Scott Maxwell breaks down the keys to competitive advantage research, step by step.
Creating Competitive Advantage
Many people talk about long-term competitive advantage—an intricately structured and ambitious plan that establishes nearly impenetrable presence in the marketplace—but few people actually work on it. Fewer people talk about short-term competitive advantage, and even fewer launch initiatives to improve their short-term competitive advantage. These people don’t understand or cannot see the gains associated with an effective marketing campaign based on market perception research.
Short-term competitive advantage is easily done and comes packaged with many rewards. It can increase your sales—without increasing associated costs—bolster marketing conversions and increase your market clarity. Market clarity is vital in order to “see” your target market, how you design and develop your “touch points” to create the best whole product, and determine how clearly your target market “sees” your product and service.
What is Competitive Advantage?
Simply put, competitive advantage is having a leg-up against everyone else in the market. For technology companies, this could mean owning and marketing a technology that no one else has, or offering a service that has never been implemented the same way before. Another example would be creating an effective website with the best competitive advantage messages to your target audience. Building websites used to take real work, but now that marketing technology has evolved, they’re easily made and, contrasted against competitors, can offer unique and streamlined customer experiences.
Short-Term vs. Long-Term
Gaining short-term competitive advantage will not escalate you to a position where you’ll never have to work at maintaining that advantage. It’s more meant for a quick snapshot of your strengths and weaknesses, as well as a glimpse of the messaging battlefield ahead. Alternately, long-term competitive advantage is created by relatively unique market positions, most obvious in larger companies like Google, Apple, or Microsoft, where even if you experience unique small competitors that are better than you, you’ll always have your name, your brand, your presence and your unique marketplace advantages that will help you maintain, and even increase, your sales for a long time period.
Placed side by side, long-term competitive advantage has the most appeal, but it’s often so difficult to implement, companies invest countless hours into crafting a plan that’s (sometimes) an epic success or (mostly) an epic failure. That’s why—especially for expansion-stage firms—short-term competitive advantage should be a more appealing and obtainable short-term goal.
The Starting Line: Preparation and Data-Gathering
As I said earlier, creating short-term competitive advantage is a simpler task than its long-term brethren—but that’s not to say it doesn’t require thorough prep. Here’s how to start:
What’s Your Initial Perception?
First define your initial perception of what the market participants will say. Oftentimes companies skirt the effort of competitive advantage research under the assumption that they already know what their target audience wants. While this may be true in some cases, surprises lurk around every corner—you will probably discover you were actually missing vital elements important to your customer base, or, better yet, that you were totally off base the entire time.
What Does Your Target Audience Want?
Hypothesize the buying criteria (other than price) that your target prospects perceive as important to them. Test these criteria with a few prospective buyers to make sure you’ve hit it somewhere within the ballpark. Hypothesizing the desires of your target audience beforehand will help you build a solid list to test when making calls to a larger group of prospective buyers.
Target Audience Perceptions: You vs. the Competition
With a list of possible criteria your target audience favors, pull out your list of competitors. Don’t have one? Get to work. How are you supposed to know what you’re up against without a hit list? Once you have a target list, narrow it down to the 2-3 companies that you want to beat the most. Even better, pick the one that you compete with most frequently if you can.
Once you have a thorough list (that leaves some room for ad-libbing), ask the following questions of your target audience:
- What criterion is important in your buying decision? Leave this question open-ended to get an unprompted response.
- How important is each criterion, including the hypothesized criteria from your hypothesized list, on a scale of 1 to 10, 10 being the most important?
- How good are each of the competitors (including you!) on a scale of 1 to 10, 10 being the best?
Repeat steps two and three until you have the answers to what’s important and how your company fares against others. Collect a reasonable sample—20 to 30 completed surveys should be adequate for your purposes—then compile the results and create an organized structure detailing what criteria is most important and how your competition fares against your own strengths.
Create a Short-Term Competitive Advantage
Now that your data has been collected and organized, you’re ready to craft your short-term competitive advantage. Here’s how:
Change Your Marketing Messaging
Highlight your strengths and minimize your weaknesses. Take a look at this advertisement for the Droid X. It’s obviously blasting the iPhone 4’s antenna problem and skirting over its own weaknesses. While you don’t necessarily have to go on the offensive, it’s important to keep your soft spots out of (and move your perceived advantages into) the limelight.
Determine Doable Short-Term Changes
Your initial response to getting a customer’s perspective on your product is to overhaul all of your touch-points and almost start from scratch. Avoid this impulse. Instead, focus on doable goals—short-term changes that will improve your standing. These changes may come in the form of product development, professional services, customer services, or other market touch points. The easiest things to change are your marketing messages. What messages can highlight your perceived strengths? What messages can minimize your weaknesses?
Using External Research Resources
If you’re having difficulties starting your own short-term competitive advantage research process, there are plenty of companies out there willing to help you out—for a price. Outside companies will inevitably do it better—especially if this is your first time around—and are able to make the calls double-blind, ensure you’re calling into an adequately specific target, and help you interpret data in case it doesn’t cluster well. Still, you should try it yourself. You’ll learn a lot, and this acquired knowledge can only bolster your company’s competitive edge.
There’s also some reading you should do. My colleague wrote a piece about creating a competitive advantage that you should look into. Also, check out Jaynie Smith’s Creating Competitive Advantage — which is my go-to book for the process.
The finish line of your hard work should always bring with it stirring results. Short-term competitive advantage research delivers. This chart from Silicon Valley Insider is a great illustration of the types of results you can expect to get.
In this example, the criteria that users use to choose their mobile search engine is hugely different from the criteria they use for their desktop search engine. The chart does not have the perspectives of the relative competitors, but with this data a search engine provider could see how important it is to put effort behind creating a user friendly interface and speeding up response time. The chart also signifies that perhaps the attack against Google should be in mobile because it is not as important to have the default search engine.
Repeat this practice every year or two to see how your target prospect’s criteria is changing as well as how you and your competitors fare in terms of market perception. This is especially important in the tech industry as the evolution of products and design are evolving in a rapid pace. Also, if you add or change target segments or change your product considerably (for example, by adding a mobile interface), doing this research for your new segment makes sense, particularly if it is very different from your prior segments. Basically, short-term competitive advantage research will keep you active, aware and on your toes, without draining your resources or time.
What else is it good for? Venture funding. While you may have an intuitive grasp on your target prospects’ desires, bringing a clear-cut, analytical case to the table will impress potential investors more than reliance on a supposition.
Besides—and beyond—everything else, competitive advantage research answers the question of why you are different from everyone else. It can help to build core brand values, helps with market positioning and repositioning, and can help you determine what you need to improve in your business in the longer term. Solid, repeatable research can help shape your organization’s identity, not only to your team, but to the public.