Protecting your competitive advantage

Safeguard and strengthen your competitive advantage to make it harder for competitors to target your customers.

3 minute read

If you’ve spent time and money developing products, services, prices, channels or a way of doing business that gives you an advantage, you’ll want to keep these unique and exclusive to you.

It could be a permanent advantage such as legal protection on intellectual property, but for the most part, competitors will often try to battle their way into your market. Here are some things you could consider on how to keep up.

Hold your own

You could look to emphasise the barriers in entry to your market, or anything that makes another business owner think it’s ‘too hard’ to compete directly. Having an established brand is one way. If you asked ten people to name an online marketplace, an accounting software provider and fast food, nine of them will probably say TradeMe, Xero and McDonalds. These businesses have invested in their brands to be top of mind.

To prevent new businesses entering your market you could try:

filling a gap in the market with unique products or services
setting up an exclusive trading area you can defend legally
having a supplier agree to only supply your business
being the only approved vendor
developing partnerships within your industry
building an online following in social media
topping search rankings.

Anything which makes someone think twice before setting up outside your business can be useful.

Protect your intellectual property (IP)

Having the law on your side is handy when it comes to stopping any imitators. Your ‘IP’ includes the parts of your business that you can legally protect and take action if anyone breaches your rights.

This includes:

copyright
patents
designs
trademarks
trade secrets
plant variety rights
company and domain names.

To help decide what to do, make a list of the essential elements of your business you can’t do without, identify if they can be protected and then weigh up the cost of legal protection.

Visit the NZ Intellectual Property Office to get an overview of what is covered under IP, and seek advice from a professional adviser or lawyer before you take action.

Protect your intellectual assets (IA)

An intellectual asset is a competitive advantage that usually can’t be legally protected, such as your business contacts, networks, your business know-how and knowledge of what customers want.

In these cases, you can still build a barrier by things like:

keeping your information secret
having staff sign confidentiality agreements
documenting internal processes with key employees only
sharing information (like prices) only to qualified leads
limiting what you place online and in the public arena.

List what intellectual assets are critical to your business and outline how you’ll keep them confidential.

Protect your price advantage

If one of your key advantages is being able to source inventory or materials cheaper than competitors (allowing you a higher than average margin or to price lower while still making a decent profit), you could protect it by:

locking in exclusivity of supply with a legal contract
building cash reserves to buy in bulk for volume discounts
documenting your systems or processes that give you a cost advantage
keeping fixed costs low (own your location, contract out when busy etc).

Quality check

Audit the quality of your products or services to check you are better than the competition. Do your products last longer than your rivals? Do you have superior after-sales service? Are you reliable? Find out what makes you awesome and put steps in place to make sure the customer experience is consistent every time.

Be the industry expert

Proving you know more than anyone about your industry is a great advantage. You might post your thoughts in social media, speak at well-known events, run webinars or podcasts with other industry experts, emphasise your qualifications and publicise any testimonials from high profile people or businesses.

At the end of the day if you’re trading and making a profit then you’re doing something right.

Find out what that ‘something’ is, then evolve and protect it for as long as you can.

Defining your unique selling proposition

Your unique selling point (USP) helps create competitive advantage by explaining why a customer would choose your business over another. Find out which USPs may be relevant to your business.

Take your first step towards customer centricity

Customer centricity is a buzzword in business – but what does it really mean? And how can it best be applied to drive business growth?

Related tools

Competitive advantage plan (PDF 35KB)

Marketing strategy plan (PDF 37KB)

Lean business plan (PDF 37KB)

References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.

The information in this article is provided for general purposes only, and is a summary based on selective information which may not be complete for your purpose. It does not constitute, and is not intended as, personalised financial, legal or tax advice. BNZ recommends that you seek advice specific to your personal financial, legal or tax situation from a qualified adviser. No representation or warranty is made as to the accuracy, reliability or completeness of any statement made in this article. Neither BNZ nor any person involved in the content accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.