What is your unique selling point and why is it important? Knowing your competitive advantage will enable you to choose a growth strategy that exploits your business strengths and your competitors’ weaknesses.
“Don’t try to be all things to all people. Concentrate on selling something unique that you know there is a need for, offer competitive pricing and good customer service.” This is the advice of Lillian Vernon, a successful American businesswoman whose company was the first woman-founded company to trade on the American Stock Exchange.
Outperform your competitors
A competitive advantage is the characteristic of a business that allows it to outperform its competitors. It may include access to natural resources, low-cost energy, highly skilled labour, geographic location, new technology, etc. It is crucial to determine what your competitive advantage is that makes your business different from the rest. It is so important that Jack Welch, past chairman and CEO of General Electric, said, “If you don’t have competitive advantage, don’t compete.”
Create the right perception
It is, furthermore, important to create the perception via marketing in customers’ minds that they’re receiving greater value than offered by the competition. There are two types of competitive advantage — cost advantage and differentiation advantage. Cost advantage means you provide reasonable value at a lower price. This is achieved by continuous improvement of operational efficiencies and using economies of scale. The low-cost strategy requires a close watch on profit margins and monitoring your competition for price changes.
How do we differentiate ourselves?
Small businesses can achieve differentiation by focusing on the following:
- Excellent customer service – Go out of your way to impress and assist your customers. Focus on their needs, making their experience a pleasant one.
- Quality – Provide a unique or high-quality product or service.
- Innovation – Meet your customers’ needs in a new way. Strive to be the first to offer new products or services to attract them and keep them coming back.
- Specialisation – This is an option, especially for small businesses who can find it difficult to meet the needs of an entire market. Rather, specialise in one particular aspect, such as brake repair instead of general automotive repair. Establish yourself as an expert in your field and carve out your own niche in the market.
A business with a differentiation strategy can charge better prices with higher profit margins. Bill Gates, co-founder of Microsoft Corporation, realised that no one product could provide a lasting competitive advantage. The Microsoft operating system provides the perfect platform for the rollout of new products such as Word, Internet Explorer and Windows Media Player.
“Good enough never is. Set your standards so high that even the flaws are considered excellent.” Debbi Fields
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The views and opinions expressed here belong to the author and do not necessarily reflect those of the YALI Network or the U.S. government. YALI Voices is a series of podcasts, videos and blog posts contributed by members of the YALI Network.