You’re here because you’re hungry to grow your business and dominating your competition is a nice side benefit. A competitive advantage will give you a much broader benefit than just getting one over on your competitors.
Getting the right perspective to be able to forge a successful path is actually sometimes the most difficult part – when you’re under so much pressure just to get better results.
What is a Competitive Advantage?
Competitive Advantage Definition
In simple form, a competitive advantage is, “the difference that affords you more leads, sales or better margins than your competitors – attributed to a specific reason”.
Everyone wants to be competitive in their market – and beat the competition more often!
How does it work?
The way a Competitive advantage works is that when used correctly (marketed and sold to), it creates greater value for the product / services which you sell. Hence generating more value in revenue and profit for its shareholders because of the certain strengths and conditions which are leveraged for increased sales at higher margins.
The more distinct, sophisticated and therefore sustainable the competitive advantage, the more difficult it is for competitors to copy and therefore overcome your advantage. The two main types of competitive advantages are comparative advantage and differential advantage.
Think about this:
If a prospective customer approached you and asked, “Why should I choose you over your competitor(s)?”
Would you be able to give them a good answer, or would you struggle?
These are good questions to ask your customers and customer facing staff:
- Why do customers pay for your product or service?
- What makes your product/service unique and better than that of your competitors?
- Would a simple change from a competitor make it easy for a customer to leave you for them?
How do we start helping clients with this indifference?
We start from the beginning… research, analysis and then develop a commercially advantages position for you in the market – from exploiting the gaps we’ve found!
When we are tasked with helping businesses grow (our main gig), a competitive advantage is what we are looking for. To identify the direction we analyse the market, your business and the competitors of your business.
We call this a competitive analysis. It helps us (and you) understand the current state of affairs, the gaps in the market and also the rough diamonds for further development of a differentiator or two – which will allow your company to have a commercial advantage.
This type of analysis should be a fundamental part of any company’s strategic business planning process.
When your business has a differentiator (that is significant enough to make your product or service seem superior in the eyes of your target market) the potential customers will see the value in buying from you (your competitive advantage).
Most of us are head down doing business, not looking out – finding new distinctive benefits for our solutions portfolio… that’s where we come in!
Sustainable Competitive Advantage
To create a sustainable competitive advantage, you’ve got to be very clear about these three determining factors.
2. Who is the target market / your potential customers? What are their needs? You’ve got to know exactly who will buy from you and how you can make their life better. That’s how you create demand, the driver of all economic growth. The News companies papers’ target market shrank to those older people who weren’t comfortable getting their news online.
3. Do you know who your real competitors are? They aren’t just similar companies or products. They also include anything else your customer could do to meet the need you can fulfil. Newspapers thought their competition was other newspapers until they realised it was the internet. They didn’t know how to compete with a news provider that was instant and free.
Main Categories of Competitive Advantages
At it’s most basic level, we break it all down under two major types of advantages
1). Comparative or Cost advantage: the business competes on price.
2). Differential or Value advantage: the business provides a differentiated offering that is perceived to be of superior value.
1. Comparative or Cost Advantage
Is a company’s ability to produce goods or services more efficiently than its competitors. This creates higher value for the company, essentially meaning they can offer the same functionality with a lower cost to them. The follow on from this value is that they can cut the sale price and retain an acceptable margin – giving them a comparative advantage.
Rational consumers will choose the cheaper of any two perfect substitutes offered.
For example, a car owner will buy gasoline from a gas station that is five cents cheaper than other stations in the area. For imperfect substitutes, between competitors such as Pepsi and Coke, higher margins for the lowest-cost producers can eventually bring superior returns.
Economies of scale, efficient internal systems, and geographic location can also create a comparative advantage. Comparative advantage does not imply a better product or service, though. It only shows the firm can offer a product or service of the same value to the consumer – at a lower price.
For example, a firm that manufactures a product in China may have lower labor costs than a company that manufactures in Australia, so it can offer a comparable product at a lower price. In the context of international trade economics, opportunity cost determines comparative advantages.
Amazon (the online shopping giant) is a classic example of a company focused on building and maintaining a comparative advantage. The e-commerce platform has a level of scale and efficiency that is almost impossible for retail competitors to replicate, allowing it to rise to prominence largely due to accessibility and price competitiveness.
2. Differential or Value Advantage
A differential advantage is when a company’s products or services differ from its competitors’ offerings – and are seen as superior.
Advanced technology, patent-protected products, or processes, superior personnel, and strong brand identity are all drivers of differential advantage. These factors support larger margins and more expensive retail pricing as well as large market shares.
Apple is famous for creating innovative products, such as the iPhone, and supporting its market leadership with savvy marketing campaigns. They have built an extremely valuable niche brand in a HUGE consumer market, while keeping the price within reach of the majority of consumers. Differential advantage is not about lower cost, but is massively powerful when the price point makes the product or service accessible to a large volume of consumers. That is the ideal mix!
Major drug companies can also market branded drugs at high price points because they are protected by patents.
Some tangible examples of Competitive Advantage
- Lower cost
- Larger delivery volume capacity
- Shorter delivery time
- Better customer service
- Higher quality product
- More technologically advanced
- More innovative (current and future aware)
- More user friendly
- Online Dominance
A company must create clear goals, strategies, and operations to build sustainable competitive advantage.
Increase profit and market share by
finding your COMPETITIVE Advantage.
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See your sales conversion rates Growing
Realise the potential of your brand
Create A Hype in the market
Dominate your competition…
because you have a distinct competitive
advantage over them.
The Advantages of Competitors
This is a tricky one… in that we all know that having competitors is good and bad for business. It exposes our weaknesses and makes us work on our strengths… but most of us in business are too busy to analyse it properly.
Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing stand out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your own initiatives.
Some Advantages are:
1. You have some benchmarks to use for comparison
2. You can play off your competitors weaknesses
3. You can advertise in ways and places that your competition is weak or poorly performing
4. Competitors that are strong in a particular, usually don’t try and hide what they are doing. This allows you to be able to easily track and keep an eye on them to make sure your “turf” is safe for the time being
5. Understanding different ways that competitors interact with your target market allows you to assess any threats posed by both new entrants to your market and current competitors.
This knowledge will help you to be realistic about how successful you can be.
Some Key Specialities that we are focussed on!
The difficult thing is to put it all together to achieve better sales results for less marketing spend… that’s the bit that we specialise in!
Businesses who communicate effectively and regularly with their target market and customers have a much higher percentage chance of winning and keeping them as customers.
Our aim is to create maximum value from every dollar spent with any promotional or marketing campaign. Effective marketing brings you to “front of mind” as the best solutions provider for your potential customers. Therefore creating the HUGE value that your end-users want from you!
The Digital Marketing suite of tools is one of the most important tool sets to understand and use effectively.
Knowing where and how to start is what sets us apart as consultants – strategy must come first.
Finding your competitive advantage and promoting it in the right ways is so important these days – you just cannot ignore starting on your journey today.
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62% Increase IN repeat Sales
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