Competitive advantage is what sets a company apart and helps it thrive. It’s the reason you might choose one brand over another. But what does that really mean, and how does music fit into the picture?
In this article, we’ll break down the concept of competitive advantage in an easy-to-understand way. We’ll also explore why it’s so important and how creating an audio brand and a unique sonic identity can give you the edge you need.
What is Competitive Advantage?
Michael Porter, a renowned economist and professor at Harvard Business School, introduced the concept of Competitive Advantage in his 1985 book, "Competitive Advantage: Creating and Sustaining Superior Performance." It states that businesses can achieve superior performance by developing a competitive edge over their rivals.
Porter identifies two primary types of competitive advantage:
1. Cost Leadership: This strategy seeks to become the lowest-cost producer in the industry. Companies can achieve this by optimising production processes, leveraging economies of scale, and minimising labour, material, and overhead costs. Cost leaders can attract price-sensitive customers and gain market share by offering products or services at lower prices than competitors.
2. Differentiation: This strategy focuses on creating unique products or services that provide customers with value beyond a low price. Differentiation can be achieved through innovation, superior quality, exceptional customer service, or a strong brand identity. Companies can command higher prices and foster customer loyalty by offering something distinct that customers find valuable.
In addition to the two types of competitive advantage, Porter developed the Five Forces framework, which analyses the competitive environment of an industry. These forces determine the intensity of competition and the potential profitability of an industry:
1. Threat of New Entrants: The ease with which new competitors can enter the market affects industry competition. High barriers to entry, such as significant capital requirements or strong brand loyalty, can protect established companies from new entrants.
2. Bargaining Power of Suppliers: The extent to which suppliers can drive up prices or reduce the quality of goods and services impacts industry profitability. When there are few suppliers or if unique inputs are necessary, suppliers hold more power.
3. Bargaining Power of Buyers: Customers' ability to demand lower prices or higher quality affects industry competition. Buyers' bargaining power increases when they have many options or can easily switch to competitors.
4. Threat of Substitute Products or Services: The availability of alternative products or services that fulfil the same function influences industry profitability. A high threat of substitutes can restrict the potential for price increases and overall profitability.
5. Rivalry Among Existing Competitors: The intensity of competition among existing firms affects profitability. High rivalry, characterised by aggressive price competition, intense advertising, and frequent product innovations, can erode profits.
By understanding and strategically responding to these forces, businesses can position themselves to achieve and maintain a competitive advantage in their industry.
How do Audio Branding and a Sonic Identity give you a Competitive Advantage?
Audio Branding and Sonic Identities fall into the Differentiation category of Competitive Advantage theory.
Being different requires offering unique value to customers, which builds and maintains brand loyalty. Loyal customers are likelier to continue buying from the company, recommend it to others, and resist switching to competitors, reinforcing their competitive position.
Audio Branding and Sonic Identities are about creating a powerful brand identity that ‘talks’ directly to your target audience. It says to your existing and potential customers:
‘This is for me’ and, ‘People like me do things like this.’
Audio branding and a sonic identity can give a business a competitive advantage in several ways:
Enhanced Brand Recognition: Unique sounds or music make a brand more memorable, helping it stand out in a crowded market.
Emotional Connection: Music and sound evoke emotions, creating a deeper bond between the brand and its customers.
Consistency Across Touchpoints: A consistent audio identity across various platforms (ads, apps, stores) reinforces brand identity and trust.
Differentiation: Distinctive audio elements set a brand apart from competitors, making it easier for customers to identify and prefer.
Improved Customer Experience: Pleasant and engaging sounds can enhance the customer experience, leading to higher satisfaction and loyalty.
This goes a long way toward protecting you from the intensity of competition and profitability of a market.
For example, a strong brand will protect you when new entrants enter the marketplace. A bond between you and your clients gives you a strong negotiating position with your suppliers. (Remember Amazon vs. Visa? Visa put their prices up for business customers, so Amazon said it would no longer accept Visa payments, removing £ millions in revenue for Visa. Consequently, Visa changed their mind.)
Also, when new products come to market, or a price war begins, customer loyalty enables you to compete or even increase your prices. In the 1980s, a price war started in the men's electric shaver market. Remington Shavers could not compete on price. So, as everyone in the market raced to be the cheapest, they put their prices up and improved the quality of their product. Many of their competitors went bust, and Remington is still trading today.
So, in summary
By building enhanced brand recognition, nurturing an emotional connection with your customers, being consistent in your customer touchpoints, and being different from everyone else, you can create a competitive advantage that can withstand the forces of markets and competition, ensuring that you remain profitable.
And a bespoke, strategic audio identity will do most of the work for you.
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It's really challenging for brands, businesses, and podcasters to be heard in a crowded market right now.
That's why we're here.
We are a strategic music production company that will enable you to genuinely resonate with your audience by giving you a distinctive audio brand and sonic identity to have that elusive competitive advantage.
If you would like to know more about how to create a sonic identity for your brand, obtain the benefits of bespoke music for your business or how to use music to gain a competitive advantage, then please get in touch at www.blacklabmusic.co.uk
Because without the music, Jaws was just a hungry fish.
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