Last week I looked at the changing face of competitiveness and how a 21st century business may not succeed by simply being cutthroat. There are still many businesses that are aggressively competitive but I would suggest this is not a viable tactic for long term growth.
So how does a business, especially a small medium enterprise, gain a competitive edge? Marketers will tell you it is crucial to have your marketing mix properly balanced- simply put the right product at the right place and price with the right promotion. Accountants will tell you it is all about cost and directors will say it is all about shareholder return.
I would argue it is probably all those things in some shape or form but none will work if you don’t deliver perceived value and the market does not have confidence in you as a viable concern. The adage that the “customer is always right” holds true when you want a competitive edge. Customers are the lifeblood of any business and they determine your fate.
In an age of increasing technology and consumer awareness this can be pretty frightening. Add to that the notion that most business is competing in a global marketplace and having a competitive edge is a challenge.
Reinvention and the competitive edge
Many companies go through regular transitions and changes in their lifetime. New colour schemes, branding, product development, personnel, all change the “look and feel” of a business. My grandmother would say it is all “smoke and mirrors” the marketing clothing that business wears. However, it has been successful for many companies to change their image and their branding. It works where a company has made the change in response to market changes and customer preferences but it can upset existing customers. It can also cost money.
When Anderson Consulting cut ties with Arthur Anderson and became “Accenture” it cost them a fortune. The new name meant nothing to clients and the trust in the firm took a nosedive.
The change cost Andersen/Accenture an estimated $100 million to execute and was regarded as one of the worst rebrandings in corporate history.
Contrast that with Burberry that was struggling in 2011 and then underwent a shift in focus, a new line of products and celebrity favour for a successful rebrand and revamp
Brands can be successfully revamped by adapting current styles while celebrating its history.
Perceived value and savvy consumers
Consumers in the 21st century are much more savvy and aware than their 20th century counterparts. They also have access to instant feedback. If they are unhappy with a company, a product a brand; they will tweet their displeasure, review on Facebook and share their annoyance with their friends. This viral commentary can be devastating to a business that is not aware of its customers’ feelings. Smart companies stay on top of this social media reaction and can use it positively. Pampers, for example has totally sussed that it’s product is part of a community of parents not just a nappy. It uses social media to gain a competitive edge. Yes, there are other nappies, but ask any mum to name a nappy brand and pampers will be the answer.
Retweet if the whole world seems to stop when you hold your #LittleMiracle in your arms.
The competitive edge is connection
Successful competition is achieved where customers instinctively choose your company products over others. Nowadays that requires a customer to have an emotional connection with the brand, the company, the community that uses those products. Yes, this can be a fickle connection at first but if handled properly it can develop into product and company loyalty.
A merchant who approaches business with the idea of serving the public well has nothing to fear from the competition.
James Cash Penney
However, if the product itself is no good then eventually no amount of marketing is going to retain that competitive edge. Price is, however, a crucial element of competition in goods consumers perceive as “basic”. So, the supermarket price wars rage on and the consumer benefits from falling prices.
The big four supermarkets are struggling to maintain their share of the grocery market, which is being dented by the success of discounters Lidl and Aldi.
To maintain their position in the market most supermarkets have had to diversify their product range to include banking, clothing, household goods, electricals – anything with a better price margin.
However, this price war also reflects general economics and it is true that retaining a competitive edge in times of hardship is far harder than in boom times. Overall it is important to remember that spending money for most people is an emotional decision not just a logical one. To retain a competitive edge, you need to win the hearts as well as the minds of your potential customer.
Next week I will look at how a company’s internal structure, their people and processes help keep a company competitive.