Chalana Williams, First Federal of Lakewood
Gaining a Competitive Advantage
It takes extensive research and strategic planning to gain a competitive advantage. Every advantage is significant and counts for establishing your business as the leader in your particular industry.
Your target audience is a focused group of consumers that your company seeks to reach with its products and services, which is differentiated by demographic, socioeconomic, and common needs or characteristics. However, your competition is also focusing on this target market. By uncovering certain characteristics, you can gain a competitive advantage.
Cost Leadership
Typically, businesses attempt to gain cost leadership as their first competitive advantage. This is where a business is in the position to offer the same quality products as the competition, but at a lower cost by perfecting production methods or using resources more efficiently than competitors.
Differentiation
With a differentiation strategy, reducing prices is only one of many factors. Companies usually seek out one or more features or advantages they have that will set them apart and then locate the sector of the market that will find those advantages essential and market to them.
Strategic Alliances
Strategic alliances with companies within a related industry or the same industry can offer a competitive advantage—as long as lines aren’t crossed by attempting to collude to control prices. Strategic alliances are like joint ventures that companies use to combine resources and gain exposure for themselves at the expense of competition outside the alliance.
Quality
Customers will often pay more for better quality products or services. If you have more expertise, superior design, or access to higher-quality materials, product quality could be your competitive advantage. The goal then is to find market sectors that will purchase your higher-priced products.
Brand
If promoting a well-known brand is your competitive advantage, you’ll need to reach consumers who see the brand in a positive way, who need it, and can buy it.
Service
By placing an emphasis on customer satisfaction, you can compete on service. Emphasizing customer service implies employees have good people skills, and are trained in customer relations and the products they support. Since customer service can get costly, businesses whose competitive advantage is customer service do better in high-value sectors.
Even after you gain a competitive advantage, you are far from done. You will have to maintain your competitive advantage continuously to be successful.
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