprehensive and can aid any efforts in building a psychological profile.
Online forums, blogs, and other communities for like-minded consumers can be another great place to invest time. The internet is filled with information and people who openly share their questions and answers about many different subjects. Quora.com is a great place to search and ask questions.
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COMPETITIVE ADVANTAGE: HOW IS YOUR COMPETITION POSITIONING THEIR PRODUCTS AND SERVICES?
Competitive analysis is a core aspect of building a deeply-rooted competitive advantage. What are your direct competitors doing to differentiate themselves to the customer base? Are their indirect competitors that can be an alternative to your service?
For web developers, it’s intuitive to look at the other web development companies that exist and determine how they are selling their products and services. However, there are solutions like wix.com and other do-it-yourself solutions that are cost-effective.
Depending on whether or not the customer can adequately learn the technology and build their own website.
Understanding the differences in what products and services are in the marketplace can help a business define a competitive advantage that is truly authentic.
In the case of the web developers, knowing what the direct competitors and the indirect competitors are doing helps develop a message that sticks out to consumers who are not looking for a DIY solution. Maybe they want someone who is capable of building customized solutions, which integrates analytics and drives engagement.
COMPETITIVE ADVANTAGE: DEVELOP PRODUCTS AND SERVICES THAT ALIGN WITH YOUR COMPETITIVE ADVANTAGE
This goes without saying. However, many businesses claim to be the best in a related field then stumble on delivery. This fragmented approach may deliver a few sales upfront but will inevitably hurt a business on the backend.
The most influential advocate for a brand is a satisfied customer. Ensuring expectations align with your competitive advantage is of utmost importance. If your business is quality focused, deliver quality. If your business is focused on cost-conscious solutions, focus on delivering a value-based product for the relative cost you are charging.
Building a brand is about continuity across all channels, and this is where that old saying “The proof is in the pudding” plays a key role.
Regardless of your business, ensure you are delivering the most value based on your position to establish yourself as the number one business in your sector. If you don’t, you’ll risk bad referrals, and lose out to the competition time after time.
COMPETITIVE ADVANTAGE: DETERMINE THE LENS YOUR BUSINESS WILL COMMUNICATE YOUR VALUE THROUGH
At this point, you have done 75% percent of the work, and now it’s time for the hardest 25%. Bring it all together in a clear message.
Most businesses find themselves to complex, and struggle to simplify their competitive advantage into something digestible for their customers.
They will say things like “We build homes, but we also have a property management division and a la carte service for existing homeowners.” This creates noise in the minds of a customer.
Sure you can open up your list of services to potential customers when you are at the table discussing their specific needs. The thing is you need to get them through your door in the first place, and creating confusion isn’t going to be your friend in this regard.
Establish your competitive advantage, by clearly communicating it. Focus on one central concept that aligns with your customer’s core psychology differentiates your business from the competition and will set the proper expectation based on your product and service.
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