Competitive Edge

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Competitive Edge

In his book, The Road Ahead, Bill Gates of Microsoft writes of "friction-free capitalism" made possible by developments in communications, chief among them the Internet and its World Wide Web. In this context, "friction" is everything that keeps markets from functioning as the "perfect competition" of economics textbooks. This friction can be a function of distance between buyer and seller, costs of overcoming this distance, and incomplete or incorrect information.

Friction manifests itself by causing barriers to entry for new competitors, limiting the number of outlets from which the consumer has to choose. Large companies, with multiple sales outlets, and economies of scale, have greater power to direct the marketplace.

The degree of friction in the developed world has been decreasing for some years now. Affordable air travel, overnight delivery, improved telephone and fax communications have shortened distances. Credit cards and toll-free numbers have spawned at-home shopping from sources across the country.

The Web has taken the friction in our economy down another notch. In principle, we can sell products and services to a worldwide audience as easily and effectively as our largest multi-national competitor.

In the friction-less economy, the challenge of differentiating ourselves from the competition becomes even greater. Successful small businesses tend to be those who can find some competitive edge, even when their product or service is similar to those around them.

Marketing professionals often call a business' competitive edge their "unique selling proposition," or USP. Pinpointing and refining one's USP, however, is not a simple matter. An approach is unique only in the context of our competitors' marketing messages.

Some marketing messages go beyond product and service characteristics. For example, Charles Revson, founder of Revlon, insisted that he sold hope, not makeup. Similarly, United Airlines sells "friendly skies," and Wal-Mart sells "always" the low price. Do these slogans convey how each company views their customers? Does their selling proposition appeal to your preferences?

Sharpen your USP:

? Put yourself in your customer's shoes; satisfy their needs, not yours.

? Know what motivates behavior and buying decisions.

? Find the real reasons people would buy your product instead of a competitor's. Ask them!

? "Shop" the competition, be open-minded about your product, and never stop looking for ways to make your product stand out.

Try now to recast your business idea in terms of its competitive advantage. Prepare an industry analysis (size, customers, trends, and competitiveness). Identify what you see as your specific market, and estimate the share you think you can capture.

The Web can be a powerful research assistant. Virtually every major business puts product and service information on the Web, including business directory services and magazines.

Search engines can help in improving your understanding of your industry, and the key success factors. Test the resources available on the Web. Visit sites of major companies in the industry, where appropriate. Search the archives of business magazines for articles that give background and statistics.

John B. Vinturella, Ph.D. has almost 40 years experience as a management and strategic consultant, entrepreneur, author, and college professor. For 20 of those years, Dr. Vinturella was owner/president of a distribution company that he founded. He is a principal in business opportunity sites jbv.com and muddledconcept.com, and maintains business and political blogs.

In The News:

Yahoo! News: Top Stories

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AP - President-elect Barack Obama intends to name Timothy Geithner, president of the New York Federal Reserve, as his treasury secretary to confront the nation's intense economic turmoil, senior Democratic officials said Friday.

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AP - While President-elect Barack Obama publicly sidelined himself during congressional debate over an auto industry bailout this week, he and his top aides quietly prodded congressional leaders to find a solution to rescue struggling automakers.

Neb. lawmakers OK age limit for safe-haven law (AP)

AP - Gov. Dave Heineman signed into law Friday a bill adding a 30-day age limit to a safe-haven law that allowed 35 children Â— including teenagers as old as 17 Â— to be abandoned at state hospitals. The law, approved hours earlier by the Legislature in a 45-3 vote, goes into effect Saturday, and makes Nebraska the 14th state with a 30-day age cap. It had been the only state with a safe-haven law without an age limit.

Germany drops attempt to ban Scientology (AP)

AP - Germany is dropping its pursuit of a ban on Scientology after finding insufficient evidence of illegal activity, security officials said Friday.

Gates would like to add US forces in Afghanistan (AP)

AP - Defense Secretary Robert Gates said Friday he would like to add significant U.S. forces to the war in Afghanistan before national elections scheduled for next year, and that grim depictions of backsliding in the seven-year-old war are "far too pessimistic."

