Competitive Advantage
Are there any fishing experts reading this?
How about some who occasionally go fishing?
Before a fishing expert can make any plans for his next fishing expedition, there is one thing he must specify. The first and most important decision - before he can decide anything else - is very specifically what sort of fish he wants to catch.
Only after taking that decision - what is my target fish? - can the fishing expert take decisions on how to catch them, by considering the following:
Firstly, geographic location
Where are my target fish most likely to congregate? If you're after fresh water trout - the local beach jetty won't get a tick in the Location box.
Timing
What time of day is most likely to have the target fish within the target location? When are the target fish most likely to be attracted by my offer of bait? What adjustment do I need to make for low and high tide, the phase of the moon, or recent storm activity?
Attracting the target
How do we attract the target fish - what bait or lure works best?
Do we use burley to prepare the target for my bait - if so, what?
Placement of the Attraction
Is the target fish a bottom feeder - or do they hang out in the surf break? Are they attracted by movement and colour, or should the bait be kept still?
Equipment
What equipment works best in placing the bait or lure in the optimum position?
Method of Operation
Do we undertake all this planned activity from a jetty, a surf beach, or the back of a boat?
Bag limit or quota
The John West strategy. If there is a limit on the number of target fish we can take home, how do we ensure we keep the best?
We have a Target Specification
What constitutes the perfect target catch? A friend of mine has a commercial crayfish licence - he operates on a very strict quota, which he can easily fill - so he has carefully specified what his best paying customers - the Japanese export market - want most. And that is 480gm with no damage - perfect plate size when cut in half .This size doesn't take too much of his quota - which is determined by weight - not quantity.
And finally
How does the fishing expert protect his area of operation from his competitors?
Space doesn't permit even a summary of the tactics employed by keen fishermen to protect their best spots from being found and worked by their competitors.
The point of going through this fishing expose - the irony I see in business life repeatedly - is that this weekend, Business Owners are making their plans to go fishing - and having decided what they want to catch - they'll carefully implement all the follow up decisions we've just been through. And yet, when it comes to marketing their business, they continue to rely on one marketing strategy - The Field of Dreams strategy - build it and they'll come - I hope!
Similarly with sales tactics, how can you successfully initiate contact before you have specifically nominated your target. At SeniorCoach.biz we work with Business Owners to specify their market niche and the marketing and sales strategies and tactics to substantiate and communicate their competitive advantage.
How?
By asking the right questions, and rejecting the wrong answers - usually within the framework of our 12 step Bullseye Process. Our experience suggests that Business Owners typically have all the answers relating to the marketing of their enterprise, brands, products and services - but they never ask themselves the right questions.
Bullseye matches the product or service in which you have the greatest competitive advantage, with the niche in your target market which has the highest percentage of optimum clients.
Why do we believe all businesses should specify their market segment or segments?
Two compelling reasons for starters:
Firstly, for service providers, an absolutely vital ingredient in your competitive advantage is your expertise - in reality and perception - being an expert in your chosen segment.
It is illogical and unbelievable to present yourself as an expert in everything, or even in a broad range of services.
Secondly, by concentrating your marketing efforts on a niche, you tend to fly under the radar of potential competitors. SME's are famous for operating successfully, and profitably, in the market spaces between the operations of industry giants.
OK, so what are the prerequisites to successfully complete the Bullseye Process?
First - the definition of your optimum client - this is your equivalent of the 480gm Cray - because without perhaps acknowledging this previously - you are also on an inflexible quota - not determined by weight or quantity - but by time, energy and cost.
So go after your optimum clients - but first you need to specify who they are.
This must be your unique definition, but will likely take into account factors such as:
- their inclination to enter long-term business relationships which acknowledge the value your product or service contributes to their business or personal lifestyle
- the frequency and profitability of business transactions
- their willingness to provide testimonials on your worth to their business, and to proactively recommend you to their associates
- their adherence to your Terms of Trade
- their cost of service, determined by considerations such as the ease and method of access to decision makers, geographic location, delivery methods and costs, and for physical products, cost of samples, tooling, production set up, changing specifications.
Now with this definition of your optimum client in mind, what niche in your market has the highest percentage of your optimum clients.
What about business owners with a product or service with mass appeal to a very board market?
Is niche marketing, or market segmentation, the right approach for them, or is it likely to reduce their volume potential?
Niche marketing will improve their business opportunity, in terms of both quantity and profitability.
For example, what could have wider appeal than water - everyone needs to drink - right?
But instead of mass marketing our spring water, how about nominating market segments to pursue, such as:
- health conscious female joggers and walkers who wish to carry your product with them during their exercise
- families in semi-rural areas, without access to drinking quality mains water, whose rain water tanks dried up months ago
- or, the increasing number of disciplined re-hydrators who take their drinking water with them for any car journey further than the corner shop
As part of their marketing strategy, let's consider just the packaging possibilities:
- for the female health enthusiasts - refillable, 1 Litre capacity, non slip bottle shape - built in sipper
- for the semi-rural families - what capacity can be lifted out of the boot of the family car by a reasonably healthy person, and what shape doesn't roll everywhere in the boot, or the back of the ute.
