A core competency is something that a company does well compared to others in its field; it’s an edge that can be used in marketing to offset competitors’ strengths. All successful businesses know their core competencies and conduct their business around them.
Core competencies are many and varied. They can be a technology, such as Apple's development of the miniaturised hard drive that made the iPod name synonymous with MP3 players. They can be a tradition of service like the Red Cross or a specialisation like that of Epson in the field of printers for PCs. They can even be an ability to set fashion trends like Gucci and Armani.
A business’ core competencies collectively give it marketing clout. They are usually achieved through a long term process of development and are difficult for a competitor to copy or imitate. Customers value them because they can acquire something unique by purchasing the products of a business’s core competencies.
What are your core competencies?
In today’s intensely competitive environment your business should devote time and resources to developing its core competencies, and then creatively apply them to a fast changing market. Even if your business is only small, identifying and developing its core competencies can create and sustain valuable long term competitive advantages.
What are the core competencies of your business? Think about all the skills, abilities, knowledge, experience, technologies or processes that enable your business to provide its set of products or services. Brainstorm with your team about all the things you are, to your team and your customers. The value proposition you offer to your customers and how they perceive you are derived from your firm’s core competencies; activate them and begin to market with them.
Defining your core competencies
Define your core competencies broadly but accurately - broadly so that you don’t rule out opportunities from which you could benefit, and accurately so you aren’t tempted to go outside what you can do well.
- Manufacturer – manufacturing durable and attractive shop fittings, fast installation, no mess left afterwards
- Shoe retailer – best prices on quality men’s shoes
- Dentist – affordable, pain-free dentistry in a caring environment
Once you have determined the core competencies of your business, you can start turning them into marketing messages. But remember, marketing messages emphasise the benefits of these core competencies so some rewording is necessary to point out, for instance, the advantage of a fast, clean installation such as minimising business down time.
A basis for decision making
Let’s say you currently operate a successful sporting goods business and you're thinking about starting a café to operate inside the store. This may seem like a good idea, but does that align with what your business does well? In other words, does it mesh with your core competencies?
If you know that your core competencies make you a successful retailer of sporting goods because of an in-depth knowledge of ball sports, then you probably wouldn’t decide to open a café because this is outside the focus of your business. But you might consider allowing an experienced food operator to open a café in your business and get rent and a share of the turnover in exchange.
It’s an important step
Defining your core competencies is an important step for any growing business. They are a basis for marketing, for making operational decisions and for planning the future of the enterprise.
If you have growth plans for your business you’ll need to develop your existing core competencies and expand them. All business growth is based on doing more of what you do, but the bigger the business is, the more it has to rely on its core competencies to withstand competitive forces.
If your business does something very well and remains focused on it, you will have a cornerstone for your marketing; customers will come to you in the certainty that you will deliver what they need. Defining your core competencies and basing everything your business does on them will keep you doing what you do best and put you on track to become a leader in your field.