CURRENT markets are incredibly volatile and competition is fierce across all industries for the public’s disposable income.
To move ahead of the pack you need to have a clear competitive advantage, whether it is in the uniqueness of the products and services you offer, the way you deliver those services, or intangibles such as brand or reputation.
There is a lot of commodity thinking going around, with the usual ‘experts’ claiming that competition is predominantly on price.
Yet marketing gurus Phillip Kotter and Ted Levitt suggest that: “There is no such thing as a commodity, all goods and services are differentiable.”
In fact the numbers show that less than 25 per cent of sales are based on price. Remember that nobody gets fired for using IBM – that’s not price or function, that’s brand, a pure intangible
When companies assert that they produce commodities and price is the only consideration, it simply means they have yet to develop the appropriate marketing strategy. By far the greater proportion of sustainable value creation and dominant market share is on the basis of attributes that are distinctive and create greater perceived customer value.
Analysis
So how do you go about discovering those attributes that will give you a competitive advantage?
There is one approach to market analysis that allows companies to identify these attributes and to measure how well they deliver them versus their competitors. This is ‘relative perceived customer value analysis’ (RPCV), and its measures of relative perceived customer value can predict market share gain and consequent value creation better than any other marketing tool.
Respected US consultant Bradley Gale developed ‘customer value analysis’ following research done for GE and a number of other companies to determine the profit impact of marketing strategy (PIMS).
The PIMS database has proved to be one of the most valuable resources for marketers. RPCV is state of the art in marketing science and quantifies competitive analysis in a way no other market research tool can.
One of the most counter-intuitive discoveries of RPCV has been that what people in the business think they know about the customer and the market is more likely to be wrong than right. Hence, the firm with an accurate measure of RPCV has an enormous strategic advantage in any market.
RPCV can provide any company with greater insights into actual customer requirements that will yield a sustainable competitive advantage.
What RPCV offers
• It develops accurate knowledge of what factors drive customers’ perception of value and which most influence their purchase decisions. This allows you to adjust your offerings to fill gaps in the market not provided by your competitors, taking market leadership and thus maximising market share and profit.
• It generates value maps showing your company’s position relative to competitors and whether this will cause it to lose or gain market share. This lets you precisely identify and weight competitor threats and opportunities.
• It provides a mathematical model of the market and the relative positioning of your competitors, allowing ‘what if’ questions to be asked in determining the optimum value proposition and what attributes to adjust to gain maximum advantage. Allows quick and accurate response to changing market conditions.
• It builds quantified knowledge of what factors should be emphasised in business communications both internal and external. Guides business development as well as branding and promotional activities.
So if you want to know how to upgrade or focus your strategy to obtain competitive advantage in a tough market, I would strongly recommend starting with an RPCV analysis. Rather than a SWAT-based on internal brainstorming (which turns out to not reflect reality terribly well) it will definitely pay you to start with the kind of hard data this analysis can provide.
Jack Somerville is a founding partner of Somerville & Partners and a director of the 4HR Consulting Group.
