Introduction
The competitive advantages of one company over others do not always lie on the surface. The signs that distinguish you from your closest competitors in the market may include various indicators, depending on which of them is being compared. Based on this, the competitive advantages of a business can be formulated in different ways. Internal advantages are based on the company’s ability to achieve a minimum cost due to reducing production costs. At the same time, the quality of the product should not be lower than the industry average and, ideally, even higher.
How to Create a Competitive Advantage
Uniqueness is another essential feature of competitive advantage. If a product is unique, it has every chance of becoming unattainable to other market players. It is good if the competitive advantage will be difficult to copy and, at the same time, have reliable legal protection (Keskin et al., 2021). Otherwise, it can be replicated by other companies; as a result, its effectiveness for the pioneer firm will decrease dramatically. The target audience should highly value the competitive advantage of the service or product.
If low cost leads to a decrease in quality indicators, it is possible to sell such a product only by significantly reducing the price and, accordingly, the share of profit. In this state of affairs, cost reduction does not lead to a competitive advantage. It can be obtained if the company achieves high productivity while reducing costs (Samsir, 2018). At the heart of this type of advantage are those properties of goods or services that they favorably differ from similar products of other market players and constitute an increased customer value. Thanks to these qualities, the company can sell its product higher than competitors whose products do not have such unique properties. The set of methods used in the course of ensuring competitive advantage depends on which factors will be chosen by the company to achieve its goal.
For example, a product may cost less than its analogs, which will be a sufficient reason for most consumers to prefer it. Often, a low price in itself is a reason for making a spontaneous purchase. The product is purchased not because it is needed now but because of its minimal cost. Secondly, differentiation can contribute to the competitive advantage of the product. It means that the product has special characteristics, which makes it desirable for the buyer. At the same time, the consumer qualities of the product, including its safety, reliability, and ease of use, may not play a decisive role. Brand promotion, a surge in consumer demand due to the emergence of a fashion trend, and similar factors often lead to competitive advantage.
The third option is to create a competitive advantage for its product through its special position. To achieve this, measures are being taken to monopolize part of the market. As a result, the buyer is forced to purchase the product, being deprived of the possibility of choice (Tarofder et al., 2019). Of course, this situation is not typical of normal market relations with free competition. Still, practice shows that quite a large number of companies are active in such a way as to ensure the competitive advantage of their products.
Conclusion
In conclusion, competitive advantages are differences that make one business more promising than others and, ultimately, more attractive to the client. To gain a competitive advantage in complex industries, improvements and innovations are required — the search for new, better ways of competition and the application of these methods everywhere. Maintaining a competitive advantage for a long period requires improving its sources. Improving the advantage requires, in turn, more sophisticated technologies, skills and production methods, and constant capital investments.
References
Keskin, H., Şentürk, H. A., Tatoglu, E., Gölgeci, I., Kalaycioglu, O., & Etlioglu, H. T. (2021). The simultaneous effect of firm capabilities and competitive strategies on export performance: the role of competitive advantages and competitive intensity. International Marketing Review. Web.
Tarofder, A. K., Jawabri, A., Haque, A., Azam, S. M. F., & Sherief, S. R. (2019). Competitive advantages through IT-enabled supply chain management (SCM) context. Polish Journal of Management Studies, 19, 464–474.
Samsir, S. (2018). The effect of leadership orientation on innovation and its relationship with competitive advantages of small and medium enterprises in Indonesia. International Journal of Law and Management. Web.