If the world were perfectly homogeneous, if all businesses were the same and if goods and services offered were identical to each other, on what basis could they compete?

Price. And price alone.

Differentiation is the basis by which businesses endeavour to distinguish their offering from their competitors offering. The greater the uniqueness, the more suitable the offering, the greater the price that can be demanded by the supplier.

Sure, sounds simple in theory but what constitutes the basis for a set of unique offerings that can build into something special that is defined as a business’s Unique Competitive Advantage.

Typically, the uniqueness comes from a combination of:

• Geography. Location is one of the classic means of differentiation. “Locally made”, “proudly Australian” or “supporting our local community” engenders a sense of patriotism that can steer buyers towards a particular offering. Similarly, accessibility can be easier for customers in the local region and is a tool that can be enhanced in marketing messages.
• Specialisation. Such a focus can lead to a powerful advantage. By concentrating on one single market or product; knowledge, skills and reputation, and a business becomes known as the best place to look for the great products and services in that market segment.
• Processes and procedures. Businesses that drive the best processes and procedures usually enjoy significant long-term benefits that can then come from good disciplines, great management and business direction. For customers, it is a pleasure to deal with the business because the experience is reliable, consistent and invariably has genuine empathy with the customer experience.
• Research & Development. Obviously a business that values their R & D will always be looking at opportunities to develop or to adapt how things are done. These businesses get the reputation of being leading edge and customers come to them to enjoy that edge.
• Economies of scale. Sheer size can deliver cost advantages and efficiencies that are not enjoyed by smaller competitors. Some businesses can gain a limited benefit from this through rapid growth or acquisition strategies. Otherwise, this is not easy to replicate.
• Quality.  Once considered a stand out reason to choose one supplier from another, it is now often considered a base level by all customers. It becomes a differentiator only for those who fail to achieve the standard. Nevertheless, any third party endorsement or certification can add weight to the claim for consistent or ensured quality.
• IP. Obviously Intellectual Property, particularly when protected through patents or trademarks, can provide an enduring sustainability to a competitive advantage. Many businesses fail to register names, designs, basic inventions and all sorts of IP because owners believe that this property is not likely to be copied or stolen. It can be very hard to protect after the event.
• Knowhow. “The way we do things” reflects history and leanings taught through many lessons and through lots of clever ideas over many years. Competitors can be blind to the knowledge and skill that has been built into a business. It can provide a level of cost advantage, product edge or service standards that are a sustainable competitive advantage.
• Culture. Perhaps one of the least obvious competitive edges that exist within a business. An empowering and positive culture underpins the performance of an organisation’s people and enables them to work towards common goals. It is a highly valued and treasured edge that needs to be nurtured by leaders.

Clearly, not all businesses are the same. The more any business can stand out from the pack, the more likely they can justify their service offering to their customers. This can generally relate to a better price.

The key is to understand what makes your business special and to build a strategy to strengthen, grow and nurture those areas of differentiation that makes them special. And then tell your people, your clients, your referrers, your friends and your family …. over and over again.