PROCESS OF CREATING SUSTAINABLE COMPETITIVE ADVANTAGE

Understanding of the terms Core Competency, Competitive Advantage, Unique Selling Proposition (USP) and Unique Consumer Perception (UCP) and the relationship between them is very vital for the businesses to gain and sustain the competitive advantage

Core Competency

An area of specialized expertise that is the result of harmonizing complex streams of technology and work activity. These are skills, characteristics, resources and assets of the firm that set the firm apart from the competitors. These are unique strengths of the firm which are difficult for competitors to imitate. e.g. Innovation, R&D, Mass production usage of technology, reliable process.

The core competency of Reliance Group is building the record capacities in record time. Similarly, for Sony Corporation, their ability to miniaturize and for Wal-Mart, their supply chain are the respective core competencies.

The Firms must ask itself following questions to identify core competency

1. How long could we dominate our business if we did not control this competency?
2. What future opportunities would we lose without it?
3. Does this provide access to multiple markets?
4. Do customer benefits revolve around it? Is it considered of “Value” by the customers? 

If the answers for these questions are positive, in that case the firm can consider that attribute as core competency.

Core competencies are long term in nature but not permanent in nature.

Core competencies help firms to have competitive advantage over its competitors.

Competitive Advantage

Competitive advantage is a position a firm occupies against its competitors. It is a unique advantage a firm has which provides a superior and favorable position over competitor. A firm possesses a sustainable competitive advantage when its value-creating processes and position have not been able to be duplicated or imitated by other firms. Basic Competitive Advantages are Cost Leadership, Product differentiation and Focus (Specialization).

Core competency creates competitive advantage for organizations. As mentioned earlier core competency of Reliance group (Capacity building) gives then cost leadership advantage to them. Similarly reliable process has given competitive (Product/service Differentiation) edge to the Mumbai Dabbawala’s over its competitors. Nike is a classic case of focus as competitive advantage.

It is essential to communicate competitive advantage to the target market in the form of Unique Selling Proposition (UPS) or unique selling point.

Unique Selling Proposition (USP)

The proposition must be one that the competition either cannot, or does not offer. It must be unique either a uniqueness of the brand or a claim not otherwise made. e.g. Head and Shoulders – Dandruff remover, Volvo – safe drive, Armani’s – Status and design, Fedex – Overnight delivery of parcel.

USP is elaborate form of competitive advantage to create distinct image in the minds of the consumer (positioning) which is easy for consumers to understand. Strong USP would ensure brand recognition and brand recall.

USP creates Unique Consumer Perception (UCP) in the minds of consumers.

Unique Consumer Perception (UCP)

Our perception is an approximation of reality. It is based on stimuli to which we are exposed. Marketers try to create a positive perception about the brand or company through USP. Brand Awareness and Brand Recall is difficult to achieve unless the firms successfully create a distinct perception (UCP is created brand awareness and brand recall is not possible to achieve. In case of Mumbai Dabbawala’s UCP is reliable service.

Consumer expectations are based on unique perception about the brand or the company. After availing the service or buying the goods consumer compares the expectation with performance and that decides whether consumer is satisfied with the same.

Hence any flaw in the process of understanding core competency, creating competitive advantage, communicating USP and in turn creating UCP may lead to failure of the brand.