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Sep 1, 2009 12:00 AM
Competitive differentiation is a subject that eventually determines life or death of every company of every size in every industry, but which too few companies address. Admittedly, it's an issue for which there's no easy answer. Those who feel a need to consult ratio studies and the practices of similar companies to the exclusion of other information are defeating the purpose of competitive differentiation: to be unique, not emulate similar companies.
In the apparent belief that, “It is better to steal than to do without,” there's a drive to emulate the experiences of others. However, in an industry such as print, in which the differentiation of most successful companies is no longer rooted in product, imitation is extremely difficult or even impossible. The reason: Differentiation perceived as meaningful to customers is increasingly rooted in a company's history, attitude and culture — factors that are difficult to emulate or imitate. Companies and managers that frequent seminars or buy books that have the word “secrets” in the title are typically trolling for an easy answer to the differentiation challenge.
A mission statement at odds with buyer perceptions runs the risk of not ringing true. There are cases in which print companies have tried to differentiate themselves by sheer size and manufacturing power. That doesn't always conform to buyer perceptions that they need customized services from a supplier to which they can be important.
In its simplest form, competitive differentiation is a credible, meaningful reason that a buying organization may realize unique benefits from doing business with your organization. Many competitors can deliver satisfactory product on time at a competitive price; that is the least that customers expect, or should expect. So what is the basis for devising an effective differentiated strategy?
Find out how your organization is perceived. Understand the reason(s) that current customers do business with your company. Beware of the amateur researchers who believe that an effective survey is synonymous with a study of customer satisfaction. That type of research fails to address the needs, objectives, perceptions, and challenges faced by print buying organizations.
Most important, avoid the trap of believing that the industry fad du jour contains the ingredients of a differentiated strategy for your company. In the late l970s and early l980s, many graphic arts firms boasted of their investment in expensive “bleeding-edge” technology, particularly million dollar electronic prepress systems, such as Hell, Crosfield, and Scitex. This was effective in the very short run. Focus groups with buyers of prepress services over the course of several years indicated that the nature or extent of the investment declined in importance over time. The perceived buyer value evolved into information about art preparation and steps to use the technology more effectively.
The graphic arts industry is in the midst of a similar phenomenon involving sustainable printing. Many companies have pure and honest motives. At least as many graphic arts companies see this issue as a vehicle of easy differentiation.
The latter companies will soon be going through the competitive differentiation exercise (or its inevitable replacement, price competition) all over again as virtually every company in the industry takes steps to embrace the environmental movement. Organizations that view promotion of technology or environmentalism as a differentiator fail to fully understand the importance of the word “unique” in “Unique Selling Proposition.”
Any mission statement or vision statement, as brilliantly wordsmithed or glib as it may be, loses meaning if the name of another company, especially a competitor, can be credibly inserted into that statement. Corporate objectives are the result of providing services perceived as valuable and unique, not establishing quotas, then figuring out steps to achieve them. One can compare a company's financial ratios with industry averages, but that won't reveal the steps that so-called industry leaders have taken to create the perceived buyer value that led to the numbers. Effective competitive differentiation leads to outstanding performance; it is not an outcome.
An investment in good research, not occasionally asking customers “what they think of us,” is critical to the process. It's an investment as important as equipment maintenance and an internal computerized management program. It's common sense to first determine customer perceptions of a company before determining its future.
Dick Gorelick is president of Gorelick & Associates and the Graphic Arts Sales Foundation. He can be reached at email@example.com.