Competitive advantage in the EU

One of the main goals of competitive intelligence is to determine the competition’s competitive advantage – either from the competitor’s standpoint or the customer’s standpoint. When one enters a new market, it becomes even more critical to understand how the local competition is positioned and what they consider to be their key value to their customers.

Golob and Podnar (2007) examined companies in both existing and upcoming EU countries to determine their core competitive advantages. They discovered that all companies used some combination of the following core values:

Product quality – This encompasses not only the product’s technical quality, but also whether the product meets the “needs and demands of the customer.” In other words, it isn’t enough to have a technically superior product if it is over- or under-featured.

Product innovation – This encompasses not only functional innovation, but whether the product is successful in the marketplace. In other words, did the innovation correctly tap into the customer’s needs?

Product variety – This encompasses not only whether there is sufficient number of product variations for market demands, but whether the product line “matches supply with demand.”

Product distribution – This encompasses the number of distribution channels, accessibility from the customer’s perspective, and the speed of delivery to the channels.

Product pricing – This encompasses how the prices are structured and if the price levels match the supply/demand elasticity parameters.

Golob et al. found that companies from existing (or original) EU countries focus primarily on product quality and product distribution for their competitive advantage; this is likely due to the established nature of the companies as well as the markets. Conversely, companies from countries recently admitted to the EU (or about to enter the EU) focused primarily on price and quality; again, this can be explained by the newness of these companies to free market economies.

For the marketer entering the EU market, understanding these differences – and countering them – could be critical to long-term success.

References:

Golob, U. and Podnar, K. (2007). “Competitive advantage in the marketing of products within the enlarged European Union.” European Journal of Marketing. 41 (3/4), pp. 245-256.

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