Regardless of size or industry, every business requires a competitive edge to create a strong brand image. Competitive advantage places an organization in a superior business position and enables it to surpass its competitors.
Access to natural resources, a qualified and experienced workforce, a strategic location, solid entry barriers, and access to technological advancements and exclusive information are all considered competitive advantages.
The easiest approach to discovering your competitive advantage is to ask yourself, “What distinguishes you from everyone else?” Why should customers choose your products or services over the competition? Many people try to get it, but few understand fully what it is, how to gain it, and how to sustain it.
Here’s a few tips on how to realize and leverage your competitive advantage.
1. Differentiation.
This is the key to distinguishing yourself from the pack. It all gets down to analyzing your customers’ demands and behaviors in order to determine what they value and consider important. Then, offer products or services that are suited to their specific needs.
Low cost, amazing customer experience etc. can be some of your differentiating factors.
2. Specialization.
Choose a market niche with specific preferences or requirements that must be met by customers; this can be defined geographically or by specialized product requirements.
Specialization is particularly promising when the segment of the market you operate in is substantial enough to be profitable and has significant growth potential.
3. Profile Building.
This strategy is for once you’ve established the foundation for growth. It involves boosting your market profile for the benefit of your target customers by emphasizing your strengths and advantages in terms of product quality, pricing, promotion, location, and distribution.
The most successful businesses today have found a way to differentiate themselves from the competition by being the best at what they do, whether that means offering the best product or service at the best price, with the easiest access, or the best customer service.
4. Offering More Value.
Most business owners’ initial reaction when trying to expand market share and sales volume is to reduce the prices of their goods or services. While price is an important factor in purchase decisions, customers search for value in areas other than the price-to-value ratio of the products they want to buy.
An evaluation of these value-add areas will position your business to more efficiently optimize your whole supply chain, allowing you to significantly increase your total value offering.
5. Shorter Lead Times.
Reduced lead times are one of the most important ways for a company to add value. Faster shipments are in high demand from both commercial and consumer-facing businesses. Some retailers are even testing same-day deliveries.
By ensuring timely delivery of goods and services, your company can establish itself as the default option for companies and individuals that value speed. Depending on the industry, this can have a big influence on the final price your customers are prepared to pay for your goods over a competitor’s.
6. Flexibility.
Strategies involving flexibility can also produce rewarding results. Many businesses have prioritized cost-cutting over flexibility, but this isn’t always the best option. A flexible supply chain can respond swiftly to shifts in demand and supply. This allows the business to reduce surplus inventory during periods of low demand while minimizing the costs when demand increases.
When other factors are held constant, this can prove to increase profits when compared to exclusively cost-cutting strategies, so it is worth evaluating when structuring your future plan.
7. Customer Involvement.
Customer experience is usually considered separate from the supply chain but linking the two can generate considerable benefits. This approach might include things like shipment monitoring and delivery notifications. Platforms offering these services are available, and the increased control can be significant in customer decisions regarding vendor selection.
Customer accounts can also help with data collection that can be used for advanced forecasting, which can be used to drive more efficient supply chain management and asset allocation.
8. Cost-based strategy.
A cost-based strategy is not only viable, but it is also necessary to some degree if your business wishes to succeed. Companies that are successful when prioritizing low prices to the exclusion of the other areas mentioned tend to rely on a high volume to overcome the lower margins, they accept to gain greater market shares.
These businesses also tend to be well-established and leverage an already large customer base to scale output, drive down costs and thereby unlock the ability to charge lower prices. Even if your business is not prepared to undercut all competition, avenues that allow the lowering of prices should always be considered if a company wishes to remain competitive.
If you’ve gained a competitive advantage at this point, you still have to think about how to maintain your advantage. Constantly ask questions about the financial and operational health of your business and look for ways to continuously improve.
