Competitive advantage: Differentiating your business
To win new business, you need to show new customers why they should choose you. To start with, look within your business for ways to improve your competitive advantage.
How well do you know your competition?
In order to differentiate your business from your competitors, you need to study your competition intimately. Documenting their products, services, prices and promotional offers on a simple Excel spreadsheet will suffice.
Pricing: competitive or premium?
Pricing is something that every business has to come to terms with, and it’s important that you make a strategic decision about where you want your pricing to sit relevant to that of your competitors.
In many cases, you’ll want to be competitive without pricing yourself out of business. Use the information you collected when getting to know your competition to compare your price to others in the market place. If you’re aiming to be price competitive, look over your operational costs to determine whether you can offer promotions that match or beat your competitors’ pricing strategy.
"When selling a premium product or service you often have a very small window of time in which to become the market leader before someone copies your offering."
Don’t be tempted to price your goods or services too low though; if you position yourself as an el cheapo business, word of mouth will spread, and potential customers may avoid you, thinking, “You get what you pay for”.
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Alternatively, when your competitors are all cutting their costs and sourcing their products from cheap manufacturers, you might decide to differentiate yourself by offering a much superior product for a higher price.
Bear in mind that when selling a premium product or service you often have a very small window of time in which to become the market leader before someone copies your offering.
Even if you don’t have a superior product you can still use premium positioning to differentiate yourself, for example by offering superior service or a specialisation that justifies your high prices.
Should you specialise?
To get a competitive advantage, consider specialising in one service or one product. This doesn’t mean that you only offer that one service, but that you’re going to position yourself as an expert in that product or service.
Deciding to specialise in a particular product or service should be supported by the fact that it will be a more profitable move for the business.
Are you top of mind?
When the day comes that your customer requires your service or products you want to be the first supplier they think of to fulfil their needs. It’s all about getting your name out there so that potential customers know who you are and why you’re different. This is one of the functions of your business branding, which should sell prospects on why they should use your product or service compared to your competitors.
What makes you special?
If you haven’t already determined your unique selling proposition (USP) now is the time to start looking at what you offer that sets you apart. Is it that you’re faster or cheaper than your competition? That you offer a premium product or service? Or something altogether different? Once you’ve determined what it is, spread the word in all your communications so that you’re always selling your USP.
How do you set yourself apart from your competitors? Please share your tips for gaining a competitive advantage below.