Understanding and unpacking Competitive Advantage: Weekly winning strategies
Competitive advantage is that unique edge that makes customers choose you over the rest. It’s about identifying and shouting about the aspects of your business that stand out in the market. Giving you a great chance to capture a bigger market share. An advantage can come from various sources. It could be user experience, product quality, intellectual property, or exceptional customer service
. So, how about unpacking competitive advantage?
Examples of unpacking Competitive AdvantageThe source of competitive advantage will differ across industries and businesses. Here are some common examples:
A skilled, innovative, and motivated team can be a major asset.
Unique access to advanced technology or innovative production techniques can set a company apart.
Offering exclusive products protected by IP laws or patents.
Cost Leadership. The ability to produce and sell at a lower cost, offering better value.
A strong brand identity and reputation is a powerful differentiator. Especially in saturated markets.
Identifying Your Business’s Competitive Advantage
To pinpoint your competitive advantage, consider these questions:
Value Delivery. How do you provide value or benefits to your customers?
Target Market. Who are your primary customers?Competitors. Who else is vying for the same market space?
Your competitive advantage is your unique benefit. One that you offer that no other business can replicate.
So, focus on the most engaging and differentiated aspects to gain market share.
Sustainable Competitive AdvantageSustainable competitive advantage is crucial in the long term. It’s obvious, really, I know. It influences consumer decisions and can lead to higher profits. It’s the obvious advantages you have. However, some of the advantages are often hard to find. These are the ones that are hard to replicate. They enable you to meet customer demands better than competitors. You have to avoid becoming another option in a crowded market.
So, just add AI to your products, tell the world your product is AI-powered when it’s not—or use “passionate” as an adverb for everything. Passionate about customer service isn’t going to cut it. If you are responding to a prospect at the same time your competitor has met them, done the deal and started the work. Read more from Octopus Intelligence: Competitor Analysis: Beyond the Hype and the AI machine.
One of our UK competitors does exactly this. They are often at the top of Google searches as they spend thousands on Ads. Attend one of their webinars, and the guru will tell listeners how important a competitive advantage is. We pay nothing on Google Ads, but we do give a damn and get back to a prospect within an hour or so. Not a week or so. Read more: 8 Banking Technology Solutions to Help Streamline Operations
There are three main types of sustainable competitive advantage:
Differentiation. That’s standing out through high-quality products, strategic assets, intellectual property, or brand identity.
Cost Leadership. Achieving lower costs, passing the savings to customers, and creating pricing power.
Focus Advantage. Targeting a specific market segment to build strong customer loyalty and satisfaction.
Framework for Competitive Advantage: The VRIO Model
The VRIO framework is a tool for internal analysis that helps identify whether company resources provide a competitive advantage. The framework consists of four stages:
Valuable: Does the resource offer a tangible benefit?
Rare: Is the resource unique or available everywhere?
Inimitable: Is the resource difficult to replicate?
Organised: Is the resource structured to capture value effectively?
Achieving a competitive advantage is not just for Christmas.
Achieving a competitive advantage is not just for Christmas. It needs to be worked on all year round. A resource that meets all the criteria is said to have a long-term competitive advantage, at least according to academics. But relying on a single advantage is risky. Your best competitors will continuously innovate and prepare for future challenges. Read more from Octopus Intelligence: Emerging Market Intelligence: Overcoming Challenges with Insight
Six Tips to Improve Your Competitive Advantage
Really Use Customer Feedback: Regularly ask for and act on customer feedback. All to help you stay in tune with their needs and preferences. This allows you to adapt quickly and maintain a strong market position.
Develop your team: A motivated and skilled workforce is a powerful asset. Offer training and growth opportunities to your team, ensuring they remain at the cutting edge of your industry.
Operational Efficiency: Streamline your processes to reduce costs and improve service delivery. Efficiency gains can lead to cost leadership and better customer satisfaction.
Strengthen Your Brand: Consistently promote your brand values and maintain a strong presence in your market. A well-recognised and trusted brand can be a significant competitive advantage.
Embrace Innovation: Stay ahead by continuously innovating your offerings and business models. Keep reviewing market trends and emerging technologies to find new ways to differentiate. That’s competitive intelligence.
Here’s another. A competitor’s new competitive advantage is always surprising, but it shouldn’t be. Most will notice this new competitive advantage for at least six months. At worst, when the tanks are on the front lawn. That’s competitive intelligence again.
Final Thoughts on Understanding Competitive Advantage
Competitive advantage is not static. It needs continuous assessment and adaptation. Use frameworks like VRIO and focus on sustainable strategies to secure a lasting edge. Remember, the key to winning is identifying your advantage and growing and changing it better than the competition. Implementing practical tips such as using real customer feedback, investing
in your team, optimising operational efficiency, strengthening your brand, and embracing innovation means you will remain competitive.
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