Imagine the frustration of entering a store with no clear signage, disorganized shelves, and no staff to guide you. How long would you stay? The same applies to website navigation.
Nowadays, it is difficult to find a business that does not have to compete with other entities operating on the same or similar level. However, this does not mean that starting a company in a popular industry no longer makes any sense. It is quite the opposite! You can develop your company and surpass your competitors if you prepare your business properly. We have created a list that will help you achieve a sustainable competitive advantage.
Competitive advantage – what is it?
A competitive advantage makes a product of one brand more attractive than other similar products on the market. This can be measured in various ways, but the main factor is of course the number of products or services sold.
Examples of sustainable competitive advantage include brands such as: Apple (in the electronics industry), Coca-Cola (in the food industry) or Intel (in the technology industry). You must be aware that every person has a completely subjective opinion, so one business, for example a computer repair service, has a clear advantage in one target group and not necessarily in another.
Is it possible to be perceived as the best company by all consumers around the world and have a global, sustainable competitive advantage? Absolutely not. However, you can take action to ensure that the group of people supporting your brand is much bigger than the one favoring your competitors.
Types of long-term competitive advantage
The basic types of advantage over the competition are:
● qualitative – when the quality of products or services of a given company distinguishes them from those produced by the competitors.
● price – focuses mainly on the attractiveness of the prices of products and services.
● informative – when information is used as a tool to influence the formation of preferences among consumers. It can also be a complementary tool for a qualitative and price advantage.
Benefits resulting from competitive advantage
Are you wondering what are the biggest benefits of having an advantage over the competition? There are quite a lot of them. Here are the ones that stand out the most:
● Overall growth of the company – sustainable advantage over competition means you can attract more customers and thus grow continuously.
● Development of the company – on the offer, image and financial level.
● More sales – company consistently outperforms the competition until it reaches the expected level instead of achieving a one-time revenue increase.
● Increased market share and easier access to new markets – for example Primark, which was so famous in the UK that it is now easily conquering other markets.
● High consumer satisfaction after shopping, and thus increased customer loyalty towards the brand.
● The long term position of an expert in a given industry.
● Increase in the value of the company on the market.
● Gaining a positive brand reputation.
Must every firm strive for a sustainable competitive advantage?
You are probably wondering if being an industry leader is necessary. Of course not! There is no need to fight for the first position in your industry if you do not need more income, and you are satisfied with the development of your company. Of course, a sustainable competitive advantage provides some stability and a buffer of safety, but it does not mean that every small company should strive to achieve it or perceive it as the only determinant of business success.
So remember to plan your activities carefully and keep your business goals in mind. Perhaps a better solution for you would be to remain a small, local business that generates average revenues, but carries the burden of leadership responsibility? Many businesses operate on a small scale and their owners are satisfied with their performance and full customer satisfaction. You can be one of them as well!
12 steps to achieve a sustainable competitive advantage
If you decide that you want to gain a sustainable competitive advantage and the constant growth of your company is something you dream about, then these twelve tips will help you plan and achieve that goal!
Carefully analyze your product/service
Sustainable competitive advantage is achieved primarily with a good product or service. Great marketing, thoughtful communication and taking care of the customer needs are extremely important aspects, but before you start dealing with them, make sure that the quality of what you offer is at the highest level and meets the needs of the target customer. This might seem hard to believe for you, as you probably know plenty of mediocre products or not very polished services that have a large market share. Take into account that this is your subjective assessment, and you should perform a more extensive analysis.
For example, one of the products or services that you buy is actually not the best choice from your perspective, but for people who have less financial resources and usually reach for the cheaper option, it may be the best quality for the price they can pay. Many companies that have great marketing and a slightly weaker product actually gain a large group of new customers at first, but then those customers do not come back, so their competitive advantage is only temporary. In addition, this lack of quality negatively affects the brand reputation, so that after a while even new customers stop buying from them.
Perform quality tests that answer key questions
For this reason, before releasing your “child” into the world, you should perform reliable quality tests, provide the product or service to a group of customers who will express their opinion, and ask for professional analysis by experts in a given field. Doing so will give you confidence that every detail will be refined, and the product will deserve to be called the best in its segment.
Are you not convinced? Imagine your business focuses on selling sustainable baby clothes. You have decided to introduce new sleepers to your offer. The material is nice to the touch, has the necessary certificates, the cotton comes from sustainable crops, the seams are durable, but… suddenly, you get a lot of returns, and negative opinions are pouring out like water from a broken bucket. You realize that you have completely forgotten to pick the right buttons! Instead of those made of recycled plastic or wood, you choose low-quality plastic that breaks after a few uses, and is not very eco-friendly. While the overall product is great, that little thing like buttons can alienate your customer, who is sensitive to such things.
