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Competitive Advantage – Why People Buy From You

Today’s Tip

Best Practice: Competitive Advantage – Focus on what customers want, how they want it and have a brand that stands out from the competition.

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Today’s Article:  Competitive Advantage – Why People Buy From You

What is a competitive advantage?  There are two types of a competitive advantage: lower cost or differentiation.  A business has three pricing strategies: Below Market (low price), At Market (more values higher price) or Above Market (luxury, status, prestige).

“Below market” competitive advantage is simply low price. For many businesses, it is difficult to maintain a low-cost pricing strategy over time with rising costs. Wal-Mart started with a low-cost strategy and a  “Made in America” campaign. To remain a low price competitive advantage, they had to drop “Made in America” and go to “Always low prices. Always” and “Save More Live Better” by buying cheaper goods overseas.

Examples of companies with a low price advantage: Wal-Mart, Dollar Tree, Sav-Mor, Aldi, Red Roof Inn, Motel 6, Super 8, Econolodge, Knights Inn, SouthWest Airlines, JetBlue, Allegiant, etc.

Many businesses think that having the lowest price in the market will make them successful. However, having the lowest price is not necessarily the best brand strategy. Unless a business can consistently maintain industry profit margins with a low price strategy the business will struggle or go out of business. At Market pricing strategy may be a better choice.

“At market” differentiation competitive advantage is offering more value at a higher price. This is the sweet spot for most successful businesses. It is finding what customers want, how they want it delivered and what values they are willing to pay a higher price for.  This is the answer to how your brand is different from your competitors.

Examples of companies with an “At Market” advantage: J.C Penny, Sears, Belk, Holiday Inn, Hampton Inn, Sheraton, Comfort Inn & Suites, Delta Airlines, United Airlines, American Airlines, etc.

Look at your industry and see what value “niche” you can consistently deliver on. Values can be:  action ( Nike “Just do it.”), competition (LendingTree “When banks compete, you win.”),  champion (Wheaties “The breakfast of champions.”), convenience  (TD Bank – “America Most Convenient Bank”), friendliness ( United Airlines “Fly the friendly skies of United”),  death ( Raid “RAID kills bugs dead.”), expert more (Target “Expect More Pay Less”), fresh (Subway “Eat Fresh”), happiness (Disneyland is “The Happiest Place on Earth”), health (Juicy Juice “100% juice for 100% kids.”),  have it your way (Burger King “Have it your way.”), helpful (Ace Hardware Stores “The helpful place” or “Ace is the place with the helpful hardware man.”), less filling (Miller Lite “Tastes great, less filling.” or “Everything you always wanted in a beer. And less.” ), less carbs (Michelob Ultra “Lose the carbs. Not the taste.” ), love (The Virginia Tourism Commission “Virginia is for lovers.”) or (Kay Jewelers “Every kiss begins with Kay.”), performance (BMW “The Ultimate Driving Machine), purity (Ivory Soap “Pure clean, pure Ivory.”), quality (Whole Foods core value: “Selling the highest quality natural and organic products available”), relief (Anacin “For fast, fast, fast relief.”), security (Lifelock “Relentlessly Protecting Your Identity), speed (Fast Signs, Kwik Kopy, Sir Speedy Printing), taste (Maxwell House “Good to the last drop.) or (Kentucky Fried Chicken “Finger-lickin’ good!”), trust (CNN “The most trusted name in news”.), try harder (Avis “We try harder.”), variety ( H.J. Heinz “57 varieties”), waste (United Negro College Fund “The mind is a terrible thing to waste.”)

What is the primary value you want to be known for? Do not dilute your brand by trying to be to many things to many people.

“Above market” differentiation competitive advantage is offering luxury, status, and prestige.  There is a smaller market for this type of business, due to the fact that its customers need to have highest net worth or income and the business requires more capital to open and run this type of business.

Examples of companies with an “Above Market” advantage: Rolex, Rolls Royce, Aston Martin, Ferrari, Mercedes Benz, Air Partner PLC, Godiva, Mont Blanc, Neiman Marcus, Saks Fifth Avenue, Ritz Carlton, etc.


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Action Step:  1. Is your competitive advantage based on a lower cost or differentiation?



2. What is your pricing strategies: Below Market (low price), At Market (more values higher price) or Above Market (luxury, status, prestige)?

3. Briefly describe what is your competitive advantage. Why are people choosing you over competitors?


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