Most people understand the key to gaining a competitive advantage is to outperform the competition. But the bigger question is what is the secret to achieving a sustainable competitive advantage?
Simply put, there are no mysteries or secrets to gain a sustainable competitive advantage. It’s simply a matter of doing what it takes to outperform the competition.
In this day and age, it’s inexpensive to launch a business. In all actuality, you can launch a start-up company with no money. This is why most markets are crowded and nearly every business environment is competitive.
The fact is that small businesses in the United States account for almost all businesses in the business sector. According to the Small Business Administration, small businesses accounted for 99% of U.S. businesses in 2019.
Therefore, if you own a small business, you must find effective ways to compete. More specifically, 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 Sustainable Competitive Advantage?
A competitive advantage can be defined as, a set of marketing tools and techniques that companies utilize to improve their 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 to 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.
How 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 was 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 Customers Happy
- Examine and Study Business Rivals
- Execute Focus Strategy
- Create Unique Products to Stand Out
- Invest and Budget Wisely
- Keep Innovating
- 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 the largest social media network in the world, the most visited website in the world, the first global social network, etc.
While Myspace was reshaping the Internet, a group of Harvard students were cooking up a networking site (Facebook) that would change the world forever. More importantly, Havard students Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Huges developed a social media platform superior to its competitors. Hence, Facebook overtook Myspace in 2009 to become the largest social network to date, with nearly 3 billion active members.
Discover Market Opportunities
Business opportunities are the foundation for 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”. To this end, it is 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 marketing research. Research helps you uncover information about the marketplace. In addition, marketing research supplies you with valuable intel concerning internal elements.
Keep Customers Happy
You have to keep your customers happy to succeed. Even though this sounds like a simple task, many companies fail to accomplish this matter.
As a consequence, customers become dissatisfied customers. F which leads to organizations losing customers or legal problems.
Finding a way to keep customers happy is crucial to success. 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.
There are two possible outcomes of conducting business online. You could either enhance or ruin your online reputation. To improve your reputation,
If you keep customers happy, online users will post positives reviews about your business or like, subscribe, share, retweet, repost, etc. Therefore, it’s essential to keep customers happy. Conversely, if customers are unhappy they will post negative reviews about your organization. Most of us have viewed consumer complaints on the internet. Hence, you must keep customers happy.
The one word to explain the marketing strategy would be “longevity”. An effective strategy focuses on longterm strategies. B Too keep customers happy, you must understand their needs and wants. Understanding the needs and wants of customers is one of the first steps in developing your marketing strategy.
It’s 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.
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.
Identifying 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 from 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
The focus strategy is effective by nature. It consists of tailoring a product or service to smaller groups of customers within a target market. The process involves the introduction of a unique product or service in a niche market. Businesses that properly execute the focus strategy attain success at a higher rate. This is due to the fact, the focus strategy helps companies deliver what customers expect. Consequently, they’re able to develop long-term relationships by establishing trust.
Create Unique Products to Stand Out In the Market
A differentiation strategy is a strategy that aims to distinguish an organization’s products or services from its competitors. This strategy single handily enables an organization to stand out from its rivals. The process involves an extensive amount of research. Strategic research is needed to develop and design creative ideas. The three areas in which you can differentiate your business from your rivals include:
- 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 to 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 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. This means innovating and staying up to date developing new concepts and material.
The 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 established for awhile.
Nevertheless, if someone has access to wholesalers, your business can benefit from the cost management strategy no matter what.