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Competitive
Advantage
By Simon Barna
Valtech Brown Bag
24 January, 2019
Say, you’ve got a business
And customers love it
Now you’ve got competitionNow you’ve got competitionNow you’ve got competition
Option A
Change your margin
Your Price Competitor Price
£2.00 £2.00
Your Price Competitor Price
£2.00 £2.00£1.99
£1.95
£1.90 £1.80
£1.70 £1.50£1.00
£0.50
!
Your Cost Competitor Cost
£0.30 £0.30
Your Cost Competitor Cost
£0.30 £0.30£0.20
!
"
Cost
leadership
Do things cheaper or do them differently
Cost advantage cheat sheet
!Get the scale right
!Optimise capacity
utilization: reduce waste
& exploit synergies
!Learn & reconfigure value
chain
DO DON’T
"Focus on production &
overlook small or indirect
activities
"Ignore diminishing returns
for incrementalism
"Forget cost of capital
Option B
Change your product
Your Offer Competitor Offer
£2.00 £2.00
Your Offer Competitor Offer
£2.00 £2.00£5.00
!
Cost
leadership
Differentiation
Increase perceived value (aka. UVP)
Increase perceived value (aka. UVP)
Differentiation cheat sheet
!Increase customers’
performance / reduce
their waste
!Lower the customer’s cost
of installation and usage
!Change value perception
(use and signaling
criteria)
DO DON’T
"Focus on product quality
(rather than customer’s
perception of value)
"Make it too unique
or not valuable to
customer at all
"Make it too expensive
Focus
Your market
This woman
is vegan
He’s on low-cholesterol diet
He’s on a high-protein diet
She loves her dog with
caramelized onions
He wants a quick bite
She wants to sit
down for a meal
She ain’t paying for
extra hipster stuff
She only
eats halal
He can’t
eat halal
Market focus
Market focus
Lower cost Unique offer
Cost
leadership
Cost focus
Differentiation
Differentiation
focus
Market
Market segment
Find a unique way to segment the market
Focus cheat sheet
!Know your customers
!Choose unique
combination of
segmentation variables
!Tailor offer: add or reduce
product functions, change
tech, design or bundle
DO DON’T
"Compromise focus for
broad targeting
"Be outfocused by a
competitor with an even
narrower target
"Segment spillover and
segment substitution
Take aways
Competitive Advantage
company assets, attributes, or abilities that allow
a firm to earn a higher rate of economic profit
than the average rate of economic profit of other
firms competing within the same market
Lower cost Unique offer
Cost
leadership
Cost focus
Differentiation
Differentiation
focus
Market
Market segment
Thank you
Valtech Brown Bag
24 January, 2019

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Competitive Advantage