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Manufacturer's Competitive Advantage

As the leader or marketing mastermind of a manufacturer, one of your duties is to defend the company from external threats, similar to how a moat protected a castle.

It was the first line of defense against invaders. In those days the enemies were few and easily identified. In modern times they chip away at the walls from all directions. Some are actual competitors (other manufacturers), some are category-changers (i.e. Uber), and some are existential (how we think about our place in the industry or in our customer’s lives). Now that competition is a way of life, the sustainability of your moat i.e. your true competitive advantage will make you untouchable or vulnerable to invasion.

Bigger Isn’t Always Better

Back when your company was started, manufacturers had few competitors. A game-changing competitive advantage was simply the void you filled with an exceptional new product. It didn’t even have to be the cheapest—it was considered the best, and was typically the “only.” Revenue increased and the company grew. But, money and scale aren’t always sustainable in a 21st-century overly crowded marketplace. Bigger isn’t always better i.e. Instagram had eight employees, no profit and sold for one billion dollars less than two years in business. Their moat was of the category-changing sort.

If money and scale are eliminated as differentiators (aka: moat protection) then the most obvious competitive advantages are customer service and quality products, right?! In a recent marketing article, David Baker affirms that these are not sustainable differentiators either and we should throw them directly into the moat. They’re like everyone else. In this day and age, quality products and great customer service are expected; the cost of admission. So, not true, sustainable differentiators.

At this point, you may be leaning on your “proven manufacturing process” as a competitive advantage. Whether it’s actually proven or not, your competition is, most likely, claiming the same thing and it also doesn’t address what’s in it for the customer (what they actually care about). It’s more about you.

Three Sustainable Competitive Advantages

To gain a truly competitive advantage and become untouchable, unlocking your long-term advantage, aka widening your moat, is key. Here are three “moat-worthy” competitive advantages that are true and sustainable and, as Baker says, worth “trumpeting from the parapet on your castle wall:”

Brand Positioning Spectrum

Image: Brand Strategy Insider

Whether challenger, rival or leader, strong positioning can create a sustainable competitive advantage. A challenger ceases an opportunity to copy a product or service model that already exists and engages with buyers at standard touch points with the goal of “carving out a piece of the pie.” The opportunity lies in choosing a very specific piece, aka audience segment, and serving them whole-heartedly and better than the industry leaders. A rival engages with buyers at identical touch points, challenging competitors efforts. The opportunity exists to address the elephant in the room, like Avis did, and promise to always “work harder” or create a new model, like Toms shoes, and contribute to the greater good. Leaders build a community (or a cult: Apple) and offer an experience that transcends what they make and market. They strategically engage with buyers at every available touch point and measure return on investment, innovation, and influence.

A commitment to solving specific challenges for a particular audience (coupled with an ironic name that no competitor would copy) gives Big Ass Fans, for example, a sustainable competitive advantage. They are an untouchable manufacturer that does four things consistently to support this competitive advantage: invest in what matters to each audience segment, contribute to the conversations and causes that matter to them, demonstrate a high level of understanding through consistent actions and creativity and create products, services, and communications that are relevant to their audience.

“The white-hot center of competitive advantage is based on a compelling customer experience. In effect, brands that are loyal to their customers, not the other way around.” (Derrick Daye)

Team members who embrace your positioning and thrive in a healthy, vibrant, differentiated culture stay longer and are of greater service to customers. Rather than delivering great customer service, they always go above and beyond to create memorable customer experiences.

WindsorOne has a sustainable competitive advantage with a culture of creativity. They empower their team to consistently surprise and delight customers. When calling Kurt for a Shirt, a non-kilt-wearing team member may answer the phone instead and you can bet they’ll be just as enthusiastic about helping you as Kurt would. And, when vendors and customers are invited to their facility for a “sales tour,” they are treated to a thematic “event-like” experience that is custom-made for them, including personalized shirts, schwag and unsurpassed fare and accommodations. No bland binders or generic PowerPoint presi’s allowed.

Becoming known as THE “Black Box” resource for your customers/their challenges/the industry can be a sustainable advantage. “Black Box” because it’s proprietary and not because it’s inscrutable. Be the brand that collects and shares real industry data, promotes advocacy and creates a trusted community. Consistently develop products and processes that contribute to your customer’s overall success. Embrace the whole system, instead of the part you provide. David Baker deems this “A little bit of certainty in the world of marketing where there is precious little certainty. You protect it not with IP locks but by constantly enhancing it. Making it deeper.” Widen your moat by being the transparent resource that consistently strives to give more than it takes.

Festool has a sustainable competitive advantage by being the go-to resource for power tools for professionals. The sections and boards on the FESTOOL OWNERS GROUP site are a banquet of information for every segment of the collective: external customers and dealers as well as internal employees. They review all kinds of tools, not just their own. With F.O.G., Festool has created a 360º view of everything that could interest their most avid brand customers (influencers).

In these crowded, fast-paced “have you downloaded the latest release this week” times it’s more important than ever to unlock your true sustainable competitive advantage. A shift in positioning, in culture or in your overall mission for the greater good will lay the groundwork for sustainable growth. Become as untouchable as any manufacturer can be. Widen the moat!

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