In Michael Porter’s Competitive Advantage: Creating and Sustaining Superior Performance, builds on his earlier work in Competitive Strategy, to build a guide that balances strategy and implementation. In the opening chapter, he explains that:
Competitive strategy must grow out of a sophisticated understanding of the rules of competition that determine an industry’s attractiveness. The ultimate aim of competitive strategy is to cope with and, ideally, to change those rules in the firm’s favor. (p 4)
He goes on to explain that regardless of the industry, the rules of competition are embodied in 5 competitive forces:
- The entry of new competitors
- The threat of substitutes
- The bargaining power of buyers
- The bargaining power of suppliers
- The rivalry among the existing competitors
Regardless of industry, the interplay of these forces – and a company’s ability to balance them – will directly translate to overall success of the company.
If you don’t already know the book by heart, it’s worth another read.
For those of you that do, we’re going to jump right into an example of a company that is building that competitive advantage with the Kompyte platform. This is a real example from a real company, but the name has been changed to protect their privacy.
Company: Jean Genie
Contact: Aladdin Sane
Location: New York, NY
Industry: Retail, Apparel, B2C
Specialties: men’s and women’s clothing
Challenge: Keeping up with competitors’ promotions.
In the summer of 2016 things were going well for Jean Genie. They had transitioned from a young online store to a strong online store with 8 brick and mortar locations. The company was growing nicely, but the co-founders identified a problem: competitor promotions.
They were often finding out about competitor promotions after they had been running for an average of 2 weeks. These promotions included everything from “free shipping” and “15% your first order” to “buy one get one” and “free store pickup”. After looking into it more, they realized that they were losing roughly 10% of sales to competitor promotions.
When they found out about the promotion, they could react with a similar (or better) version of the promotion. But, by that time, the promotion was often ending. If they could find a way to be alerted to their competitors’ promotions as they were starting, they could react a lot faster.
That is exactly what they were able to find out with the Kompyte platform. They began tracking their 3 direct competitors and 1 indirect competitor. Focusing on their website changes, they set up alerts based on changes.
The real benefit came from Kompyte’s Hidden Changes feature. The Hidden Changes feature captures the drop-down menus and remarketing campaigns that are displayed as pop-ups. With this intel the product marketing team was able to respond immediately by matching or beating their promotions.
Learn more about how Kompyte could help your team get ahead of the competition in real time!