As I spend time with friends, I often hear them say, "There is no unique place to go shop these days. They all have the same stuff." To which I reply: "Why do you shop where you do?" This at times leads to an interesting dinner conversation. But it always reminds me that many business owners may not know how to set themselves apart from the competition at little or no cost.
Creating an image of your business as different from the competition helps establish a competitive advantage for the business. As a business owner, the competition for your business should be well researched so that the idea of what you do differently will be clearly thought out and easy to implement. Two ways to establish the business’s competitive advantage is through the market and pricing. With the market, you find a niche and exploit it to attract more customers. With pricing, you can lower the price by finding a way to be more efficient, thus lowering costs.
In creating a competitive advantage through the market, some strategies push:
- Increasing product quality or benefits to the customer
- Superior customer service
- Creating an atmosphere where customers are welcomed
- Offering additional add-on services not currently offered by competitors
The idea behind higher quality is to prove the product to be of such high quality that niche customers will pay more for it. I know I am glad to pay for something of quality that will last longer than one month. With customer service, the first impression needs to be positive as customers make quick decisions about whether or not they will come back within minutes of entering the business. Finding new uses for a product and showing it off is another way to benefit the customer. For example, show in the store how pieces of fabric could be used as a fast and easy table runner for an upcoming house party. By focusing on a niche audience, you focus on the needs or desires of a narrow audience who find it hard to shop. I used to work in a local big and tall men’s clothing store. The store was definitely a niche since we started at extra-large and went up to eight x-large. The people who came to us typically had few retail choices, and we focused on taking care of them: We had chairs for them to sit on, and we kept it cool even on winter days. They did not have to struggle to get a shirt or pants; the sales staff did it for them. And they kept coming back.
Using pricing, a business typically is working on a lower price point to attract new customers. This method is fine if your way of doing things is more sustainable because the serious competitor will also work to match your price. Some ways to do this involve increasing your production efficiencies. Here you learn to be more energy-efficient, buy product at lower prices or work out credit terms with the suppliers. As a business owner, you might upgrade your technology to better track inventory or record sales for bookkeeping purposes or in order to develop an online presence. Innovation is also a way to reduce price, and it does not necessarily always mean technology. You could be innovative in how you promote a sale through Facebook or other social media outlets, by better tracking your customer’s purchases to remind them when a similar product comes in or by providing more personal service to customers by creating an anniversary/birthday program. As the business owner, staying on top of overhead is a daily task. This is an area where a business owner can lose his shirt quickly. Staying aware of employee turnover, salaries, benefits, operational costs and physical structure costs like rent can help you see areas to trim.
Creating a competitive advantage is important to the success of a business. If interested in obtaining free assistance in establishing your business’s competitive advantage, your area Missouri SBDC can help answer questions, offers training and one-on-one appointments; reach out to a location near you.
The Missouri SBDC is funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.