Most individuals understand outperforming competitors is the key to gaining a competitive advantage. But the bigger question is what is the secret to gaining a sustainable competitive advantage?
Truth be told, there are no secrets or secrets to gain a sustainable competitive advantage.
In this day and age it’s inexpensive to launch a business, as you may already know. In all actuality, you can launch a start-up company with no money these days. As such, nearly every business environment is competitive.
The fact is, most businesses in the United States are small businesses. In 2019, small businesses accounted for 99% of U.S. businesses according to the Small Business Administration (SBA).
Given this information, it’s critical to find ways to gain a sustainable edge over your rivals. This way you can boost sales, generate leads or increase your revenue. Consequently, your business can excel and dominate the marketplace.
What is a Competitive Advantage?
A competitive advantage can be defined as: A set of marketing tools and techniques that companies utilize to improve their overall business. These tools and techniques give organizations the ability to pursue their target audience, and outperform competitors in the marketplace.
A competitive advantage is not an action that can be taken, rather it’s something that’s gained.Dejuan Jones
Competitive Advantage vs Sustainable Competitive Advantage
The competitive advantage refers activities that organizations perform to outperform competitors.
Similarly, a sustainable competitive advantage also refers to methods businesses execute to outperform rivals. A sustainable competitive advantage, however, means gaining a long-term advantage over the competition, i.e. years, decades or forever.
What’s the importance of gaining a sustainable competitive advantage? For starters, keeping your company in business for the long haul is the main objective of gaining a sustainable competitive advantage.
Have you ever heard the saying “there is nothing new under the sun”; it means that everything that exists has been done before. In other words, there are companies that are currently based in every market. Given the information, you need to find strategies to stand out in the market or find ways to outshine your rivals.
Ways to Gain a Sustainable Competitve Advantage
Developing a competitive advantage is not an easy task, let alone gaining a sustainable competitive advantage. If gaining a long-term advantage were an easy task, most organizations would opt for it.
Nevertheless, many companies spend a lifetime trying to outperform the competition. But where these companies fail you can succeed. Here are the key ingredients for gaining a sustainable competitive advantage:
- Discover Market Opportunities
- Keep Your Customers Happy
- Examine and Study Business Rivals
- Execute Focus Strategy
- Create Uniuqu Products to Stand Out
- Make Wise Investments
- Develop a Cost Leadership Strategy
Think about companies or entrepreneurs that have succeeded in the past. As an illustration, Myspace was the top social media platform with over 100 million active members in 2004. They took the industry by storm and dominated the social media industry from 2005 to 2008. Over this course of time Myspace accomplished several accolades including: largest social media network in the world, most visited website in the world, first global social network etc.
While Mypace was reshaping the Internet, a group of Harvard students were cooking up a networking website (Facebook) that would forever change the world. More importantly, Havard students Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Huges were developing a social media platform that could outperform the competition. Consequently, in 2009 Facebook surpassed Myspace becoming the largest social media network till this day reaching almost 3 billion active members.
Discover Market Opportunities
Identifying new market opportunities is the cornerstone of growth and development. The most successful businesses evolve at some point in time due to the fact the market is constantly changing, “chickens one-day feathers the next”. For this purpose, it’s important to conduct market research to identify opportunities.
By the same token, discovering opportunities within your organization can also help your business prosper. Typically, this is done by making changes to the internal business environment. For example, you can purchase better equipment to increase production.
The most effective technique for this process is market research. Research helps you uncover information about the marketplace and your competitors. In addition, market research provides you with internal information.
Keep Customers Happy
Satisfying the customers is definitely a simple task, however many companies fail to accomplish this matter. For the most part, this leads to dissatisfied customers, resulting in organizations losing customers or legal issues.
As an association, it is important to understand that we live in a digital world. Individuals use the Internet for many purposes like buying products and services, finding information, and more importantly, communicating.
There are two possible outcomes of conducting business online; your online reputation will be enhanced or ruined. If you keep customers happy, online users will post positives reviews about your business or like, subscribe, share, retweet, repost etc.
Conversely, if customers are unhappy they will post negative reviews about your organization. Most of us have viewed consumer complaints of the internet.
Finding a way to keep customers happy is a key factor to gaining a sustainable competitive advantage. Therefore, it is vital to focus on understanding what customers need and build long-term relationships. Consequently, your business will sustain itself through ups and downs.
Examine and Study Business Rivals
Who are your competitors? Your competitors or business rivals are companies or individuals in the same marketplace as yourself. Nonetheless, it’s important to discover who is on your side and who is against you.
Identiying your competitors enables you to discover your allies and rivals. Your allies are the organizations that want to see you win. The allies usually share authentic information. Typically, these companies have been in competition with your rivals for awhile.
Rivals are organizations that typically do things that stop you moving forward. Normally, these companies have larger budgets so you can’t try to compete financially. Therefore, it’s vital to find alternative approaches to compete.
Identifying the target market involves classifying the audience likely to purchase your product(s) or services. It involves segmenting current customers and potential customers.
Identifying the target market is a crucial process. To be honest, many components of the marketing plan depend on successfully identifying the target market. Elements like the pricing strategy, marketing mix and growth strategy just to name a few.
Execute Focus Strategy
A focus strategy aims to target a smaller market opposed to the entire marketplace. Typically, the focus strategy helps newbies and startup companies.
The most successful companies deliver what the customer expects. In general, these companies are willing to solve the problems of customers at anytime. Consequently, they’re able to develop long-term relationships by establishing trust.
Hence, you can attain success by simply improving relationships with customers. In fact, one of the main goals of a strategic marketing plan is developing a better understanding of customers.
Create Unique Products to Stand Out In the Market
The differentiation strategy involves focusing on strategies to distinguish an organization’s products or services from its competitors. This strategy single handily enables an organization to stand out from their rivals. The process involves an extensive amount of research. Strategic research is needed to develop and design creative ideas.
There are three areas in which you can differentiate your business from your rivals:
- Products — offer customers unique goods or merchandise
- Pricing — establishing a price your competitors can’t match
- Organizational — offer services that are unachievable
A successful differentiation strategy identifies strategic methods to provide customers with unique products and services.
Invest and Budget Wisely
Every organization must have cash flowing in order earn profits. In business, “it takes money to make money”. However, you need to invest wisely to avoid financial setbacks. Therefore, it’s advised to perform marketing research to identify profitable ventures.
The term investments also refer to investments in physical products and technology. You can invest in professional development seminars, training employees and managers.
Innovating and staying up to date implementing new concepts and material. Innovating is a process that should take place throughout the lifespan of a company. You should always search for better business solutions and the needs in your respective marketplace.
Value proposition is a term you want to get familiar with while developing your competitive strategy. The term value proposition means a promise of value to be delivered, communicated and acknowledged. In other words, developing a product or service that serves value to customers.
Develop a Cost Leadership Strategy
Cost leadership is a pricing strategy that involves listing your product(s) and services for the lowest price. However, for this model to work, your company must have the ability to operate at a lower cost than your competitors.
In addition, your product(s) must hold value to attain success, therefore, you must produce products that are equal or better than items in your respective market.
The cost leadership strategy allows organizations to present competitive prices to the target market. Truthfully, it’s one of the most effective methods to achieve a sustainable competitive advantage; because your organization can beat every price in the market.
For the most part, the cost leadership strategy is only effective for companies that have outperformed their competitors. Or businesses that have been established for awhile.
Nevertheless, if any have access to wholesale distributors; your business can thrive from the cost leadership strategy no matter what.