Creating relative superiority [Archives:2003/01/Business & Economy]

January 6 2003

The Road Ahead
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Now more than ever, resources of capital, people, and time are at their scarcest, and so business organizations need to concentrate their resources on functions and products that have proved profitable. But merely allocating resources similar to that of the competitors won’t yield a competitive advantage for the business.
So, a business in order to have a competitive edge has to search for and identify the key factors responsible for success in the industry and apply the right mix of resources in order to earn a real competitive advantage which will yield relative superiority.
There are two approaches used in identifying the key factors for success. The first is to dissect the market into key segments in order to decide where the business should focus its resources. The second one is to know what distinguishes the successful companies from the less successful ones.
Segmenting the market involves understanding the different characteristics of different customers for each product line. For example an automobile dealer segments his market in such a way to recognize the strategically important segments.
The next step is to develop product-market strategies for the important segments and assign responsibility to implement new and modified segment-wide strategies. Having segmented the market and identified each segment’s requirements, suitable changes should be done in the marketing strategy in order to concentrate on the key segments.
For example a commercial vehicles dealer after developing product- market strategies focuses on customers in the retailing and distribution segments (customers who indulge in occasional distribution and delivery of customer goods).
The other approach for creating relative superiority is to highlight the differences between successful organizations and the less successful ones. That lies in factors such as the different functions carried out, raw material souring, production facilities, product range and variety, advertising and publicity, sales and marketing efforts, distribution network and servicing.
For example, an elevator company can have a better competitive advantage if it has a better servicing system; nobody likes to wait for hours to be rescued from a stuck elevator. This in its self is a key factor that can ensure better relative superiority.
On the other hand, identifying the differences isn’t enough. A business has to ensure that all functions in which such factors can be found are exploited to the max and perfect the functions carried out thereafter. For example many automobile importers in Yemen import advanced automobile technology, but only few have the capabilities to provide an excellent after sales service. That is how Suzuki Yemen – Bamarouf has created relative superiority.
Remember: Relative superiority can be created though exploiting competitor’s weaknesses and discovering the key factors for success in that industry.