by Ntombizamasala Hlophe (@askYellowwood) As a marketing fraternity, we have for some time defined competitive advantage as a business, product or service that better fulfills a consumer need when compared to competitors. Our innovation pipelines are filled with concepts that we believe will grow organically and not cannibalise current volume. Positively, this notion forms part of a commercial necessity. However, the fundamental challenge is to appreciate, firstly, what will drive a sustainable advantage and, secondly, what the distinguishing factors are that deliver on this advantage.
Fundamental challenge
Generating business growth in a ‘post-recession’ era has been marked with the dilemma of creating more value from fewer resources. Businesses have to respond not only to a tough economy but also to an increasingly cautious and sceptical consumer. Indeed, it has become imperative for business leaders to identify and lead with a distinctive competitive edge in order to deliver sustainable commercial results.
In The Age of You[1] by Stein Arne Nistad, he states that we all need to break away from established rules about communication, relationships and the way in which we do business. Increasingly, in this age “we take control of our personal and commercial relationships and decide who we want to listen to, and with whom we wish to engage.” To test this theory, ask yourself when last you physically went to a bank to transact.
Consumers are looking for brands that are essentially ‘better for’ them and their environment, and not brands that are merely ‘better than’ the competitors.
Key behaviours
Here are some key behaviours that form part of this consumer-defined environment and play a role in the argument of whether brands should lead with a competitive advantage or a consumer advantage.
Beneficial intelligence
One of the most apparent is beneficial intelligence, where the evolution of technology provides a solution to a universal consumer need, rather than the need for the technology itself.
Discovery Insure, for example, applies telematics technology to gain knowledge of its consumers’ motor driving behaviour and then rewards them for that behaviour. The integration of the insurance offering into the overall Vitality reward system creates a self-fulfilling continuum of corrective behaviour. This reward and behaviour loop has allowed Discovery to achieve a clear commercial benefit by delivering a consumer advantage that consistently transcends each category in which it operates.
Linked mobile devices
Another example that has transformed consumer experience is the linked mobile device service. When linked to a person’s lifestyle, mobile devices may inform and measure sleep patterns, weight loss, health alerts and exercise routines, and may also help consumers find directions to destinations previously visited. This information is undoubtedly a great advantage to the provider as it gives insight into the consumer that may be really powerful.
Nike identified the consumer need for easily accessible coaching and partnered with mobile devices to deliver a tangible benefit to its consumers. Whether through an app on a phone, a watch that monitors activity, or an exercise band, Nike is able to deliver an exercise experience to the consumer. The resultant growth in exercising has created the need for active wear that Nike has translated into a commercial benefit; this is visible in the growth of its active-wear range and expansion in retail space in recent years. Nike creates a consumer advantage through mobile devices that is fully integrated with its products.
Flexibility
Flexibility in response to the ever-increasing needs of consumers can be difficult for even the most agile business and more so for businesses built on conventions established over decades. Changing the response to consumer needs when existing systems are already in place is often an inconceivable notion to established businesses.
An example of a brand which thrives on focusing on flexibility is Capitec Bank, which has changed banking conventions by merely changing operating hours to meet the needs of its clients. Its single account product has made conventional banking appear obsolete and left its competitors with the burden of justifying the need for multiple accounts. Indeed, the banking community cannot ignore the success of what Capitec offers South African consumers and the resultant expansion in its reach and customer growth.
Power of consumer advantage
Perhaps the strongest argument for the power of consumer advantage is Capitec’s sentiment on its recent success:
“We are very happy with exceeding the nine million Capitec clients milestone. We are however not in the business of competing for size. Instead, we value the strong brand affinity and positive engagement with our clients. This validates our efforts to help them bank better and live better.” —Francois Viviers, executive: marketing and communications at Capitec Bank (source: BusinessTech).
Finally, in the quest to answer the question of consumer vs competitive advantage, the challenge was to ask why this conundrum exists in the first place. I suspect that it is a misalignment in peoples’ appreciation of the purpose of marketing within business. For a marketer whose role it is to deliver growth through consumer acquisition and cross-sell, it should be encouraging to note that consumers greatly reward the brands that listen and consistently engage with them in meaningful ways.
It is my view that consumer advantage is competitive advantage, and businesses that master the ‘art of the consumer’ are the ones that will thrive in today’s business environment and beyond.
Allow consumers to lead
To convert consumer advantage into commercial advantage, we need to learn how to incorporate the voice of the consumer into our decision-making in new ways. We need to build our brands differently, opting out of the sacred competitive conventions and allowing consumers to lead our choices in business trade-offs in order to deliver new growth.
[1] “The Age of You: How to understand and benefit from social media and the connected society” by Stein Arne Nistad
Ntombizamasala “Zama” Hlophe is a strategy director at Yellowwood (@askYellowwood). A Rhodes and UCT graduate, she has 10 years’ experience in the field of marketing and has worked across Africa for FMCG companies such as Unilever, SAB and YUM restaurants.
“Motive” is a by-invitation-only column on MarkLives.com. Contributors are picked by the editors but generally don’t form part of our regular columnist lineup, unless the topic is off-column.
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