How to Build Your Unique Competitive Advantage

"Father of Competitive Strategy", Harvard professor Michael Porter pointed out that the essence of competitive strategy is to create an irreplaceable position for others. If an enterprise wants to stand out in the fierce business battle, it must form a unique competitive advantage, otherwise it will be easily replaced by competitors.

Interactive topic: What is your unique competitive advantage?

Porter believes that to build a company's competitive advantage, there are three competitive strategies that can be followed: 1. Total cost leadership strategy; 2. Differentiation strategy; 3. Specialization strategy. The three strategies require companies to reposition themselves in terms of cost control, product and service differentiation, and market focus, to find the most matching combination of their own resources and capabilities, and to form their own advantages.

If we simplify the value chain and strategic links of an enterprise and divide it into product development, marketing and service, business model, etc., then an enterprise needs to be invincible in at least one of them. Only by gaining an advantage over competitors in one aspect can success be achieved. The exploration of the three Chinese companies in related fields has brought us useful enlightenment.

Product R&D

In high-tech industries, such as IT and the Internet, leading product R&D can often establish a huge competitive advantage for companies, such as Intel's leadership in processor chips in the PC era , the epoch-making product iPhone launched by Apple in the era of mobile intelligence. In fact, in some fields, Chinese companies have gradually gained a leading edge in product research and development, and even become the invisible champions of the industry.

For example, Wanshida Auto Supplies Co., Ltd. from Chaoan, Guangdong Province, the tire self-repairing agent developed by them has become the industry leader due to its unique formula, and the effect of repairing air leakage surpasses that of competitors. Leading companies, whose products can also compete with international established companies. According to the introduction of Chairman Zhuang Hanming, the tire self-repairing agent developed by his team has reached or even exceeded the international advanced level in terms of repairing hole diameter and antifreeze temperature. "Compared with international brand products, their products can only repair To a few millimeters, our products can reach ten or even dozens of millimeters; the international general antifreeze standard is minus 25 to minus 30 degrees, and ours can reach minus 40 degrees. So foreign customers are also surprised to see it.”

Zhuang Hanming's company can achieve the ultimate in tire self-repairing products, thanks to his persistence in research and development. Since the self-repairing agent products he acted as agents in the early years had serious defects in tire repairing ability, corrosion resistance, stability, etc., and he recognized the large market demand for tire self-repairing agents in this industry, Zhuang Hanming decided to set up his own R&D team to tackle key problems. He brought together a group of professionals such as technicians, engineers, chemistry teachers, scientific research institutions, and experts in the field of fine chemicals to jointly develop. After doing hundreds of tests in nearly two years and paying a lot of money, Zhuang Hanming finally successfully developed a new generation of self-replenishing formula with better performance.

With the unique formula of self-replenishing products, Zhuang Hanming has the confidence to change from sales "price" to sales "value", "Last year, my product has achieved the sixth price increase, and the dealer can also adapt to me. Because of the outstanding features of my products and the value for money, suppliers are willing to sell my goods." Zhuang Hanming said.

The competitive advantage of a product does not necessarily have to be the first in technology, and differentiated products such as high cost performance and high customization may also be successful. Beijing Oudebas Car Washing Equipment Co., Ltd. has successfully opened up the European and American car washing equipment market when the global financial crisis is raging with the high cost-effective equipment as its selling point.

"Before the financial crisis, sales in the European and American markets could only account for 3% to 5% of total sales. After the financial crisis came, it quickly increased to 15% to 20%. Focusing on cost performance is the advantage of our products.” said Xu Zhu, President of Autobus, “We have established a R&D team since 2002, emphasizing the long-term accumulation of technology. Therefore, although our price is not the lowest, customers are aware of it. When our products are better in terms of stability and quality, they are often willing to reach a long-term cooperation with us.”

Xu Zhu's skills in product development and positioning benefit from his experience in representing German companies' products in his early years. "The most important thing I learned from this experience is the rigor and integrity of Europeans in doing things. So we realized early on that we must have our own R&D team and technical reserves." Xu Zhu pointed out. The high standard requirements on products, combined with the advantages of manufacturing in China in terms of cost, create a competitive advantage in product development and positioning of Autobus.

Marketing and Service

For manufacturing enterprises, the competitive advantage established on the R&D and manufacturing side can be said to be a necessary enterprise survival condition. For enterprises engaged in non-production links such as trade, competitiveness in marketing and service often becomes the foundation of their success.

