Competitive advantage is a feature that gives a company an edge over its rivals. It is something that helps it compete more effectively. A competitive advantage could be a superiority that a company gains. For example, perhaps it can provide the same value as other companies can, but at a lower price. It may also offer more attractive credit terms than its competitors.
Some companies with a competitive advantage can charge more. They charge more by providing greater value through differentiation. Differentiation refers to the results of efforts to make a brand stand out to customers. Specifically, it stands out as a provider of unique value.Specifically, the article focuses on conditions that allow companies to generate either greater margins or superior sales than their rivals.
Competitive advantage – reasons
A firm may have a competitive advantage due to its quality, price, brand, distribution network, intellectual property, or location.It could also be due to customer support, cost structure, natural resources access, and a supply of suitably-skilled labor.Historically, access to new technology has consistently given companies a significant advantage over their rivals.Competitive advantage provides an edge over the competition. It can also generate more value for a business and its shareholders.In customers’ minds, a competitive advantage is what makes a company superior to others.Businesses first utilized this ‘competitive advantage’ method of success. However, any person or entity can also adopt it.
Competitive advantage – three determinants
Before finding out what your competitive advantage is, you need to know about three determinants. First, the competition; second, what you produce; and third, the target market.
Your Target Market
Which customers should you target? You must know who is currently buying from you. You also need to find out who will purchase from you in the future.Furthermore, you must determine what you need to do to make them happier. In other words, find out how can get them to spend more.For example, physical newspapers today know that their target market is older individuals. They know this because younger adults prefer going online. Many newspapers did not prepare for this evolution and consequently died.
What Are You Providing?
You must be clear on what type of product you are providing. Only then can you focus on making sure it is something that offers real value.You need to list all the advantages and benefits that your product provides consumers.For example, since the Internet emerged, retailers have had to redefine what a shopping experience is for the customer.
You need to know everything about rival companies. You also need to find out as much as you can about your customers. Then you have to try to meet their particular needs.Major retailers thought their competition was other major retailers. However, it was, in fact, the online world.Suddenly, the market opened up to millions of smaller players. Operating online means having considerably lower costs than retailers with physical shops. Online retailers are forever looking for innovative ways of enhancing the shopper’s experience.Make sure you are completely familiar with every aspect of these three determinants. They will help you identify what you are better able to provide to your target market than your competitors. Being able to do that is your main competitive advantage.
When understanding competitive advantage, value proposition is important. A value proposition is a summary of why a consumer should buy a product. We also use value propositions for services.If the value is effective, it may produce a competitive advantage in the good or service.The value proposition will also increase customer expectations and choices.