Identify the core competencies of your company that makes it stand out from competitors
A company’s core competencies are those skills that set it apart from competitors and allow it to do certain things better than any other company. With this valuable information, it will be much easier to gain a long term competitive advantage because you will have solid arguments and data to back them up. At this stage, it is also advised to answer the question of what is the superior value of your business.
Perform a thorough competitors and market research
Market research, both in terms of emerging products and services as well as existing competitors, is extremely important. You need to know what has already been offered to consumers in order to be able to surprise them with a better version of a product or service they already know, or simply focus on innovative elements in your communication. In addition, it is also a good idea to analyze customer experience among people who buy from other companies to learn what is worth implementing and what to avoid if you want to increase brand loyalty.
Lay the foundation for marketing activities
Once the product is refined, it is time to move on to its promotion. Good promotion and communication is the basis for achieving a sustainable competitive advantage. There are many things to remember.
1. Develop your brand’s mission carefully
The brand’s mission is definitely important. It determines the core of activities and becomes a kind of guide for all people who are associated with the company. In addition, potential customers need to know and identify with your mission in order to love your products and then maintain brand loyalty. The mission may be, for example, to bring a smile and entertainment to a customer or to serve only healthy meals that help prevent civilization diseases. Many companies have achieved a sustainable competitive advantage precisely because of a well-crafted mission that captured people’s hearts and brought them tangible benefits.
2. Break down your marketing goals
Creating a proper marketing plan will be impossible without outlining its purpose. It is worth following the principle of getting to “know me”, “like me”, “trust me”, “buy from me” when setting marketing goals. At the beginning, you have to build brand awareness, then positive associations that clients make with the brand, this will earn you their trust and enable you to increase the sales.
Remember to break down each step very thoroughly. For example, with the “get to know me” part, it will be necessary to perform tasks such as: designing marketing one pagers, creating profiles on social media platforms, advertising via Google Ads, presenting yourself at business fairs and so on. In the case of trust, it is more about building customer loyalty – they will come back if your offer is the best.
3. Create a buyer persona
Knowing your target audience will enable you to communicate what you have to offer much more precisely. Creating products that will delight your clients will be possible only if you know who they are. Use the market research done earlier and the analysis of what customers use products or services offered by your competitors.
4. Create guidelines for communication
The way you communicate with people who deal with corporate culture on a daily basis and a group of heavy industry workers will be completely different. You need to adjust the language and form of communication to your target audience needs. If they are busy entrepreneurs, the messages should be short and substantive, if they are students, you can allow yourself to use a bit of humor and much looser language. Sustainable competitive advantage is achieved to a large extent by the appropriate means of communication, so this element should be constantly analyzed. Otherwise, your competitors might steal your customers.
5. Choose your broadcast channels
It is important to remind your customers about the existence of your brand. This kind of communication must be very thoughtful, otherwise your clients might feel harassed. Companies that spam their customers with new offers all the time are not well perceived, that is why balance is important. Choose a few platforms on which you will advertise, as well as a few on which you will be active. You should focus on TikTok and Instagram if your target group consists mostly of a younger audience – focus on Facebook and YouTube if you want to reach older clients. Be sure to also analyze the sales channels. This is also where market research and competitors analysis come in handy.
6. Create a team that will deal with individual segments
It is extremely important for the marketing team to know the brand’s mission in-detail, understand it and be consistent with its implementation. Only then will your advertising activities be at the highest level. You should keep in mind that one person will not be able to do everything, so it is worth dividing activities into segments, such as work coordination, social media support, consulting, analysis of competitors’ activities, customer experience and data analysis, online advertising, etc., and then assign individuals to them.
Build relationships and brand loyalty
You need to develop relationships with customers if you want to build a sustainable competitive advantage. Why? It is much easier to sell something to people who trust a given brand, know its offer well and simply sympathize with it, than to people who see the company’s products for the first time. So start by building brand awareness, show the inner side of your business, be visible, answer questions from potential customers and try to create an impression of accessibility. Do not bombard users with ads and content, but be visible and remind them about your brand, or your customers will be taken over by the competitors.
Thoroughly analyze every business decision
Thoughtful business decisions are the key when it comes to gaining a competitive edge. What do we mean by thoughtful? The problem that many companies have, although they put a lot of time, money, creativity and commitment into creating ads, is that they do not generate sales, while their competitors make all the money. This is most often due to the fact that the chosen method of communication does not reach the target group of a given brand and makes their customers’ experience unpleasant.
For example, if you run a restaurant and it serves business customers, it is not the best idea to publish funny TikToks in which you are dressed as a dinosaur. In this case you need a serious, professional message that will build you a sustainable competitive advantage over your competitors and ensure a positive customer experience.