- and for the car-bound re-hydrators - about 750ml capacity, but in a shape that fits into the vehicle's cup holder.
The market segment approach will outsell the "one size fits all" approach every time.
If volume can be enhanced by market segmentation - so can profitability - even more so!
For an example of market segmentation by a large corporate, let's consider Hardy's Wines.
Any bean counter worth his salt will be able to provide the financial statistics to prove the case for marketing all Hardy's Wines under the one brand name - just call them all Hardy's and bank the savings.
So why have Hardy's created the following additional brands to market to different segments?
- Banrock Station
- Barossa Valley Estates
- Boomerang Bay
- Brookland Valley
- Omni
- Yarra Burn
- Stonehaven
- Tintara
- Chateau Reynella
- Leasingham
- Starve Dog Lane
The reason is simple - the total of their market niches adds to more volume and more profit than the single brand approach.
Let's consider the medical field.
How come general practitioners are barely surviving by creating a new business model of impersonal neighbourhood clinics with extended trading hours, while the Specialists are burdened with the dilemma of choosing between the 7 Series BMW or waiting for the new Mercedes?
As a branding decision, why wouldn't those battling GP's reinvent themselves as Specialists in Family Health?
Let's now turn our mind to defining Competitive Advantage.
There have been numerous text books written on this topic, usually adding the prefix of Sustainable Competitive Advantage concentrating on theories and concepts such as Distinctive Competencies, Differentiation Focus and Cost Leadership.
I'm a life-long student of Competitive Advantage as a marketing issue, and I can't understand the relevance of most of these existing texts.
There is no longer such a thing as Sustainable Competitive Advantage - certainly not in Small and Medium Business, where competitors can respond too quickly to counteract any perceived advantage. This is no longer a set-and-forget marketing exercise - it is an everyday, top-of-the-mind, vital ingredient in your marketing activities.
There's no use fishing where the fish were - last week.
The definition of Competitive Advantage is simple - why should your target niche buy from you and not your competitors?
While I'm slaughtering sacred cows - let me put a bullet in another old favourite - USP - Unique Selling Proposition. The notion of USP's is a dangerous piece of backwards thinking - however you do need a clear understanding of the UBM's of your target niche - their Unique Buying Motivators, their Hot Buttons - why do your Optimum Clients select the suppliers of Products and Services that they do?
Why do your Optimum Clients stay in some long term business relationships and terminate others?
That's what you need to know - because only with an understanding of why your target niche continue to do business with their chosen suppliers, are you able to "substantiate and communicate your competitive advantage".
Competitive Advantage is not about what you do better than your competitors, it is about what you do better than your competitors to satisfy the Buying Motivators of your target niche - your optimum clients.
I recently went through the process of selecting a Real Estate Agent to sell our home - and to that end arranged with 6 agents to do a property appraisal and interview with my wife and me.
In 6 interviews, usually with the Agency Principal, despite the hints I dropped, not one asked us how we were going to make the selection, what we considered important - they must have been too busy talking about what they do!
When it comes to communicating your competitive advantage there is no need to outspend your competitors if you can out-think and out-create them.
OK, so what have we covered so far - albeit in overview - certainly not the detail these topics demand:
- the definition of your Optimum Client
- what niche in your target market has the highest percentage of Optimum Clients
- what are the Unique Buying Motivators of your target niche
- how do you substantiate and communicate your competitive advantage to satisfy the Buying Motivators of your target niche.
Having compiled this information unique to your business, you are now in a position to answer the toughest question of all - what business are you really in?
Peter Drucker observed that "nothing is worse than climbing the ladder of success only to find, once you reach the top, that it was leaning against the wrong wall."
An old Turkish Proverb suggests "No matter how far you have gone down the wrong road - turn back."
To ask this question more pointedly - what problem commonly experienced by your target niche do you solve better than your competitors?
At the end of the Bullseye Process that's the answer you will have clarity on - for the short term at least.
I mentioned earlier on that Bullseye was a 12 step Process - that's true, but it does not start at Step 1, go through to Step 12, and end. Bullseye is a 12 step cycle - Step 12 leads to Step 1 of the next circuit - and away you go again.
As a local SA example of a dated branding position - consider the case of Radio Rentals.
Radio Rentals don't rent radios - their tag line on every ad proclaims they are SA's Biggest Electrical Retailer. OK so Radio Rentals retail electrical appliances - so how come in many of their TV ads their product is furniture.
In their case, if they continue to throw money at the problem, they may get their message through to their target market, but SME's don't have the luxury of multi million dollar marketing budgets.
I'll finish with two, hopefully thought provoking quotes - one from me - one from Mark Twain.
In business, you can do anything you want - you just can't do everything you want - so do your best stuff.
And from a frustrated Mark Twain "I can tell anyone how to get what they want, if I could only find someone what knew what it was."
