Gaining competitive advantage

Understanding your target market and conducting market research can be incredibly powerful for identifying and developing your sustainable competitive advantage.  In fact, just using data and analytics to inform your strategy can put you ahead.

It is common for companies to have value propositions such as pricing, service levels, quality, brand recognition, etc. to create a competitive advantage, but if everyone in the market has the same value proposition, there is nothing that makes your company stand out.  For instance, if everyone in your market is talking about the quality of customer service, you need to ask yourself what makes your company’s service better.

Here is a summary of some other key ideas for gaining competitive advantage:

1. Being price competitive

• Produce goods more efficiently – improve your production line
• Reduce overheads
• Utilise economies of scale
• HOWEVER, and it is an important point, you are far better to offer value for money than be cheap, as something that may cost more, may be way better – this means it is better value for money, but make sure you are comparing apples with apples

2. Being adaptive

• Offer customisation and flexibility, but again only if this can fit into your production methodology and return a good margin – flexibility costs money to produce, so charge accordingly
• Provide goods that can change with the market rather than remain static

3. Establishing a point of difference 

• A niche market for those products or characteristics
• Make your business renowned for exceptional customer service – have people recognise the quality and service, and the price as being the appropriate outcome of the first two
• A brand that attracts its customers on the strength of its reputation alone is powerful
• Attract the best talent – being seen as the Subject Matter Experts may give you the first opportunity to engage with the shopper
• Leverage new technology

4. Seeking strategic alliances

• Share resources to reduce costs – keep to your knitting and have others produce that which isn’t core to your business
• Provide customers with added benefits from other related businesses – this extends your influence and ecosystem

A competitive advantage distinguishes a company from its competitors.  It contributes to higher prices (or at least better yield), more customers, and brand loyalty.  Brand loyalty means repeat business.  Establishing such an advantage is one of the most important goals of any company.

Think about the companies you purchase from regularly.  There is a reason you choose to keep going back.  Their competitive edge may be something as simple as proximity or pricing, or something more complex, like your unspoken desire for the social prestige associated with the purchase.