Pirates of the Corporation:
Finding Your Competitive Advantage 

By Bob Garrow

Why were pirates so successful? They certainly didn’t spend millions of doubloons on marketing. What they did do was plan ahead to give themselves important tactical advantages over other ships. Only when perfectly positioned did pirates fire a shot across the bow of the targeted ship, using the element of surprise to create such a clear competitive advantage that the other ship had little choice but to surrender.

Thinking like a pirate can help you in the business world. To begin, you need to position your company in the minds of customers by learning what customers really want and determining how you can meet those needs in your particular market. Follow these steps to create a strategy that will give you the competitive advantage.

1. Study the waters you’re sailing: Bring your marketing team together to assume the roles of current and potential customers. As a group, determine how your customers perceive and value the following factors in their buying decisions about your product or service. Assign a percentage to each of these Marketing Mix Factors to equal 100%.

• Price - What percentage of a customer’s buying decision is based on the product’s price? For example, if you produce computer software for the mass market, price is an important consideration. Consumers want to pay as little as possible for their software, so they place a high importance on price, while large corporate and government consumers in a different, more specialized market don’t care much about price; other factors are more important to their buying decision.

• Product or service - What percentage of a customer’s buying decision is based on the quality of the product or service? Are customers in your market most concerned with product features, and benefits, such as high functionality?

• Marketing and Promotion - Including your corporate profile, sales, advertising, and promotions, what percentage of importance would customers assign to promotional efforts for the product? How much influence do marketing and advertising have on product sales? What value, for instance, do consumers in the market for personal computers place on word-of mouth advice? On TV and in magazine ads? On a company’s larger reputation in the marketplace?

• Place - Location of your business doesn’t always matter, but it might influence customer perception of value if, for instance, you produce heavy machinery that consumers would buy frequently and therefore routinely needed to pay high shipping costs.

At the end of this first step of the process, you will come to a conclusion such as this: 60% of customers’ decision to buy product X in your market is based on product quality. 20% of their choice is based on price, and only 10% each on promotions and place.

After you have allocated an overall percentage to each Marketing Mix Factor, further break down each factor, assigning percentages of customer perceived value to the elements that comprise that factor. For example, you might break down price into levels, quantity discounts, terms, etc.

Assign a rating on a scale of 1 to 10 (10 being the ideal) to each element within the Marketing Mix Factors to indicate how your customers would rate you on each of them. At this point, you may determine that your product is outstanding in terms of X and Y but that you are at a disadvantage in certain areas, like Z. If, however, you’ve determined that Z doesn’t matter that much to consumers in your market, you can focus on beefing up your advantage in the X and Y areas.

The goal is to develop a picture of your competitive strengths. Repeat this process using your competitors’ product or service. This will help you to develop a picture of how you and your competitors stack up in your customers’ eyes. Determine where your company is superior, equivalent, and inferior. If you determine that your product is superior, for instance, that’s the advantage on which you’ll build to create your strategies.

2. Draw up the treasure map: The planning team is now in a position to create a strategy that will build upon your competitive advantages while capitalizing on your competitors’ weaknesses. The earliest pirate captains found that the key to leading was to involve their crews in all planning decisions: where to sail, how to divide treasures, and who their officers would be. Likewise, as a leader you’ll want to include as many of your key people as possible to develop your plan and its implementation, in order to maximize the level of commitment to the mission.

If you determine a clear competitive advantage within your market in rapid product development, for example, your strategy should plan to grow that further. Similarly, if you have lost a competitive advantage in customer service - if your competition is superior to you in this regard and it’s an important factor in customer value perception for the product your company produces - your plan should be to improve in that area.

3. Steal market share, ship by ship: Avoid the big ships - the Navy vessels that can out shoot you - until you’ve developed a fleet of your own. You can do this by finding niches within the overall market where you have competitive advantages. While you increase your sales, your competitor may or may not recognize your gains, or their losses.

Repeat this incremental sales approach in several portions of the market, and you can generate a substantial lead before your competitors even know to react. Airlines like Southwest did this; instead of openly pursuing the business of the legacy carriers, they developed a niche for economy fliers and incrementally took away market share before their competition even realized it.

Make those scurvy dogs walk the plank: By following this three-step strategy, you leave your competitors with only two choices: 1) engage in an expensive counterattack to regain market share, or 2) surrender portions of the market to you. When you have a sustainable competitive advantage and a flawlessly executed strategy, competitors often have little choice but to surrender a portion of the market to you again and again. And eventually you’ll send them straight to Davy Jones’ locker!

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