Almost every day, somewhere in the world, for the last few decades, people have been discussing “competitive advantage” specifically with regard to the business itself. More recently, certain scholars have even gone so far as to suggest a business’s competitive advantage is transient or even non-existent. However, at ROKC we place competitive advantage front and center – in the customer’s lap! Simply put, businesses exist to provide their customers with a competitive advantage in achieving some specific outcome.
Let’s consider the Customer Competitive Advantage for a moment before getting into the concrete example of Over The Counter pain relief medication.
I don’t think anyone would contest the assertion that since the dawn of time man has struggled to survive. First and foremost, physiological survival. Up until fairly recently the rate of infant mortality, death at childbirth or within the first year of birth, was very high. Modern science, medicine and hygiene greatly increased the chances of an infant surviving anywhere in the world. Some have argued that infant mortality rates in the “developed” and “developing” worlds are so close it makes no sense to even use these words. The second struggle is to survive physiologically past that first year by having enough food, clean water, and access to medicine to keep your body healthy over the rest of your life time. Here again, many nations have overcome this struggle through bountiful access to these resources. While other nations are still struggling to bring these basics to their citizens. In almost all cases, both of these struggles have been overcome through science and the technological advances employed to make these resources readily available on a mass scale making the struggle for education the third most prevalent in life. These three struggles have contributed significantly to our “modern” way of life and business: science informs our understanding of what resources can be used while technology gives us the means to make them usable on a large scale so that we can alleviate the struggles of as many people as possible. Therefore, business serves only one purpose which is to provide customers with a competitive advantage in overcoming their struggle to survive.
Philosophically, ethically, morally, economically, politically,….we can engage in countless debates as to who gets what benefit from this process of transformation but we will not do so here as it is outside the scope of this article. However, it is a passionate subject which has been debated for centuries and forms the very basis the political and economic systems used in every country.
In more customer-centric economies where consumption is the highest proportion of the Gross Domestic Product it is probably easier to see how business’s provide customers with a competitive advantage in achieving a specific outcome if not for any other reason that the market is so crowded. More times than I care to admit I use the pain relief align at the local pharmacy to illustrate this point. Thus, the reason for this article. So, here goes!
Way back in history when you struggled with a headache you would have to romp around the forest and plains to collect herbs you then boiled up in a pot and drank – probably a very bitter – tea in the hope of some pain relief. The process probably took a great deal of time which meant people just suffered through it. The herbalist and then apothecary came along warehousing the herbs allowing you to gain some time but it was still rather inefficient. Subsequently, science came along to determine what, inside, the herb was the active ingredient that relieved a person’s pain allowing the pharmacist to synthesize it and keep a powder on hand for any customers who came into their shop with a headache. Technology helped standardize the process and mass production made it so cheap to manufacture little pills that you could keep a bottle at home, in the office, on your person, in car glove compartment,… Over the course of time relieving a headache went from a few hours to minutes. Or, to express it differently, the competitive advantage by which the customer relieved their headache increased significantly; it became not only faster but more sure with time, the uncertainty was reduced to almost zero.
However, in today’s modern pharmacy you don’t find just one product but hundreds. Why is this so? Well, at a minimum, you have four: Aspirin (Salicylic Acid), Acetaminophen, Ibuprofen, and Naproxen. These are the four most commonly used “active ingredients” in Over The Counter pain relief products. But what about the rest? The other hundreds of products are made up of variations of these four themes each one addressing another customer uncertainty by providing a competitive advantage to relieve the customer faced with that specific struggle.
- Heart health
- Children, Women, and Men targeted
- Fast acting
- Coated pills for stomach discomfort
- With/without water
- and so on and so forth, not to mention dose sizes and quantities.
In fact, a search of Walgreen’s e-commerce site shows no less than 79 Aspirin containing products, 278 Acetaminophen products, 112 Ibuprofen, and 40 Naproxen. 509 pain relief products that use these 4 active ingredients! From a ROKC™ Methodology point of view, each of these 4 key components has on average 127 products providing customer’s with a competitive advantage in treating a couple of dozen or so uncertainties. But this is only part of the reality because this is only the Over The Counter mass retailer market. These same pain relievers are available in convenience store, gas stations, vending machines,hospitals, medical offices, dental offices, veterinary offices, … all over the world. Next, you have to add the prescription products into the mix and maybe we have a complete picture.
In fact, in the US, all health products are registered with the FDA. A query of the FDA database using these active ingredients gives a complete picture for this country:
- 1,393 – Aspirin
- 8,090 – Acetaminophen
- 2,899 – Ibuprofen
- 1,365 – Naproxen
Or, 13,747 pain relievers using these 4 active ingredients!
In such a crowded market it is impossible to successfully penetrate a market with a new product by only taking into consideration the active ingredient, or as we call it the Key Component. And, please keep in mind, those ancient herbal remedies are still around vying for their share of the market as well as new compounds challenging the entrenched 4 to dethrone one or all of them.
So regardless of where your business is in its life cycle – startup or mega-corporation – you are going to be hard pressed to make any headway in a market if you do not approach it based on the competitive advantage you are providing to the customer.
While researching with topic we came across a newer company with a novel approach which illustrates this point. All of the pills, capsules, gelcap, tablets,… we looked at require the consumer to drink a full glass of water. Goody’s on the other hand provides a powdered product the consumer simply ingests, no water. Undoubtedly this is a very niche product however each does retails for $0.73 while basic aspirin is less than a penny. That’s over 73 times more expensive! Their margins must be very comfortable. Goody’s was able to discern an opportunity in the marketplace that no one wanted to – or could – address making it a viable new entrant into a very crowded market.
What Customer Competitive Advantage is your business addressing?