Lasitha Silva’s Web’log

Posts Tagged ‘Consumers

When operating in a market it is not the competition that is very different from you that matters – in fact your most dangerous competitors are those that are most like you. This is because for most products and services there will be many features in common which give customers a ‘comfort’ factor and allows customers to differentiate between offerings without feeling that they are looking at something so completely different that they will disregard it.

It is, however, the differences between you and your competitors that are the basis of competitive advantage and leads you to offer a distinct customer value proposition that compels customers to use you rather than the competition. To be successful in business you must have some kind of competitive advantage, no matter how small or how subtle.
This allows you to construct a Customer Value Proposition (CVP) which distinguishes you from your competitor’s products but which also equalizes the price/value trade-off in the customers’ mind – in your favour. A superior CVP will exist because your competencies are more in tune with market ‘needs and wants’ than the competition – otherwise you will lose customers to those competitors that have organisational competencies that are better or more in tune with the customers. It is important to keep abreast of customers’ needs and wants which change constantly – as shown in the diagram – and update your competencies accordingly.

Usually insufficient attention is paid to CVPs and organizational competencies – but that is exactly where benchmarking can add value.

In this context competency refers to all aspects of the organization that are inputs into the CVP (IT, customer handling processes, premises etc) – not just staff skills. This set of competencies is unique to you and is why you have competitive edge. It is not set in tablets of stone, however, and an edge can be dulled or even worn away. To maintain and enhance it you must:

  • keep evaluating the needs and wants in the market place and how they will metamorphose;
  • understand what your customers’ value now and their needs moving forward;
  • take a long term time horizon;
  • understand competitive movements (current and potential);
  • keep a close eye on changes in the substitutes market; and
  • put in hand the changes to your own competencies to continue to meet the evolving market needs and therefore sustain your competitive advantage.

This is where benchmarking can be of great value and successful benchmarking, therefore, will involve focusing on key, cross-functional business processes that support the long-term strategic intent and enable you to develop process capability, or focusing on those areas that develop and enhance core competencies.

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August 2020

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