How to Compete

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You are likely to find that most businesspeople are competitive. Especially in marketing, people want to win.

Business has always been competitive. That’s one of the expectations of a free market system. Businesses compete with one another for customers.

And despite most typical assumptions, there are a number of different ways to compete. Most people only really think about two ways to compete:

  1. Quality
  2. Price

But there are many more, often obvious, ways to compete. So let’s review those here.

Compete on Quality

Everyone knows you can compete on quality. If you have a better product or service than your nearest competitor, you are likely to take market share from them.

Choosing to compete on quality means three things. First, you believe that you can consistently outperform when it comes to the quality of your product or service. If you didn’t, you would find another way to compete.

Second, it means that you believe there is a demonstrated desire by consumers for this higher quality. And third, you believe in your ability to communicate your higher quality to those consumers.

The key is, if you compete on quality, you must always be one step ahead of your competitors, those that already exist and any potential newcomers.

Compete on Price

There are always companies in every industry that will compete on price. It is the oldest form of competition. If I think that I can offer the same thing that you offer, but for a lower price, I will. I know that all other things equal, the lower price will always win.

But as successful as many companies have been focusing on price, this form of competition comes with high risk. Why?

What happens if your competitor lowers their price? What happens if a new competitor figures out a way to market an even lower price? Price wars are never fun and often lead companies out of the market entirely.

If you decide to compete on price, you must make sure that you can always offer a lower price than your competition.

Compete on Audience

To compete on audience means that your target market is going to be different in some way from that of your competitors. Perhaps you have recognized that there is an under-represented part of the market, one that is not currently being addressed by your nearest competitor. Or perhaps there is an alternate use for your product that you think will appeal to a new group of consumers.

Competing on audience requires you to focus your efforts, designing your marketing and product for a specific subset of the larger market. If you can serve them better than your competitor, you might either steal market share or create a new slice of the pie that is yours and yours alone.

Compete on Brand

Branding is a way to establish your company in the market – a way of connecting with customers beyond just your products or prices. Large companies love to compete on brand, and we’re seeing it more and more for well-funded startups.

Competing on brand is an attempt to register your company’s name in the mind of prospective customers, so that when they have a specific need, they think of you. If you are successful, it can lead to success even when your price isn’t the lowest, or your quality isn’t the best.

The problem is that this strategy is often very expensive, and only rarely does it succeed. If you can’t compete on one or more of the other options listed here, attempting to out-brand your competition is incredibly risky.

Compete on Service

Sometimes people just want to do business with a company that is going to treat them well. When your price is not the best, and when the quality of your product is not discernibly better than your competition, you can compete on service.

Companies that compete on service focus on being a pleasure to do business with. This means they make it easier to get support, going out of their way to make their customers’ lives simpler.

Companies that successfully compete on service have grown in recent years, focusing on customer loyalty through a more personal touch.

Compete on Location

We often think of competition on a national, or global scale. But companies can and do compete locally. And you don’t have to have a physical presence to do so.

Using any of the above criteria, you can focus your efforts in one market or another that gives you the best chance to win. This is just like an alternative version of the Compete on Audience concept, except that in this case the distinct criteria about your target market is where they live or work.

Conclusion

To sum it all up, it is important that marketers and business managers of all stripes are aware of the many different ways to compete and succeed in the marketplace. You don’t always have to be the best, or the cheapest, to win business. Your company can succeed if you know what you do well, and focus on making that your competitive advantage.

Is Your Value Proposition Unique?

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We don’t call it the Unique Value Proposition for nothing. It’s got three elements:

  1. Unique
  2. Value
  3. Proposition

If your value proposition is not unique, it means that you are offering the same value as your competitors. And that means your customers could just as easily buy from them. That’s a problem.

What makes you unique?

  • Is it your price? Do you offer a lower price than your competitors?
  • Is it your service? Are you more hands-on with your customers?
  • Is it your location? Are you closer or more convenient?

Whatever it is that makes you unique, that needs to go into your value proposition. It is the thing that distinguishes you from all the other companies that your customers might go to instead.

If there is nothing unique about your company in relation to the competition, you don’t have a reason to exist. You can’t just do the same thing as someone else and think you deserve to grow and take market share from them. You have to be different to survive and succeed.

What should you do if you don’t have a unique value proposition?

The first thing you should do is be honest about that fact internally. Call together the decision makers and start talking about it. That’s the only way to move forward affectively.

Next, you should decide as a group what your strengths are relative to the other companies that you are competing with. Are you able to improve your product or service without adding any cost that would be shared by the consumer? Are you able to lower your prices (without starting a price war with your nearest competitor)? Are you able to make the buying process simpler for customers? Are you able to offer a higher level of service?

