Core Marketing Concepts Refresher: Two for One

Notebooks out and pencils ready? Today we have the second instalment in our dummies guide to core marketing concepts. I know what you’re thinking; core marketing concepts don’t really have the same razzle dazzle as an exposé on Apple’s latest operating system. You’re right. They don’t. But while Apple will launch a new iOS in 12 months’ time, these core concepts have stood the test of time. And, whether you believe it or not, these core concepts underpin Apple’s marketing savvy. So (pencils poised) today we will cover not one, but two core marketing concepts (well, maybe one and a half – they are quite closely interwoven): Core Competencies and Competitive Advantage.

Core Competencies and Competitive Advantage

To be successful (ie. sell more i-Pads, Pods and Phones, if we’re sticking with the Apple analogy), companies must not only own, but nurture and improve, the resources and core competencies that constitute the essence of their business.

Back in the day, companies generally owned and controlled all the resources across their business, from labour power and materials to machines and information. Today, many companies outsource the less-critical parts of their business if they can be obtained at a better quality or a lower cost. This makes core competencies even more important.

Before we go any further, we’d best define what a core competency actually is. At a very basic level, core competencies are the capabilities of a company. They are CRITICAL to the business achieving a competitive advantage and generally have three very specific characteristics:

• They are a source of competitive advantage and make a significant contribution to perceived customer benefits.
• They have applications across a wide variety of markets.
• They quite difficult for competitors to imitate. If competitors can copy them easily, then they are not core competencies.

While we are defining terms, let’s go through competitive advantage. The theory of competitive advantage was espoused by Michael Porter (Remember him from last week? He is that leading professor at Harvard Business School that came up with the value chain theory.) back in 1985. Told you these theories stand the test of time. Competitive advantage occurs when a company accrues or develops an attribute or core competency (or a number of attributes or core competencies) which enables it to outperform all competitors.

Therefore, competitive advantage is ultimately derived from how well a company can accrue or improve core competencies and mould them into interlocking activity systems or business processes. Companies may also have a competitive advantage if they distinctive capabilities or excellence in broader business processes.

So, how does a company maximise its core competencies? There three main ways:

• (re)defining the business concept or big idea (Apple went from computers to personal portable electronics)
• (re)shaping the business scope: you might need to expand (selling just computers wasn’t working for Apple, so they expanded into iPods, Pads, Phones and Touches) or limit the scope of the business (you don’t see Apple expanding into any other electronics fields)
• (re)positioning the company’s brand identity: you might find that the brand is too broad (trying to appeal to too many different markets) or too niche (not enough people in your target market).

Pencils down. I realise we’ve covered a bit this week. So, it must be time for a break. I might check out iOS7…..

Marketing.com.au would like to thank Sally for sharing with us Part 2 and we hope you enjoyed it. If you missed Part 1 make sure you check out Core Marketing Concepts Refresher: The Value Chain.