May 15, 2014

Competitive Immunity: It’s Hard To Compete Against A Brand

One of the biggest, yet often overlooked, benefits of growing your brand is competitive immunity. It’s hard to compete and win against a sticky brand.

You can see this dynamic in the personal computer marketplace. Apple has a great deal of competitive immunity.

Dell, Toshiba and HP are fierce competitors in the PC space. They compete on price and features, and regularly try to undercut each other. Apple, on the other hand, operates relatively unscathed, because their brand insulates them from the competition.

Growing a recognized and valued brand in your industry does more than generate sales. It creates a competitive advantage by protecting your company from the competition.

A sticky brand provides protection

Growing a sticky brand is your company’s primary line of defense. It keeps your competition at bay.

Your brand is like a moat around your business. It insulates and protects your products and services in measurable ways:

  • Increased perceived value and affinity towards your products and services.
  • Increased customer attraction and retention. Your customers seek out your brand, and come back frequently.
  • Decreased price sensitivity, because your clients choose you first and gravitate towards your brand.

The moat gets deeper and wider the stronger your business becomes on these three dimensions.

Sticky brands generate profits

Cash in the bank creates opportunities. Increasing your company’s profitability allows it to invest more resources, make bigger bets and fend off competitors.

For example, Apple earns forteen times more profit per laptop than their PC competitors. Apple’s average sale price of MacBooks in 2013 was $1,229.56 with an assumed profit margin of 18.9%. The average sale price of the Windows PC manufacturers in the same period was $544.30 with an average profit per PC of 2.73% or $15.71.

Apple is an anomaly in business, and very few companies will achieve such an enviable brand position. But the profit gap between sticky brands and their competitors exists in every sector. A company that dominates its category typically earns triple the profit of its number two competitor, and the number three competitor earns half the profit of the number two.

Growing your brand into a leadership position more than pays for itself.

Rise above the herd

Duking it out with your competitors is exhausting and unnecessary. Let your competitors fight over features and price. Your opportunity is to grow your brand, and become your customers’ first choice.

Growing a sticky brand will not happen overnight, but every improvement is positive. The stronger and stickier your brand becomes the harder it will be to compete with your firm.

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