From the June 2007 issue of Entrepreneur

Why should customers do business with you and not your competitors? If you can't answer that question quickly and easily, you may be losing customers and market share. It all comes down to what's called your "competitive advantage"--an essential component that customers value. It's something you do differently or better than your competition. A strong competitive advantage is the differentiator that makes customers want to buy from you. And this point of differentiation should be the central theme in all your marketing messages.

A true competitive advantage relates directly to a benefit customers value that's unique to your organization. What benefit do your customers or clients get from your business that they can't get elsewhere? Choosing the right competitive advantage boils down to understanding what your customers want. It's not about what you offer, but how the customer benefits because of what you offer.

It's also imperative to examine your competitors' competitive advantages so you can position against them. Take a careful look at their marketing materials to identify the unique benefits they promise. Once you understand what your customers value most and the benefits your competitors use to differentiate themselves, you can get out of your "me too" marketing rut and define your own unique competitive advantage. Begin by examining these four primary areas.

1. The products you market: Whether your company manufactures and sells its own products or retails product lines purchased from wholesalers, there are lots of ways to differentiate. For example, if your items are specially engineered to have fewer breakdowns, your competitive advantage may be longer-lasting, more dependable products. A more comprehensive extended warranty program than your competitors would deliver worry-free operation and peace of mind. Or perhaps providing a wide selection of hard-to-find products can become your competitive advantage that gives customers superior shopping convenience.

2. The service you deliver: Today more than ever, buyers want to know that their post-sale experience will be positive. Companies that differentiate themselves with top-flight customer rewards programs keep past buyers coming back for more. And when customers or clients evaluate companies that provide B2B or consumer services rather than products, they choose the firms with services that are noticeably superior to those of their competition. How can you deliver added value to your customers through additional or enhanced services?

3. The pricing you offer: In some business categories, price is a major differentiator. These are areas in which the competitors all offer parity products and customers routinely shop for the best prices on established brands. In this instance, a company that consistently offers the lowest price will have the competitive advantage. It also helps to add value by bundling services that build buyer confidence and convince new customers that you are a stable, well-rounded seller. This is particularly critical if your company is little-known in its marketing arena, because many customers will willingly pay a slightly higher price to a competitor they feel is more reliable or offers superior value.

4. The way you sell: The dry cleaner that stays open later and is located next to a subway stop successfully differentiates itself from other dry cleaners--not on service alone, but on the convenience it provides. Get the idea? If you can't differentiate based on what you sell, it's smart to build a competitive advantage around how you sell. The winning advantage goes to entrepreneurs who offer more ways and more times to shop--24/7 via the web, in a brick-and-mortar store, through the mail or by phone--making it easier for customers to buy.

Contact marketing expert Kim T. Gordon, author of Maximum Marketing, Minimum Dollars: The Top 50 Ways to Grow Your Small Business, at www.smallbusinessnow.com. Her new e-book, Big Marketing Ideas for Small Budgets, is available exclusively from Entrepreneur at www.smallbizbooks.com.