There are various ways to discover a competitive advantage for your business.
A competitive advantage is non-negotiable if a company is to survive in the cut-throat world of marketing. [Tweet That]
This advantage is vital in determining whether a business will stand out and last.
Thus, it must be something that the competition can’t easily replicate. This means that a company can’t rely on the quality of its products alone – it has to go deeper than that.
Hence, your company has to evaluate the strengths and weaknesses of its competition, discover gaps in the system, and step up to fill those gaps.
Amazon is one company that has identified its competitive advantage and deploys it effectively. They identified flop areas in the ease of shopping and speed of delivery and filled these gaps by making it easy for customers to order on their website and get their goods delivered the next day.
The e-commerce giant did not stop there but created Amazon Prime, an option allowing you to order and get your orders on the same day!
In this post, we will discuss five strategies you can use to discover a competitive advantage for your business.
1. Cost leadership strategy
This strategy employs the use of lower prices to gain a competitive advantage.
A company that operates this strategy will aim to become the lowest-cost manufacturer or provider of a product or service. The company achieves this by providing goods and services of standard quality to consumers at a lower and more competitive price than comparable products or services.
A company using this strategy will maximize profit by combining low-profit margins with significant sales volume. Thus, it has to be nimble enough to find the best alternatives for producing goods or offering services.
Furthermore, its marketing strategy should involve shining the light on this USP as much as possible.
One company that has mastered this strategy is Walmart, with its USP reflected in its tagline “Always Low Prices”. The company makes its profits by offering large economies of scale and providing the best available prices of goods.
2. Differentiation strategy
This strategy employs the development of unique goods and services that are significantly different from those offered by competitors.
To get the best from this strategy, a company needs to be on top of its game, especially as regards branding. Additionally, the company must consistently invest in research and development (R&D) to maintain or improve the differentiating features of its products or services.
With an effective branding strategy, a company can convince its customers to pay a higher price, resulting in higher profit margins.
Companies that have mastered this strategy include Nike, Rolex, Starbucks and Apple, with their high-end product offerings targeted at consumers with higher disposable incomes.
Apple, especially, has mastered this by using innovative technologies and trailblazing designs to produce highly sought-after products. This ensures that consumers are willing to pay a premium for Apple devices.
3. Innovative strategy
This strategy employs doing old things in new and innovative ways.
The unique value proposition of this type of strategy could be ease, which would be providing more effortless ways to carry out vital functions. An obvious example would be automobile manufacturing companies.
In the early days, they offered an easier way for people to get around instead of walking or riding horse-drawn carriages.
Another value proposition could be comfort – providing an alternative for people to do what they have always done in more comfortable ways. Automobile companies fall squarely into this category as well.
Another company that excelled at this is Spanx. This premium underwear manufacturing company started with an attempt to solve wardrobe problems in innovative ways.
While the company began by manufacturing the perfect underwear for the everyday woman, it has since expanded into other areas of fashion. However, it has maintained its innovative edge for all of its product offerings.
4. Adaptability
Being fleet-footed enough to pivot as you observe the way the wind blows is a tremendous competitive advantage.
As economies and markets continue to be unstable and unpredictable, being able to adapt to change can be a distinctive advantage for any company.
The 2020 pandemic is a classic example of how adaptability is crucial to a company’s survival. Many companies were caught unawares by the global supply chain disruption the pandemic caused.
While the pandemic is a one-in-several-lifetimes kind of disruption (hopefully), there are other disruptions that can arise. Adapting to these changes can make a company stand out and last.
A company that appears to have mastered and excelled at this strategy is Tesla. The company was shrewd enough to understand the intrinsic value of bitcoin and accepting it as a form of payment long before the world woke up to it.
By the time the rest of the world caught up, Tesla had gone on to be the boss. The competitive advantage of this move is reflected in the value of the company’s shares.
5. Operational effectiveness
This strategy involves doing the same things your competitors do, but doing them better than anyone else.
You can do this by investing in your human capital, knowing that a company is only as strong as its people. Therefore, hiring, training and building a successful team of skilled employees can give you a highly competitive advantage.
You can achieve this by putting in the time and care to select exceptional candidates for open positions. It is also important to train your current employees and provide a culture where your people feel supported and empowered. The long-term benefits are usually worth the effort.
In fact, statistics show that businesses with highly engaged employees see a 21 percent increase in profit over their less-engaged counterparts.
Conclusion
Every forward-thinking business needs to define its competitive advantage to help it stand out and attain market leadership. While discovering your competitive advantage may not be a walk in the park, the time you invest in identifying and fine-tuning it is usually worth the effort.
Which of the above strategies are you already using in your business? And if you are still trying to discover yours, which strategy will you use as a launchpad?