Examining Your Business
What is "competitive advantage”?. A competitive advantage is simply a factor that distinguishes your business from others and makes customers more likely to choose your product over the competition. Without a competitive advantage, your business has no unique method of drawing in customers
A competitive advantage is a way in which you can create value for your customers that your competitors cannot. This may be lower cost, faster service, better customer service, more convenient location, higher quality, or other factors.
For example, a restaurant offering the best food in town (best-tasting, highest-rated, most well-known chef, or some other measure of quality) would have an advantage other its competitors by offering a higher-quality product.
Alternately, a business could focus on reducing overhead and production costs to offer a market-quality product at a below-market price. Being able to offer this product at the price that they do would then be their competitive advantage.
Creating a competitive advantage involves analyzing your business's strengths and those of your competitors, and then learning how to take advantage of these factors.
Work to understand your customers.
Identify the demographic qualities of your customer base. If you serve businesses, what type of businesses do you typically sell to? If you serve individuals, are they typically young or old, male or female, married or single? Do they live within a 1/4 mile of the business or 50 miles? What is their typical income? Are they different from your competitor's customers? If you do not understand your customers, you cannot determine why they patronize your business.
Take this one step further by seeking to understand your customers on a personal level. What are their hobbies? What do they care about? What aspects of your business or your product resonate with them?
Demographic information can be discovered through customer interaction, surveys, or analyzing customer information.
Examine your business's unique strengths. Examining the strengths of your business can let you know which areas you can build on to create a competitive advantage. Ask yourself, "Why do customers buy from me?" The answer to this question will help you understand what value you offer them
For example, if you own a Chinese food restaurant, the quality of food, the location, or perhaps the speed of the delivery service may all contribute to a customer choosing you over your competition.
Don't be afraid to ask your customers directly. You can make a survey for them to fill out, or just approach them, but your key objective is to discover why it is they choose you.
If many customers list location, for example, you can work on other aspects of your business to create an even greater advantage.
Look at your competitors. A competitive advantage means you need to offer some things your competitors don't. Therefore, you need to know what it is your competitors do well, and do not do well. Think about your competitors' products, services, prices, location, and marketing. Then, compile a list of all the reasons you feel a customer would choose your competitors' business
Compare this to your list of advantages. What strengths do you have that your competition does not have? Which strengths does your competition have that you do not? The areas of strength that you have are the areas you should focus on expanding.
Remember not to be a "me too" competitor as much as possible. For example, if your competition has one recipe that many customers come to that restaurant for, simply imitating their recipe will not add to your competitive advantage. Instead of trying to copy your competitor's advantages, strengthen your own to create a unique set of strengths that cannot be replicated.
Remember that your competitors can include more than lookalike businesses. For example, a Chinese restaurant competes with other Chinese restaurants, but also with other dining choices.
Hire a company that specializes in providing business information. For example, Cortera will research, construct and analyze a competitive landscape of your target market. They and similar companies will have extensive databases to quickly access the information you will need. The more information you have, the easier it is to make decisions on what is working and what is not detailed customer knowledge is equally important as competitor knowledge. Gaining in-depth insights about your customer portfolio will allow you to maximize revenue potential, increase customer retention, and boost prospective customers.
You can use a mix of many tools and methods to measure consumer insight and both your position in the market and the positions of your competitors. Along with traditional company information resources, consider social media analysis tools that allow consumer insight mining on a large scale.
Sourced from Cortera