What is competitive advantage?
Competitive Advantage looks at the factors allowing a company to sell their products or services on a cheaper level or better than its competitors. These factors help a company generate higher sales and show stronger margins when compared with its rivals. These factors could be around cost, branding, quality or distribution just to name a few!
You can find your company's competitive advantage through strategically thinking. Wondering how to think strategically? Apply your thinking processes to a context of achieving success. Apply your unique business insights and opportunities to find what you can do to get above the rest.
How can you benefit from competitive advantage?
Obviously, the main benefit of having competitive advantage is your product or service is more popular within the market you’re a part of. Consumers are much more inclined to buy from you than any other- but there’s a lot more to it!
You can cement your business as a player within the sector giving certainty to your employees and let your competitors know you’ll be here for the long haul. Not only that but you’ll be much more likely to predict your revenue streams, so you can plan ahead and spend more time looking at how to keep up your advantage over others.
Building up your competitive advantage also means can reduce unessential marketing because you can attract talent and investors for future endeavours. Competitive advantage can help you strengthen your brand and develop the alliances you have within the market.
The main methods of competitive advantage?
If you’re just starting out, think about how these strategies can help you build a competitive advantage in the market you inhabit…
Same Product, Lower Price! The first strategy companies try to gain an advantage through is cost. Buying something at a lower price is always going to be a game-changer for some consumers- especially when the product is of the same quality. Think about if your brand can produce the same quality products/service at a lower cost, so you can sell at a lower price…
Defensive Strategies. Once you have a competitive advantage, you want to keep it- duh! A defensive strategy means you’re trying to keep competitors as far away as possible, attaining the competitive advantage you already have over them. A way you could do this is through differentiation.
Make alliances! On one final point, you can create an advantage by finding alliances. Partnering up with other businesses in related or the same sector can be mutually beneficial for all. This does not include collusion though- in no way do you want to partner with another company to try and control the price structure. You should be looking for a brand that wants to join you in a joint venture, pooling your resources together to have some sort of advantage- not gaining exposure at the expense of other competitors.
And that’s a whistle-stop tour of competitive advantage and how you can use it to benefit your business. On one final tip- make sure to do your research!
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