Sustainable Competitive Advantage, What Is It and How To Use It?
Competitive advantage refers to all those characteristics that help a brand overpower its competitors in the market. Given below is all that you should know about competitive advantage and how to create it:
Competitive advantage lets a business become its consumers’ first choice. It comprises various tactics and strategies for making a business’s products and services better than all others. Every business owner planning to build competitive advantage needs clarity on the following three things:
1. The benefit and value that their products or services can provide the consumers
2. The kind of consumers who’d be most attracted to whatever the business is offering. What kind of people they are? What do they exactly need from a product or service? What attracts them the most?
3. The potential market competitors. Your competition also includes all those products or services that can replace whatever you’re trying to build a competitive advantage for.
If you’re looking forward to building a competitive advantage successfully, you need to strongly communicate your product’s benefits to your target consumers. Also, you need to demonstrate how your product or service is better and worth the consumer’s investment when compared to those provided by your competitors.
Competitive Advantage is a well-acclaimed business school course book written by Porter in 1985. This book covers almost everything that can help a business create a sustainable competitive advantage.
Porter’s book emphasizes having clear-cut goals, tactics, and operations for a business to successfully create a sustainable competitive advantage. The advantage can also be created easily if the business values and culture are in line with its goals.
After researching several companies, Porter came up with the following ways for businesses to achieve sustainable competitive advantage:
1. Cost Leadership
It refers to businesses providing good value in their products while offering them at comparatively lower prices. Cost leadership is often ensured by improving operations at the production plants. Most businesses achieve cost leadership by paying low wages to the labor force. While some do compensate the workers in several other ways, most of the bigger brands don’t do much for their workforce.
Differentiation refers to a company’s practice of delivering its consumers more value and better advantages than the competitors. A company can differentiate itself either by offering extra-high quality or by enticing the consumers with the fastest possible delivery. Differentiation can also be ensured by reaching out to the target consumers in a potential way.
Businesses that have achieved successful differentiation can easily charge higher, gaining more profit. Traits like quality, responsive customer services, and invention can help businesses achieve differentiation faster.
Quality simply refers to any brand providing the best possible product from others. On the other hand, responsive customer service can be ensured by doing all that can make the customers happy. Whereas, innovation means that the brand responds to the customers’ needs in a revolutionary way.
3. Cost Focus
Focus related to understanding and closely serving the target market in a personalized way. Businesses aiming to achieve competitive advantage must employ different strategies to respond to the target consumers. Usually, cost leadership and differentiation can help organizations display focus. When trying to build focus, try selecting a specified target group so its needs are better responded to.
The strategies of competitive advantage building aren’t limited to businesses only. Rather, countries can also establish a competitive advantage by employing various practices that can help them stand apart in the world. A good example of a country with a competitive advantage could be China. With low-cost products, while maintaining quality, the country’s export has turned it into a financially independent and well-equipped power.
Other examples are India, Japan, and the U.S.A, using cost leadership, differentiation, and innovation, to create a sustainable advantage over others.
Individuals can also achieve their career goals better using the strategies of competitive advantage. Your chances for a new job increase by targeting the right kind of employers and differentiating yourself as a candidate who can provide value to the organization. Try voicing your benefits for the company with clarity in your resume, interview, and your persona and you’ll surely have an advantage over other candidates.