Competitive Advantage
Competitive advantage is an economic category, which means that a company has unique characteristics that distinguish it from other similar entities in the market.
Classification of Competitive Advantages
A company, like its products, may have one or more competitive advantages. Conventionally, they are divided into the following types.
Technological. These are advantages that affect the quality of a company's products and its productivity. This type of advantages includes equipment and production technologies.
Resource advantages. These advantages include the company's access to the highest quality or cheapest raw materials.
Marketable. These are the advantages that relate to advertising campaigns, sales systems, distribution, after-sales service, and market share.
Innovative. These advantages include the use of scientists and results of research work, which helps to improve company's goods and services, and increase assortment.
Cultural. These advantages are associated with similarities or differences in the culture of countries in which the company operates.
Managerial. These advantages include the company's ability to attract qualified specialists at different stages of work. This can be managers, employees with extensive experience, top marketers and other professionals.
Competitive advantages also include low cost of production, high production speed, the ability of the product to adapt to the needs of the buyer and other factors. To ensure the steady growth and development of the business, companies strive to form a sustainable advantage.
Sustainable Competitive Advantage
A sustainable competitive advantage is an advantage that does not depreciate over a long period of time, such as several years or more. It brings long-term benefits to a company, strengthens its market position, and increases profits. A sustainable competitive advantage is often a set of values that are hard to copy and replicate. This is what distinguishes it from a company's strengths.
Let's imagine that there are two companies on the market that provide the same website development and maintenance services. Both have the same support service and the same number of specialists. The only difference is the speed of processing requests. Company A responds to requests from potential customers faster than Company B. This is their strength. It is unlikely to become a competitive advantage, because Company B can change the way the support service works and start using chatbot in a messenger or online chat on the website to quickly receive requests and speed up communication with customers. To better understand how competitive advantage differs from strengths, let's look at another example.
Suppose several companies are in the business of making women's walking suits. They produce similar models and use similar materials. One of them, in addition to the standard three colors (white, black and beige) decides to add a blue suit to their range. The presence of a model of a different shade can be confidently called a strength of the brand, as other companies can also add to their ranges.
Such a move can become a competitive advantage for the company if the color comes into fashion and other brands cannot find suppliers of the right fabric at a reasonable price.
How to achieve Competitive Advantage
A competitive advantage must make your company and its’ product unique and difficult to replicate. Then you can successfully fend off your competitors and strengthen your position in the market. Even if your company is similar to many others and you do not yet know what makes yours special, remember, everyone has a competitive advantage. The hardest thing is to find it.
It is important to rely on research and facts. Assumptions are often wrong, because what may seem like an advantage to you won't matter to the customer at all.
Analyze the current situation of your company. Conduct an analysis and examine your strengths and weaknesses. Gather a team of several experts and brainstorm. The more opinions you can gather to form a complete picture, the more objective the result will be.
Research your competitors and their products. Research the market thoroughly. Look at the companies and what products they offer. Analyze their strengths, weaknesses, positioning, and unique selling proposition.
Conduct in-depth interviews with your target audience. Find out how customers solve their problems and challenges, how they look for solutions, and what they rely on when choosing a company or product. Identify which qualities and features of the product are important to customers and which are not.
Analyze the information collected. Structure the data and compile it into a table. Examine the information carefully and find your competitive advantage.
Remember, the competitive advantage is more than the strength of a product or company. It is a property or combination of properties that must be valuable to the customer, unique in its kind, and difficult to replicate.
