How to Win : Your strategic competitive advantage.

Strategy is about winning. It is about finding a way to win rather than just to compete.

Winning means providing a better consumer and customer value than your competitors do, and be able to provide it in a sustainable way.

This brings us to the most basic question of all: Why will customers choose our brand over the others in the category?

Customers usually base their purchasing decisions on secondary cues such as popularity, customer rankings, tribal identity, or price. Performance-based facts are usually less persuasive than you think. So having a better performant product will not make the difference and drive you to win.

There are 2 ways to focus your strategy to win, a cost leadership and differentiation.

Low-cost strategy

You brand need to be based on discounts and low pricing.

You will need a plan to ensure that your discounts lead to sustainable profits and not to downward spiral by dropping the price without thinking about your cost structure.

In the low-cost strategy, profits is driven by having a lower cost structure than competitors do.

While all companies make efforts to control costs, there is only one low-cost player in any industry. – The competitors with the very lowest costs.

Having lower costs than some but not all competitors can enable a firm to stick and compete for a while. But it won’t win. Only the true low-cost player can win with the low-cost strategy.

Differentiation Strategy

The alternative to the low cost is differentiation. The most successful brands (Apple. Amazon, Google, Coca-cola …) aren’t better or cheaper. They are different. More important, they are different in ways that customers find compelling.

Compelling difference is known as positioning. It is that art of finding a strategic slot in your customer’s mind.

But you can produce the kind of products, messages, and behaviors that favor an advantageous position in a customer’s mind.

In a successful differentiation strategy, the company offers products or services that are perceived to be distinctively more valuable for customers that are competitive offerings, and is able to do so with approximately the same structure that competitors use.

What the company offers resonates with the customers aims and needs in a way that his identity resonate with the purpose of the company.

Loyalty emerges where there is match between what the brand distinctively offers and the customer personally value.

Differentiation between products is driven by the activities of the firm: Product design, product performance, quality, branding, advertising and os on.

Takeaways

All successful strategies take one of these two approaches, cost leadership or differentiation. Both can provide to the company as greater margin between revenue and costs than competitors can match – thus producing a sustainable winning advantage. This ultimately the goal of any strategy. It is about generating a sustainable competitive advantage.

Even if you do, winning doesn’t come from strategy alone. There are two parts to building a brand: getting the right idea; and getting the idea right. Getting it right is the more difficult of the two parts. Why? Because it demands the coordinated efforts of a wide range of specialists, both inside and outside the company, to create a coherent brand.