The key to creating a unique value proposition is to leverage your strengths. It needs to become a core piece of who you are, and exist as a part of your overall strategy. It’s not easy to be the price leader or the most convenient.

“But I Know My Company is the Best”

It’s true, you know your company better than anyone else. And that means you know your company better than your prospective customers.

But that’s not always a good thing, because it can be a blinder. It can cause you to miss critical issues because you’re not seeing your brand the way they are.

The best way to determine why people buy from you (in a sense, what makes you unique) is to ask them. Surveys and focus groups can help you uncover a unique value proposition that you didn’t even know you had.

Unique Value Proposition – a Refresher

A Unique Value Proposition (UVP), sometimes referred to as a unique selling proposition (USP), is a clear statement that describes the benefit of your offer, how you solve your customer’s needs and what distinguishes you from the competition.

Let’s break that down piece by piece, because many marketers and brands get this critical messaging component wrong.

Clear Statement

Firstly, we establish that the statement must be clear. This is because it is a statement you should use to attract customers. It must be written and expressed in a way that is immediately understandable. No confusing business jargon. This is not a mission statement.

Benefit of Your Offer

Second, the unique value proposition speaks directly to the benefit(s) of your product or service. Benefits are not features. The benefit answers the why question – as in, “why should I, the consumer, care?”

How You Solve your Customers’ Needs

If the benefit tells your customers what you do, this is where you address more specifically how you do it. (Example: We make insurance cheaper by doing everything online. In that example, ‘making insurance cheaper’ is the what, and ‘by doing everything online’ is the how.)

What Distinguishes You from the Competition

This last part is where the “Unique” comes in. This answers the question, “why should I choose you over your competitors?” Are you cheaper, quicker, friendlier, simpler? What makes your offer unique?

Unique value propositions are important because they force you to distill your marketing message down into its simpler form. It’s a clear definition of what you offer and why people should purchase from you.

For more help creating your unique value proposition, there are resources here and here.

And make sure you check out these great examples of brands with perfectly simple unique value propositions.

Marketing Myths – Copy the Competition

Welcome to the first edition of our brand new weekly blog series, Marketing Myths. Each week’s installment of Marketing Myths will aim to bust a commonly held belief about marketing. Last week, we busted the “People Read” myth.

This week’s myth = Copy the Competition

You can’t blame the people running a business for paying a lot of attention to the competition. It’s been hammered into them from the very first business courses they ever took. They learn about competitive strategy and competitive analysis. It gets baked into everything from pricing and product development, to sales and marketing.

And because they are so tuned in to thinking about the competition, they tend to put more faith than they should in the relative intelligence of those firms. They point to things the competition is doing and ask their own team why they didn’t think of that first?

“How come we’re not doing that?”

And in many of these companies, copying the competition becomes a key bit of strategy.

Here’s the problem – no company ever achieved long term success by copying what another company is doing. Companies succeed when they stand out, when they do things no one else is doing, when they have a clear advantage over the competition.

Instead of copying the competition (who might be just as clueless about strategy as you are), it is important to figure out what sets you apart. What makes you different from them?

If you don’t know the answer to that question, neither do your customers. And that’s a recipe for disaster.

Stay tuned next week for another myth. If you have a marketing myth you’d like me to bust, add it in the comments below.

How to Add Value for Your Customers

Value = benefits – costs

Your customers are looking for value. If you offer them the biggest value, you are likely to get their business.

Adding value can help you in a number of ways:

  • It can help you justify a price increase
  • It can give you a competitive advantage in the marketplace
  • It can help win new customers who were not in the market before

But most companies don’t focus on adding value. They are too busy focused on cutting costs and advertising to drive growth.

It is a marketer’s job to add value. Here’s how:

  1. Do a better job solving the problem you aim to solve. People are in the market for your product because they have a problem you can solve. Improve the product, do a better job solving their problem, and you just added value.
     
  2. Solve other problems for those same customers. New products and new features can make your offerings more valuable to solving more of your customers’ problems.
     
  3. Make it easier for your customers to get the value you currently provide. Simpler purchasing and better customer support can eliminate hurdles to your solutions.
     
  4. Find new solutions to old problems. Give a man a fish, feed him for a day. Teach him out to fish, feed him for a lifetime.

Adding value is a key to successful growth. In order to add value, marketers must work with salespeople, customer service, and product teams to identify opportunities based on real customer feedback. Many times it is possible to add value without spending more money, which is an easy sell to business managers, and sure way to spur growth.