In today’s challenging economic times, it is more crucial than ever for companies to maintain their competitive advantage, ensuring their business continues to thrive and remain viable. However, trying to stay ahead of your competition isn’t easy and requires a focused approach. Today’s post discusses implementing strategies that can help build and sustain competitive advantage, giving you the edge you need for success.
Above, you see an example of a benchmarking tool used to help identify your competitive advantage against others in your market. Benchmarking is a critical element in differentiating your products and identifying competitive advantage. So, let’s start by looking at the concept of competitive advantage.
The concept of competitive advantage
Competitive advantage refers to the ability of a company’s products (both goods and services) to outperform the competition on some aspect that matters to customers and prospects. It sets your company apart from others who compete for your customers and gives them a reason to buy your product over those provided by your competition. A sustainable competitive advantage is one that persists over time. Thus, price isn’t a great tool to build such an advantage since others in your market easily copy it unless you can offer cheaper products because of your business model. For instance, Walmart undercuts prices offered by competing retailers due to their volume, allowing them to buy resale products at more favorable pricing from manufacturers.
Below are aspects of a product that provide sustainable competitive advantage:
- product attributes, especially when supported by patents that limit the ability of competitors to copy your products
- buying power or other factors that allow you to sell at a favorable price
- brand reputation and customer loyalty
- superior service and an excellent customer experience
- information, such as a deep understanding of your customers and prospects
- extensive brand awareness
When your company is performing well and is a leader in its field, it is easy to think you can rest on your laurels. It’s happened so many times across different industries we even have a name for it — marketing myopia. The essence of marketing myopia is you fail to consider how environmental changes might impact your competitive advantage. An extreme example of this is when existing modes of transportation thought of airplanes as novelties rather than a threat to their very existence. This complacency nearly cost the train business everything and required a federal bailout to avoid collapse.
If your business enjoys success and runs smoothly, congratulations but don’t be tempted to continue doing everything exactly the same and hope to maintain the status quo. While it is excellent news that you found a formula for success that works for your business, this mustn’t lead to complacency. No matter how big your current market share is, there is always room for improvement, and there will always be opportunities for your business to develop and grow. So, ensuring that the day-to-day running of your business continues to operate effectively is essential. Still, it is crucial to keep innovating and looking for better solutions to stay ahead of the competition by constantly ensuring your sustainable competitive advantage continues.
Actionable strategies to ensure sustainable competitive advantage
Here are some actionable ways you can keep your business thriving while ensuring it maintains its competitive advantage:
Invest in your people
Your business needs the best team possible to stay competitive, which means constantly upskilling them with what they need to excel in their roles and motivating them to do their best. The quality of your employees and the skills and knowledge they bring to your workplace has a significant impact on your business’s performance and how well it fares against the competition. Ensuring that you hire the best candidates to fill your positions in the first place and that you can retain these staff members helps your business thrive.
But, retaining your best employees so that you can maintain your competitive advantage isn’t easy. Senior staff members may be headhunted by the competition and take their experience and knowledge with them when they leave for greener pastures. Investing in your employees and providing them with a clear route to advancement within your company helps you secure your staff and reduce attrition.
Investing in your people also means recognizing and rewarding their contribution toward reaching your goals with the right compensation packages and the right management style. Offering flexible schedules, providing a good work/life balance, allowing employees real input into the company’s direction and how to achieve goals, and utilizing coaching management styles rather than bogging workers down in stifling bureaucracies helps you get the most from your staff.
You need the best people on your side for your business to continue evolving and find newer and better ways of doing things. With the help of a strong, loyal team, your business can achieve so much more.
Keep innovating
Continuing to evolve your business and develop new products is essential to stay ahead of your competitors. Doing product research and development as a priority is crucial to ensure that you continue to deliver industry-leading products to your target market before your competitors. But to ensure your new products beat the competition, you need to move quickly and get them to market as soon as possible without compromising on their quality and performance. Working with an organization such as MRIGlobal on the research and development of your product is an excellent way to expedite your path to market.
However, innovation for the sake of something new has no value in the marketplace. Consumers don’t buy products; they buy solutions (a truism I’ve shared many times on this site). To achieve competitive advantage and keep it means solving their problems in a novel way or doing it better than the competition. Developing new products without a market is putting the cart ahead of the horse, which never works.
Many pain points in the research and development of the product you can’t solve in-house benefit from the help of expert engineers and marketers with experience in bringing new products to market. This enables you to free up your time to continue generating product ideas and staying at the cutting-edge of the industry.
Differentiate your business
The term unique selling proposition (USP) is a well-worn phrase in marketing circles, but it remains highly relevant. Despite sounding like another jargon term, identifying your USP is essential to helping your company succeed against the competition. Having a USP means that your business won’t simply blend into the crowd and get lost among the many other similar companies offering identical products. If your business operates in a particularly saturated market, it is especially crucial to differentiate your products from the competition in a way that provides unique or superior benefits to a defined target market.
Identifying the unique features your products offer that the competition can’t match and then making these the focus of your marketing efforts adds value to your products over and above your competitors.
Build your brand
Even if your products are nearly identical to your competitors’ offerings, you can ensure yours stand out by differentiating them and building a strong brand that aligns with the unique features of your products. For instance, while 2 products might feature identical product attributes, you can establish a USP for your brand to differentiate it from others in the market. Check out this product positioning map (or perceptual map) for the automobile industry, then create a similar one for products competing in your market (using 2 attributes that are hot buttons for your target market) to help you find a differentiation strategy that contributes to success. Then, build a brand around that strategy.
Building a brand offers your business many benefits but is particularly useful when you have many direct competitors. A strong brand makes your products instantly recognizable and adds value beyond the product’s tangible benefits. Understanding your target market and what appeals to them and then developing your branding based on this knowledge ensures your efforts hit the mark. You can then use this to your advantage to build a loyal customer base and keep your business way ahead of the competition.
Conclusion
Creating a sustainable competitive advantage for your products isn’t easy, but you can apply all these tactics and communicate your brand effectively to your target market. Good luck.
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