OVER the past several years, I have worked with many companies, and I’ve been amazed to find that they do not know, and cannot articulate, their competitive advantage.
How can a company expect prospects and customers to give their time and attention if they do not understand, clearly and concisely, what that company can do for them that no one else can do?
The statement of competitive advantage is a 30-second statement of what differentiates your company in the marketplace. It sets you apart from the competition and it makes you sound like a polished expert right from the start.
Companies who don’t understand their competitive advantage say things like “Our product is better quality” or “Our service is better”.
Even if a company has better quality or better service, it won’t convince its customers just by saying so because many of its competitors will be saying the exact same thing!
If you were to ask the average car dealer, computer store or furniture manufacturer what they do for a living they will probably say “I sell cars, computers or furniture”.
But that’s what every other car, computer or furniture company would say.
So what should the businessman who understands his competitive advantage say?
The car dealer could say: “My name is Mike from Competitive Motors. We’ve found that there is a lot of confusion in the automotive market today because there have been over 150 new models introduced in just the past three years. We’ve developed a computer book that profiles everything the buyer wants in a car and in less than five minutes, identifies the models most likely to fit their needs.”
You have to define quality. You have to show what outstanding service looks like and how your service differs from the competition. But how do you determine exactly what your competitive advantage and demonstrate it?
Your statement of competitive advantage has four components: your name, your company, a statement about a problem in your market and how you and your product solve that problem.
The best way to determine your competitive advantage is to break down the components of your product or service into four distinct categories: competitive uniqueness, competitive advantage, competitive parity, and competitive disadvantage.
Let’s look at each one individually. Suppose someone walks up to you at a business conference or social gathering, introduces herself, and asks you what you do for a living. Exactly what would you say? Would you have any trouble? Do you know what sets you apart from your competitors?
What can I do for my customers that no one else can do? What can I offer that no one else can offer?
An example of competitive uniqueness exists if a pharmaceutical company receives approval to sell a new drug. Since no one else has the drug, this company now has a competitive uniqueness with this drug.
What can you do for your customer better than your competitor can?
An example of a competitive advantage might be where two companies market the same drug, but one is a large well-known company and the other is a small relatively unknown company.
Even though both are selling essentially the same product, the larger company has an advantage because it is well-known and people ask for the drug by its company name because of its wide name recognition.
Objectively speaking, my competitors and I are the same here — there is no real differentiation. Vitamins are a good example. Several drug companies make different formulations, but all have similar records for effectiveness. This is competitive parity.
Where does the competition have an advantage over you? That is, what does the competition do better than you do? For instance, your drug may have more side effects than the competitor’s.
One way of overcoming this is to do analysis and know your competitive advantage. By doing this analysis, you will be in a position to help your customers distinguish between you and your competition.
Once they see your uniqueness and advantages, it will be easier for them to make a decision in your favour.
To discover your competitive advantage, you may have to do some intelligence gathering — talk to your customers, your salesmen, watch the local newspapers, attend trade shows, talk to your customers’ suppliers and build a file of your competitors’ marketing and product information.
In addition, do a debriefing when you lose a customer to a competitor, obtain annual and quarterly reports of your competitors and prospective customers, and watch the market trends in your industry and in your customers’ industries. In short, become the expert on your product or service and how it can help your customers.