Establishing cooperation with other brands that have completely different goals and values is yet another example of ill-considered decisions. As a result, not only the finances of both brands involved in the cooperation suffer, but also their image. To make sure your company consistently outperforms others you need to constantly analyze and learn from the result of every action you take.
Offer a lower price than your competitors
Pricing power is another essential element to analyze. The price of products or services has a huge impact on sustainable competitive advantage. You should consider lowering the price of a product only if you can afford to keep its quality at the same or similar level. Money is one of the most important factors in the decision making process for many consumers, so this strategy will definitely work. However, remember never to lower the price at the expense of product quality.
Let’s use baked goods as an example. As the company owner, you can decrease their price if you find a vanilla supplier who will offer you lower prices for their products. On the other hand, if you find that to make your baked goods cheaper you have to replace the real vanilla from Madagascar with vanilla sugar, then the cake is not worth the candle, because customers will notice the difference in taste and their customer experience will be far from what they expected.
For companies that offer services such as copywriting or online marketing it is easier to reduce the price because of the low cost advantage of such businesses. Remember not to lower the prices too much and do not forget that your operating costs include all taxes, various bills and, of course, your time and skills.
The big advantage of using the price reduction strategy is the increase in demand for your product or service, in accordance with the rules of the free market. Thanks to this, you can see a significant increase in profits and stay ahead of the competition. You have to calculate such decisions well, because it may turn out that the profit will barely cover the costs of operation and the business will no longer be profitable.
Make sure your products are unique
Uniqueness of products and services is one of the factors that can make you a leader in your industry. You will easily take the lead if you are the sole provider of a product or service. It is especially easy when you are in a specific niche where the competition is not fierce. When it comes to some types of businesses it might be difficult to come up with something completely innovative. In such cases you should focus not so much on the unique product as a whole, but on the uniqueness of its main components, or on providing an extraordinary customer experience.
For example, as a florist, you should sell flowers that are difficult to obtain, imported from distant corners of the world or dyed in unusual colors. This will give you a competitive edge over those who offer compositions made with seasonally available plants.
If you offer consulting services, prepare your reports in an unprecedented, simplified version, which will take your clients only a few minutes to review. Thanks to this, their customer experience will be at a higher level, and you will gain the interest of all those people who are always in a hurry.
You can establish better profit margins when your business offers something different than the competition, as customers will choose your products because of their uniqueness, not price.
Build a committed team that will develop sustainable competitive advantages
A team that knows the company’s goals, its business model and strategy is a very important element when it comes to building the brand and achieving a sustainable competitive advantage. It is essential that the people you employ are engaged and want to develop your brand as much as you do. Remember that every member of your crew is important – from people working at the reception, through the marketing and sales department, to the managerial staff. Their motivation to work will be constantly at a high level if you make sure they feel appreciated. It is also important that the team is managed by a person who knows how to do it, has well-developed soft skills and is good at making decisions.
Efficiently adapt to the current trends
Quick adaptation to trends is a must have when it comes to achieving a sustainable competitive advantage, whether you offer products or services. Imagine how the world looked twenty years ago. No one even thought that one day we would be able to listen to books or have a small electronic device in our pocket that could hold thousands of them at the same time. Today, ebooks and audiobooks are nothing unusual and every publisher offers them to their customers. If those who were active on the market several years ago had not followed these changes, they would probably have been out of business a long time ago. Constantly introducing new products and staying ahead of the competition in this regard is extremely important if you want to maintain the high level of your brand’s value.
Use the company’s strategic assets
If your company has beneficial strategic assets, such as a technology patent, intellectual property, or copyright to a product, you can treat this as an element that will significantly strengthen its position in the industry. It is an advantage based on something that others cannot have. Of course, you have to be aware that when another brand releases a more advanced technology, you may lose your leadership status. However, this is just another motivation to continue to develop your business and introduce newer options.
Take care of cash flow
Companies where the budget is quite large and cash flow is a natural phenomenon, have the opportunity to make much more risky decisions and implement a much more elaborate strategy. They are also more stable in a larger market and have the ability to develop faster, so their value is constantly growing. It is therefore worth gathering resources first, and then trying to gain an advantage in the market. Keep in mind that high budgets are the domain of large businesses, so do not give up if you are just starting out with your product or service and do not have the opportunity to increase it.
We hope our article will help you achieve a sustainable competitive advantage and achieve the long-term success your business deserves. If you want to know more about building successful companies, be sure to check out our blog and read articles such as brand audit checklist. You can also use our brand strategy consulting service. We will be happy to have you as our client!
