In the previous section we outlined a four-phase process for defining your Unique Positioning Statement. In this section we start breaking each phase into a series of steps to follow in carrying it out.
The beginning point is making specific points of comparison with your competition. The purpose is to identify any competitive advantages that you have over them. From this list of advantages, you then eliminate any that are not sustainable.
You then look at the remaining advantages through the eyes of your target customers to determine which of these advantages have genuine appeal to them.
These steps are moving you toward the ultimate identification of your one most important competitive advantage, which the procedures in Section 4 will help you isolate.
Author: Mike Armour
What Makes Your Business Unique?
Branding Yourself in the Customer's Eyes
Part 3 of a Four-Part Tutorial
Defining Your Competitive Advantage
Your competitive advantage has two components. The first is what sets you apart from your competition in terms of what you offer. The second is what sets you apart in terms of meeting the customer's expectations and buying criteria.
You satisfy this first element by offering something by way of products, services, prices, customer support, expertise, financing, value for the dollar, customer rewards, convenience, warranties, or product support which your competition does not generally offer. You satisfy this second element in the unique way that you create customer satisfaction and loyalty.
It's important to note that we have described your competitive advantage as something "which your competition does not generally offer." (Note the emphasis on "generally.") Ideally your competitive advantage should be something for which you have no competition at all.
Unfortunately, such exclusive competitive advantages are not always possible. In business fields where competitors are numerous, you may not have the resources as a startup to provide a competitive advantage that absolutely no one else offers.
Your objective in this case is to create a Unique Positioning Statement that distinguishes you from the vast majority of your competitors. In a word, your UPS is how you stand away from the crowd. A handful of others may stand away from the crowd in the same way. But it should be a very small handful. Remember, your Unique Positioning Statement and the competitive advantage on which it hinges have the purpose of setting you apart from the competition in the mind of customers.
Take Stock of Your Competition
You can ferret out your competitive advantage by using the four-phase process outlined earlier. The first phase is to analyze your competition. Here is one way to perform that analysis.
- Compile a list of your primary competitors, remembering to include those who may compete with you on the web. As more and more people shop on the internet, you can't dismiss online merchants as potential competition.
- List the principal strengths of each competitor.
- Also briefly describe any competitive advantage that this competitor holds.
- Identify what sets you apart from these competitors (or at least most of them) in terms of your offerings. Here's a partial list of things to consider:
- What unique products or services do you deliver?
- Is there anything unique about the way in which you deliver them?
- Are you serving a niche within your general market that is under-served?
- Does your price include added value that your competition does not provide?
- Have you made it more convenient or affordable for people to do business with you than with your competition?
- Do you have in-house licenses, credentials, specializations, or expertise that your competitors do not have?
- Do your products or services have superior quality that is easily recognized?
- Are your warranties and guarantees more appealing than those offered by your competition?
- Hopefully you have found several things that set you apart from your competition. Examine each of these items and ask whether it is, or has the potential of being, a truly meaningful competitive advantage. Put an asterisk beside any that seem to qualify.
- Now transfer the items with asterisks to a new sheet of paper, leaving enough space under each item to allow the addition of comments.
Identify Sustainable Advantages
Next, work through this list one item at a time, asking yourself, "Is it reasonable to expect this advantage to be sustainable?" For instance, a particular line of products may give you a competitive advantage if none of your competitors happens to offer it. But how long can you maintain this advantage before the competition begins stocking the same product line?
If any item does not pass the "sustainability" test, put a line through it. Your UPS must build only on sustainable competitive advantages.
As you are evaluating sustainability, don't assume that we are referring to perpetual sustainability. Any sustainable advantage has a finite lifetime. Even Enterprise Rent-a-Car ultimately had to forsake its "We Pick You Up" slogan once other car rental agencies began offering pick-up services themselves.
On the other hand, in this exercise you are looking for advantages that can be sustained long-term. That's because your UPS will center around this advantage and will, in turn, be the basis of your marketing and advertising. You don't want to invest heavily in marketing and advertising to promote a competitive advantage which is likely to be short-lived.
Take Stock of Your Customers
Once you complete this assessment of your sustainable competitive advantages, you are ready to begin the second phase of the UPS-development process, namely, analyzing your customers. This phase delves into the buying actions and attitudes of your primary target customer.
You should have already identified this customer while developing your mission statement and/or business plan. The key descriptive of this customer is "primary."
Most businesses attract a certain number of patrons who would not be classified as their primary customer. A retail store in the heart of a small town will have occasional drop-in customers who happen to be passing through. But the business could never succeed if it put the lion's share of its effort into attracting pass-through customers.
Or take this website as another example. It draws a certain number of visitors who do not fit the profile spelled out in our UPS. A web search leads them here because of some article or blog on the site. But they may be too young to fall within our target age-group. Or they may be in the target age-group, but are not starting or building a business. In either event, these are not the customers at whom this site is aimed and around whom we make our marketing investment.
In essence, your primary target customers are those on whom you rely to maintain your cash flow. Because they are so essential to your success, they alone are the focal point of your UPS.
Incidentally, it's not uncommon for a business to have a variety of services or products, some of which cater to one type of customer, others to an altogether different type of customer. In a situation like this, there is no one set of primary target customers. There are multiple sets.
If this happens to be true of your business, then you need to develop multiple UPSes, one for each of your target customer groups. Then the UPS for a particular group will shape the way that you market to that group.