What makes up a competitive advantage? The answer is relatively simple. In order to have a true competive advantage, the entrepreneur’s idea or concept has to be rare, difficult to imitate, valuable to the customer who will purchase it, and sustainable over time. Often, I find that young entrepreneurs have not thought through these concepts carefully – and they resort to descibing simple “features and benefits” of their product or service – without regard to how well they are competitively positioned. Here are a few good qestions to consider when evaluting what type of competitive advange your new product or service will have:
- How is your approach to solving a problem different from other ones out there?
- Are these differences important?
- Do they offer you a sustainable competitive advantage (rare, difficult or costly to imitate, valuable to the customer?
- If the need the company is addressing is so great, why is no one else offering a compelling solution?
- Are the product’s advantages compelling enough to outweigh the customer’s preference for continuing to deal with its existing, established vendors?
- What is the source of the company’s differentiation?
- How can this source of differentiation be protected and enhanced over a long period of time?