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Friday, August 9, 2013

How do you give yourself an advantage in the marketplace?

Market differentiation. Have you ever wondered how to create that? There are five commonly recognized sources of market advantage. It is not necessary to use all of them in order to distinguish your company in its markets. Any one is enough. However, by achieving differentiation in one source and superiority in another, you further ensure your business's continued success.

No one source is, in and of itself, better than another. Let's explore each of the five sources and their relationship to your company.

Low Price
A company can gain and sustain market advantage in its markets by focusing on and achieving a low price strategy. In order to do this, however, there conditions must be present:
  • The company must be a low cost provider. The reason is simple: any company that tries to be low price without being low cost for any extended period will eventually become unprofitable and run out of cash.
  • The company must always be low price. This is essential because the market must come to rely on the low price the organization charges for its services. If the organization is only low price with particular programs, when it needs to generate sales, or when it is trying to capture market share, the marketplace will be confused and will not respond.
  • The company must position itself in the market as the low price provider. It must consistently and repeatedly tell the market through its promotional mix that its prices are the lowest it will ever find.
Product Differentiation
A company can gain and sustain market advantage by clearly differentiating its products and services from those provided by its competitors. There are several ways in which a company can differentiate its products:
  • Innovation/Unique Characteristic: by providing products and services that are highly innovative or possess characteristics unique to a market.
  • High Perceived Quality: by providing products and services with high perceived quality.
  • Availability/Response Time: by having its products and services readily available to its customers, thereby demonstrating a significantly shorter response time than its competitors.
  • Promotion: by promoting its products and services in a way that the market perceives them as being noticeably different than other comparable products. 
Unrivaled Service
A company can gain and sustain market advantage by differentiating, from its competition, the way it sells its products and the support services it provides. Some specific examples of service differentiation include:
  • being highly and consistently responsive to customers and their wants and needs.
  • delivering products with an unexpectedly high degree of reliability.
  • treating the customer with respect...all of the time.
Niching
A company can gain and sustain market advantage by focusing on a very narrow market and becoming recognized as the provider within that market. This focus can take place on a "macro" basis or on a "micro" basis. When a company decides to pursue a niche market on a macro basis, it focuses its organizational resources on:
  • a specific geographical area
  • a particular customer type
  • a highly defined line of products or services
When a company decides to purse a niche market on a macro basis, it focuses its resources on selling its services to specifically targeted prospects and/or increasing its penetration within deliberately chosen key customer accounts.

Relationships Leading to "Partnering"
There is a general rule in business that says, "All things being equal, people would rather buy from a friend." There comes a point, though, when that is no longer true--when other performance factors (e.g. quality, service, price) are not adequate to justify continuing to give business to the friend.

With this rule in mind, you can gain and sustain market advantage by building superior relationships with your customers (and prospects). These relationships can exist on two different levels. At the first level, you have worked hard to identify and meet the needs of your customers. This trust and familiarity has enabled your customers to view you as a "friend," a friend with whom they have a great relationship.

At the second level, you have been able to leverage your relationship into a true partnership--not in a legal sense, but rather one in which the customers view you as being essential to their lives. When a partnership level has been achieved, you are capable of not only meeting your customers' needs, but anticipating them to a point where you are able to create mutually beneficial business opportunities. When this level of partnering occurs, your competitors are at a significant disadvantage because they experience a "barrier to entry" that is all but impenetrable.

Tweed-Weber's research makes it easy to get the information you need to give yourself a clear advantage in the marketplace. You can call us toll-free at 1-800-999-6615, email us at mail@tweedweber.com, and/or visit us on the web at www.tweedweber.com. Also, be sure to follow us on LinkedIn (Tweed-Weber, Inc.) and on Twitter (@TweedWeber). Whether your research project is large or small, you can be assured that Tweed-Weber has the resources, skills, and experience to provide the information and results you need.

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