Why competitive advantage is key to drive your business growth
Competition is critical to the success or failure of an organisation. It is one of the key elements determining the accuracy of a company’s operations and its impact on its overall performance. Therefore, you need to have a competitive advantage strategy in place. A competitive advantage is when you can satisfy a customer’s/market’s needs better than the competition.
These strategies help companies complement their strengths with the tools for coping in the target market and exceeding their competitors’ strengths. Competitive advantage helps deliver affordable, satisfactory, and superior products than your competitors. Thereby improving your market share and profit margins. The competitive advantages are difficult and expensive to replicate. So how can companies or individuals achieve competitive advantage? Let’s find out.
Competitive Advantage Strategies
Cost Leadership
You can outperform your rivals by offering attractive pricing to customers. This strategy aims to produce low-quality products at lower prices than the competitors. Tech giants such as Amazon have risen to the forefront by adopting this strategy. There are several ways to achieve this, including economies of scale and large-scale production. Economies of scale refer to the cost benefits incurred by a company by producing goods on a mass scale.
Differentiation Strategy
The differentiation strategy refers to one where a company maintains the originality of its products or services in the market. Your business offers goods with a unique advantage over your rival. Simply, yours are better quality, or you provide a faster service. This method may include a product’s brand, function, or design. The aim is to lure more customers through quality and features while preventing others from getting a bigger market share.
Focus Strategy
Just like cost leadership, the focus strategy can also offer products at lower prices. The only variation is that a particular niche market sector is targeted in the cost-leadership method. This way, you can concentrate on specific markets with particular needs. Adopting the focus strategy will minimise expenditure regarding staffing and equipment and other expenses like raw materials to remain competitive regarding cost. For instance, community banks use the focus strategy to gain a competitive advantage. Their target audience includes small local companies or high net-worth individuals who like the personalised experience big banks aren’t able to offer. As a result, customers want to pay a little more for that service.
Competitor Analysis
Understanding the competitive landscape is essential for a business or individual to compete in a market. It’s gathering and assessing information about competitors’ strengths, weaknesses, strategies, value propositions and customer perception. It helps you focus on their strengths and mitigate their weaknesses to gain a competitive edge.
Few Takeaways
- If adopting a competitive advantage, ensure the market knows your goods and services are superior.
- You must comprehend and evaluate your products and services well. It’s important to ensure that your offering is of real value to customers.
- Staying in tune with the most recent trends and technology is another critical factor to gain a competitive edge. It will benefit and influence the company’s business and sales of the products.
Why competitive advantage is key to drive your business growth
In conclusion, gaining a competitive advantage is all about having better products and services, attracting more customers, making more profits, and returning more value to shareholders than your competitors. It’s more often achieved by leveraging low-price and differentiated products/services strategies. Other aspects help you to gain a competitive advantage, including responding to changes in time and modifying the operating strategy. Organisations having robust manufacturing capabilities, superior technical know-how, and more can utilise them efficiently and transform them into competitive advantages.
