Identifying the competitive advantage of your business has become more and more important to the survival of SMEs, particularly in a climate of subdued consumer spending and global economic volatility.
Obtaining a competitive advantage involves gaining a superior understanding of the needs and buying processes of your customers in comparison to your competitors. It's about identifying what makes your business different when it comes to delivering a service or selling a product.
When this is achieved, you are able to deliver more value to customers and ultimately sustain and build a strong customer base. Identifying a competitive advantage of your business may seem like a daunting task, but there are numerous ways in which you can create greater value for your consumers and it is a lot easier to achieve than you think.
So, in what specific ways can a business differentiate its offer from those of competitors?
Product differentiation is when a business establishes its product as different from competitors in the market. It may seem impossible to identify areas of differentiation if you sell a highly standardised product such as cards, meat or flowers. However, some meaningful differentiation is achievable. Take, for instance, the well known chicken brand Steggles. They claim that their branded chickens offer less fat and more meat, and as a result are able to establish a price premium. This illustrates how even highlighting the smallest difference can enable your product to stand out in the market.
If you're finding it difficult to establish a unique feature for your product, you can focus instead on the service that accompanies the product. Your business can gain a competitive advantage by offering speedy or reliable delivery services. However, simple things such as 'a service with a smile' can have a big impact on customer loyalty. Large companies such as McDonalds and IBM Global Services are great examples of companies that have built their success upon service differentiation. McDonalds is known for their consistent service whilst IBM focuses on providing a quality installation service.
When your employees are the first point of contact that customers make with your business, it is essential that you hire the appropriate people to represent your business. This requires the training of employees and ensuring that they possess the required skills and knowledge to perform their job well. They also need to be courteous, friendly, respectful and considerate. They must perform the service with consistency and accuracy. Singapore Airlines is an example of a company that has built an excellent reputation in the aviation industry largely because of their cabin crew. In-flight attendants always make an effort to understand customers, communicate clearly with them and respond to their request and problems promptly.
Even if you offer the same products as your competitors, buyers may perceive a difference based on branding. Thus, image differentiation should be considered, which involves establishing images that differentiate your business from competitors. A company or brand image should convey a singular and distinctive image that communicates the product's major benefits and positioning. Symbols are one of the key elements that you can use in your business signage or logo as it can aid in brand recognition and recall.
Whilst there are several ways in which businesses can go about discovering their competitive advantage, not every business will find one big opportunity to differentiate itself. For some, it may involve discovering many minor advantages. The key is to keep identifying new potential advantages and introducing them one by one, keeping your competitors constantly guessing and enabling you to stay ahead of the market.