Fla. teen commits suicide with live Web audience (AP)

AP - A college student committed suicide by taking a drug overdose in front of a live webcam as some computer users egged him on, others tried to talk him out of it, and another messaged OMG in horror when it became clear it was no joke. Some watchers contacted the Web site to notify police, but by the time officers entered Abraham Biggs' home Â— a scene also captured on the Internet Â— it was too late.

Year later, baby ordered back to adoptive parents (AP)

AP - The Nebraska Supreme Court on Friday ordered a year-old boy back into the home of an adoptive couple who had to give him up months ago after not telling the biological family the woman was pregnant.

Lavish 1,800 year-old bronze chariot unearthed in Bulgaria (AP)

AP - Archaeologists have unearthed an elaborately decorated 1,800-year-old chariot sheathed in bronze at an ancient Thracian tomb in southeastern Bulgaria, the head of the excavation said Friday. "The lavishly ornamented four-wheel chariot dates back to the end of the second century A.D.," Veselin Ignatov told The Associated Press in a telephone interview from the site, near the southeastern village of Karanovo.

Suspect arrested for greasy imprints in Neb. town (AP)

AP - Police have arrested a man suspected of leaving greasy, graphic imprints on the windows of stores, churches and schools in a small Nebraska town. A 35-year-old man was caught in the act by police early Wednesday morning, Cherry County Attorney Eric Scott said Friday. The man hasn't been charged yet, but authorities believe he is the vandal some townsfolk have dubbed the "Butt Bandit."

Knicks set themselves up for 2010 with 2 deals (AP)

AP - The New York Knicks traded Zach Randolph and Jamal Crawford in separate deals Friday, parting with their two top scorers to free up coveted salary-cap space for the summer of 2010. Crawford was sent to Golden State for forward Al Harrington. Hours later, Randolph was shipped to the Los Angeles Clippers along with reserve guard Mardy Collins for Cuttino Mobley and Tim Thomas.

Obama moves to pick Timothy Geithner for Treasury (Reuters)

Reuters - President-elect Barack Obama on Friday moved toward nominating Timothy Geithner as Treasury secretary and charging the respected head of the New York Federal Reserve with helping pull the United States out of an economic nosedive.

Citigroup talking to U.S. government as shares dive: source (Reuters)

Reuters - Citigroup Inc has begun talks with the U.S. government as its plummeting share price raises doubts about the bank's ability to survive, a person familiar with the matter said.

GM cuts output, jets as U.S. demands turnaround plans (Reuters)

Reuters - Detroit automakers began work on turnaround plans demanded by Congress in return for $25 billion in aid as General Motors Corp said it would cut production more and give up two of its controversial corporate jets.

Wall Street stages late rally on Geithner news (Reuters)

Reuters - U.S. stocks stormed higher in a late rally on Friday to cap another volatile week as investors welcomed reports that President-elect Barack Obama has chosen his point person to combat the U.S. economic crisis, instilling confidence about the administration's ability to take action.

U.S. eyes "surge" of over 20,000 for Afghanistan (Reuters)

Reuters - The Pentagon is considering a plan to send more than 20,000 troops to Afghanistan over the next 12 to 18 months to help safeguard elections and quell rising Taliban violence, officials said on Friday.

Bush, Hu discuss North Korea ahead of APEC summit (Reuters)

Reuters - U.S. President George W. Bush held talks on ending North Korea's nuclear program with Chinese leader Hu Jintao on Friday, the first in a series of meetings U.S. officials hope will lead to a renewal of six-party talks by early December.

Iran fails to halt U.N. assembly rights resolution (Reuters)

Reuters - Western nations claimed a success on Friday when a U.N. General Assembly resolution condemning human rights violations in Iran passed through a key committee more easily than in the past.

Even Google scales back on holiday fun (Reuters)

Reuters - Internet search giant Google Inc is known for hosting the most extravagant holiday parties in Silicon Valley, often drawing crowds of over 10,000 and prompting some employees to post ads for party dates on classifieds Website Craigslist.

Obama readies economic team as global recession fears rise (AFP)

AFP - The economic team of US president-elect Barack Obama came into view as fears mounted on the global financial crisis and more mass job cuts loomed worldwide.

Bush bows out, China assertive at APEC summit (AFP)

AFP - US President George W. Bush began Friday his last scheduled foreign trip, meeting the leader of increasingly important China ahead of a summit aimed at containing a spiraling financial crisis.

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