Competitive Advantage is a Relative Concept. Have you determined your Yours as Yet?

Do you know what is your Company’s competitive advantage?

Most of the common answers are:

We have great products

We have a distinguishing brand

We connect with our audience

We constantly innovate and adapt to the market changes

While all the above sentences point to what you are good at, none of them talk about your competitive advantage. How?

Competitive advantage is what can be done faster, better and cheaper than your competitors. It is always a relative concept? It is always market-specific.

Let’s look at some examples:

Asian brands such as Toyota, Nissan and Honda have a competitive advantage in American and European markets because American and European auto cars make do not have such brand value in terms of reliability as their Asian counterparts.

Now suppose you are in Japan, and you notice that all the car brands in the market are reliable. Well! In that case, you would have to look for a different differentiator, a competitive advantage that is different from the reliability factor. Perse, if Toyota wants to talk about its competitive advantage in Japan, it will have to look for some other measure than reliability.

Just like that every company needs to see its competitive advantage in terms of the market it is operating in. Similar to competitive advantage, every company also needs to see its biggest competitive disadvantage.

If you have to get to your competitive advantage/disadvantage, you have to be crystal clear on the following:

Decide who your target customers are / will be

Define what products or services you are offering

Design the value chain to deliver products and services

Knowing your competitive advantages does help you focus your effort in the right direction, this eventually reduces your costs and increases your sales. Focused efforts would then turn your customers in your favor.

When Amazon had launched Amazon Kindle, Amazon differentiated itself in terms of value chain delivery. Starbucks could expand rapidly because it advertised itself not just as a coffee shop but a place apart from your home and office where you can network, work and spend time. That is why they offer large seating spaces and free Wi-fi. This shows how knowing your competitive advantage can help you build strategies and create a space for your product/service.

In 2008, Nokia was a global smartphone chain but had to eventually sell itself in the coming years. This was because it had started losing its competitive advantages.

It is also important to note that what you consider as a competitive advantage, your customers should also think the same. Customer’s beliefs are far more important than your beliefs. You may think that what you produce is of the best quality/least price, etc. but if your customers don’t see that then you do not enjoy a competitive advantage.

Be it an individual or a Corporation, nothing operates in a vacuum. There is competition all around and change is the only constant in a competitive landscape. With an ever-changing fast-paced competitive environment, knowing and correctly evolving your competitive advantage can give you a strategic edge both in the short term and in the long term.

When determining your competitive advantage, always think from a relative point of view. What might be your competitive advantage in one market will not be the same in a different market. The dynamics of every market is different and determining that can help you figure out your competitive advantage appropriately.