Shengshi (Hong Kong) International Trading Co., Ltd., founded by Ran Lingyan, stands out from many trading companies and companies integrating industry and trade with its excellent overseas marketing capabilities, and has successfully won the favor of overseas buyers.

With the continuous evolution of international trade, many manufacturers that used to only produce factories have gradually expanded to self-operated trade exports, and international buyers are often more inclined to cooperate directly with factories, which makes the middle The position of the business-trading company became more and more embarrassing. However, since Ran Lingyan's company was established in 2009, it has not only successfully obtained overseas orders, but also established good cooperative relations with factories. She even invested in some factories.

Talking about why her company can win a place in the fierce competition, Ran Lingyan thinks that the most important thing is that she maximizes the natural advantages of a trading company - flexibility and service. "We can satisfy almost every imagining of different buyers' products. Because we have the support of many factories behind us; the second is that we provide customers with very thoughtful service, not only pre-sale and after-sale services, but we even help customers. Conduct market research, formulate sales plans for target markets, and analyze competitors. These are all unique services we provide to our customers." Ran Lingyan said.

In the marketing process, being too eager for quick success often backfires, and Ran Lingyan knows the secret. She regards successful marketing as "falling in love" with customers. "Traditionally, selling yourself and the company to customers is nothing more than advertising, but I think this kind of exposure is cold. I think we need to go a step further and let customers do their best. Get to know you, recognize you, and finally trust you. When a client trusts you, he will choose you as his 'other half' and a 'life partner'." Ran Lingyan said, "So, I received every inquiry. At times, I will study this company and this person in detail. From his perspective, I will do product planning, market analysis, and formulate competitive strategies for him. In this way, although I have not directly promoted myself, I have been subtly recognized by customers. ”

Ran Lingyan cited her example of “grabbing food” from a large-scale manufacturing factory: a purchaser who specializes in gas appliances turned out to be the main cooperative suppliers of two leading manufacturers in the industry , but because the suppliers are "bullying customers", buyers think they are arrogant in solving various problems from production to sales to after-sales. Over time, the buyer decided to change the partner. And his evaluation of Ran Lingyan is "the questions I ask every day, you can always answer me within an hour". Efficient communication and attention to customers have enabled Ran Lingyan to win the direct competition with large factories.

Zhuang Hanming also follows the principle of service first when developing the market. In order to make dealers recognize his products, he spared no expense in product design, packaging, description, etc., and vigorously carried out advertising promotion to create one of the best product images in the industry. In order to help dealers to develop the market, Zhuang Hanming also specially established a marketing team to help dealers in local market promotion, and cultivated the market for them free of charge. At the same time, in the domestic market, he also established a strict regional segmentation system, allocating market areas according to the size of dealers, and strictly preventing dealers from smuggling goods. In this way, dealers save a lot of marketing and promotion costs, and at the same time avoid the pain of vicious competition.

Business Model

The highest level of competition is often the competition of business models. When an enterprise can reconstruct the business model according to its own resource advantages, and even change the business model of the industry, then the enterprise has a pivotal position in the industry, which is also an important step for the enterprise to maximize its own competitive advantage. .

As one of the leading companies in the car washing equipment industry, Autobus, President Xu Zhu is no longer satisfied with only selling "equipment", he has transformed and started to sell "service". According to Xu Zhu, the car wash-related industry is a highly extended service industry, and the one-time profit from selling equipment is far less than the continuous profit from selling services.

Therefore, in the post-financial crisis era, Xu Zhu began to make a big transformation with excellent technology and cost-effective products. He has invested and opened directly-operated car wash service chain brands in developed markets in Europe and the United States such as Germany, Italy, and the United States, as well as emerging markets such as Russia, India, Iran, and Saudi Arabia. This brand not only sells car wash products, but also implants new formats such as catering and entertainment to achieve a comprehensive service industry transformation.

“Transforming to the service industry can not only improve profit margins, but also achieve 'safe development', because the life cycle of the service industry is longer than that of the manufacturing industry.” Xu Zhu pointed out, “Currently we have The implementation effect of this transformation strategy is in line with our expectations, and the new model is feasible and will continue to go forward.” From the examples of successful companies in several industries, we can see that to win the competition, companies must find their own Unique competitive advantage. This kind of advantage does not necessarily have to be comprehensive. If you stand out in one aspect, you can often get excess returns over your competitors.