If you want to start a successful business or survive in business, you’ve got to have some degree of advantage over your competitors. Otherwise, why would anyone ever buy from you? Competitive advantage can come in one or combination of many factors: Price, service, quality, location, or imbedded customer base. The better your business performs against one of these factors, the more likely you are to succeed.
In times of crisis, you have too much to do with too few resources. You therefore have to focus on specific target markets, on your most important products or services and on your most productive sales and marketing activities.
Whether you’re a Fortune 500 company, one of the best 100 in Sri Lanka or a one person shop, to be successful, you must have a marketing strategy and you must implement it consistently. However, it doesn’t have to cost a fortune and you don’t have to be a creative genius.
The key is developing a marketing strategy that forms a solid foundation for your promotional efforts. Implementing promotional activities such as advertising, direct mail or even networking and one-to-one sales efforts without a marketing strategy is like buying curtains for a house you are building before you have an architectural plan. How would you even know how many curtains to buy or what size they need to be?
Developing your strategy You can develop a strong marketing foundation by:
Defining your product or service: What is it that your customers are really buying? You may be selling a globally accepted brand of power tools but your clients may be buying increased productivity, improved efficiency and cost savings.
Identifying your target market: Everyone or anybody might be potential clients for your product. However, you probably don’t have the time or money to market to everyone. Who is your ideal customer? Who does it make sense for you to spend your time and money promoting your service to? You might define your ideal customer in terms of income, age, geographic area, revenues, industry, etc.
Knowing your competition: Even if there are no direct competitors for your service, there is always competition of some kind. Something besides your product is competing for the potential client’s money. What is it and why should the potential customer spend his or her money with you instead? What is your competitive advantage or unique selling proposition?
Finding a niche: Is there a market segment that is not currently being served or is not being served well? A niche strategy allows you to focus your marketing efforts and dominate your market, even if you are a small player.
Developing awareness: It is difficult for a potential client to buy your product or service if they don’t even know or remember it exists. Generally, a potential customer will have to be exposed to your product five to 15 times before they are likely to think of your product when the need arises. You must stay in front of your clients consistently if they are going to remember your product when that need arises.
Building credibility: Not only must clients be aware of your product or service, they also must have a positive disposition toward it. Potential customers must trust that you will deliver what you say you will. Often, especially with high-valued purchases, you need to give them the opportunity to ‘sample’, ‘touch’, or ‘taste’ the product in some way. For example, a trainer might gain credibility and allow potential customers to ‘sample’ their product by offering free, hour long presentations on topics related to their area of specialty.
Being consistent: Be consistent in every way and in everything you do. This includes the look of your collateral materials, the message you deliver, the level of customer service and the quality of the product. Being consistent is more important than having the ‘best’ product.
Maintaining focus: Focus allows for more effective utilization of the scarce resources of time and money. Your promotional budget will bring you greater return if you use it to promote a single product to a narrowly defined target market and if you promote that same product to that same target market over a continuous period of time.
Another important part of business strategy is known as creating ‘value proposition’. What is meant by value proposition is a promise of value to be delivered and a belief from the customer that value will be experienced. A value proposition can apply to an entire organisation, or customer accounts, or products or services.
Developing a value proposition is based on a review and analysis of the benefits, costs and value that an organisation can deliver to its customers, prospective customers within and outside the organisation. It is also a positioning of value, where Value = Benefits – Cost.
When you are comfortable with the underlying value proposition, you can use it to develop and implement a marketing plan:
First, understand the value proposition in all three parts: The benefit, the target customer and the pricing.
Second, communicate the value proposition. Using all the means you have, from advertising, positioning, public relations, packaging, or whatever other tools you have available, communicate that value proposition to your target market. For example, the importance of communicating a value proposition is obvious in the advertising message. However, it goes much deeper. With a retail location, the layout and design of the store are communicating a value proposition. Consider the difference between an expensive clothing boutique and a discount merchandiser. A computer retailer wanting to communicate service and reliability might have a large service counter prominently displayed.
Third, fulfil the promise. If you’re offering greater reliability at a price premium, for example, make sure you deliver. If you’re stressing customer service, then deliver on that promise. Review all elements of the business in terms of how they affect your value proposition.
So, think! What is your competitive edge? How is your company different from all others? In what way does it stand out? Is there sustainable value that you can maintain and develop over time?
The most classic of the competitive edges are those based on proprietary technology and protected by patents. A patent, an algorithm, even deeply entrenched know-how, can be a solid competitive edge. In services, however, the edge can be as simple as having the phone number, which is an actual case. A successful company was built around that phone number.
Sometimes market share and brand acceptance are just as important. Know-how does not have to be protected by patent to offer a competitive edge.
For example, for years, Apple computer used its proprietary operating system as a competitive edge, while Microsoft used its market share and market dominance to overcome Apple’s earlier advantage. Several manufacturers used proprietary compression to enhance video and photographic software, looking for a competitive edge.
The competitive edge might be different for any given company, even between one company and another in the same industry. You don’t have to have a competitive edge to run a successful business – hard work, integrity and customer satisfaction can substitute for it, to name just a few examples – but an edge will certainly give you a head start if you need to bring in new investment. Maybe it’s your customer base, or its image and awareness. Maybe your competitive edge is quality control and consistency.
Most successful businesses exist in the marketplace with other successful competitors. They can do this because each has some mix of competitive advantage factors that appeal to a given segment of the potential customer base. Successful businesses work hard to understand their customers. They ask questions like: What could we be doing that would make us even better? Or, how do you see your customer base changing over the next 12 to 18 months. Understanding your customers and your customer’s customers can help you see the changes you need to make in order to maintain or gain competitive advantage.
(The writer is a corporate director with over 25 years’ senior managerial experience. He can be contacted at email@example.com)