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Business competition is what helps business owners in the same niche to increase sales or market profit. This mostly occurs when two business owners are pursuing the same target audience. Unearthing a way to beat off competition in the industry determines if a business is successful or not. Therefore in this article, you will find out what is really needed for sustainable competitive advantage to thrive, examples, types as well as its strategy.
What Is Sustainable Competitive Advantage?
A competitive advantage is what makes a company’s goods or services better than other products of same in the same rival. This term is commonly used in businesses, but the strategies work for any organization, country, or individual in a competitive environment. Therefore if you dint have a sustainable competitive advantage, don’t think it twice to compete else you’ll lose.
According to Wikipedia, Sustainable competitive advantages are company assets, attributes, or abilities that are difficult to duplicate or exceed; and provide a superior or favourable long term position over competitors. In business, a competitive advantage is an attribute that allows an organization to outperform its competitors.
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Meanwhile, to enjoy a competitive advantage, a firm has to provide its customer’s with benefits similar or superior to its competitors but at an affordable or same price. This doesn’t mean the quality of the product should be greatly tampered with. These unique benefits give the firm a competitive advantage. However, for how construct a competitive advantage, you’ve got to consider the determinants listed below.
A company should state clearly the benefit(s) of their product or service. It must also strive for real value and create interest. know your product’s features, its advantages, as well as how they benefit your customers. Another important thing is staying up to date on the new trends that affect your product.
#2. Target Market/Audience:
A company should establish who are your customers from the company. Creat demand by knowing who buys from you and how you can make their life better with your products or services.
For rapid growth, it is of great importance if a company understands its competitors in the competitive view. To build a competitive advantage, a company must be able to detail its benefits in such ways that other competitors may not. Let there be a recall value that distinguishes your product from another.
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Competitive Advantage Examples
A sustainable competitive advantage is a strategy that makes a customer choose your business over another one. A company can only win a larger amount of market share by promoting, a competitive advantage.
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For instance, we all have that particular thing that drives us toward a particular product. Have you considered why you choose Indomie noodles over minimie noodles? This depends on the sustainable competitive advantage. A sustainable competitive advantage is a set of unique features of a company that make its products be perceived by the target market. It is the reason behind brand reliability. Thus, it makes you prefer one product or service over another. In addition, brand and big pockets are an added advantage to boost a sustainable competitive advantage using the social media platform. Let’s also take a look at few examples using Facebook, Google and Whatsapp.
Google enjoys a sustainable competitive advantage of being the only effective search engine over the internet. They were only able to reach this extent because of their size, innovation, market position, and network influence.
Facebook also enjoys a sustainable competitive advantage over its competitors such as google plus. This is because it is one of its network effects. Moreover, there are other reasons which led to their success include; constant innovation, advertisement, etc.
Whatsapp is of the examples of competitive advantage. It enjoys a competitive advantage over other platforms. After all, its users feel they are better than others because most of their contacts use Whatsapp.
Types of Competitive Advantage
There are two main types of sustainable competitive advantage that exist. They include;
#1. Comparative Advantage
Comparative advantage is a company’s strength to create goods or service more efficiently compared with its competitors. However, this can be through a higher quality of product made with a lesser cost of production. Thus this equally means that a firm can make higher profits by selling their goods or services with competitive price without compromising on its quality.
#2. Differential Advantage
Another type of sustainable competitive advantage is the differential advantage. It allows a company to create unique innovative products that are appealing to its customers. This type of advantage can be achieved through a lot of research and innovation. It requires a firm to understand the needs of the customer and satisfy them with every need.
What is Competitive Advantage Strategy?
In the present business atmosphere, the competition has greatly increased as companies are speedily concentrating on adverts and other promotional campaigns. A compelling brand image and positioning strategy lead to customers loyalty to the brand. Similarly, this forces companies to come up with strategies that will help them surpass their competitors. Meanwhile, below are few strategies that can create an edge for establishing a competitive advantage.
- Cost Leadership Strategy
- Differentiation Strategy
- Innovative Strategy.
- Operational Effectiveness Strategy.
- Technology-Based Competitive Strategy
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Finally, understanding the basic principles of competitive advantage is essential for designing an effective business strategy. As earlier discussed above, Competitive advantage is what makes an entity’s products or services desirable to customers than any other competitor. This gives the firm/company a greater profit margin than its competitors.