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Design a competitive advantage

We believe spending the effort positioning and communicating a business’s value is an essential exercise to kick start business growth.  If a business is not clear about where its value lies for customers, customers won’t either.

Design a competitive advantage

 

We believe spending the effort positioning and communicating a business’s value is an essential exercise to kick start business growth. 

 

If a business is not clear about where its value lies for customers, customers won’t either.

 

A marketing Unfair Advantage can be built upon a competitive advantage of any kind. Indeed many operational advantages come straight out of business school. To save you the cost of an MBA, here’s a quick introduction to some competitive advantages that translate brilliantly into defensible customer value from which a powerful marketing programme can be built. 

 

To start the process use Michael Porter’s Generic Strategies. It’s a useful set of three strategic approaches that businesses can adopt to gain a competitive advantage in their respective industries. 

 

These strategies help businesses position themselves in the market to achieve sustainable profitability and maintain a distinct edge over their competitors. 

 

The three generic strategies are:

 

Cost Leadership:

The cost leadership strategy focuses on becoming the lowest-cost producer or provider in the industry while offering products or services with acceptable quality to customers. The key to success with this approach is to streamline operations, optimise efficiency, and achieve economies of scale. By having lower production costs, the company can offer its products at competitive prices, attracting price-sensitive customers. Companies that pursue a cost leadership strategy often target a broad market.

 

For example, Zara’s Fast Fashion Model, or Jeff Bezos’s “Your margin is my opportunity” driving principle

 

Differentiation:

The differentiation strategy involves creating unique and distinctive products or services that are perceived as superior by customers. By offering features, attributes, or benefits that are valued by the target market, the company can charge premium prices and build customer loyalty. The differentiation can be achieved through product design, brand image, technology, customer service, or other factors that set the company apart from its competitors. Businesses using this strategy may target a broad or narrow market, depending on their specific differentiation.

 

For example Tesla’s public commitment to ever greater vertical integration creates technology unseen elsewhere. Or Gymshark’s focus on social influencers and creating social media friendly clothing created a positioning unlike any other sports apparel brand.

 

Focus (or Niche) Strategy:

The focus strategy concentrates on serving a specific segment or niche of the market. The company focuses on meeting the needs and preferences of a narrow customer group better than its competitors. There are two sub-strategies within the focus strategy:

 

  1. Cost Focus: The company aims to be the lowest-cost provider within a niche market segment. Such as Amazon Prime enables

 

  1. Differentiation Focus: The company seeks to offer unique and superior products or services within a niche market segment. Such as REI’s Co-op Membership Program.

 

By concentrating on a particular segment, offerings can be tailored and stronger customer loyalty garnered to defend against larger, more diversified competitors.

 

These ‘generic’ strategies are not mutually exclusive. Try combining elements of different strategies to form your competitive approach. The choice of strategy depends on the company’s internal capabilities, resources, market conditions, and the nature of competition in the industry. 

 

Other ways to frame competitive advantages exist. Here’s some examples we’ve collected to use as stimulus as you look for competitive advantages to base your customer growth on:

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