Competitive advantage: Why is it a valuable benefit and what are the 5 ways to obtain it?
How can a business be truly successful? By having a competitive advantage that distinguishes it from the competition and sets it apart from other companies.
However, acquiring a competitive advantage is complex for a business since hard work, total dedication, and constant study are among the qualities that will enable it to achieve. Moreover, as soon as the company obtains the advantage, it must continue to work to make it more difficult for competitors to overtake it.
But what is competitive advantage exactly? And what are the five ways a business can acquire it?
What is a competitive advantage?
The competitive advantage is directly tied to the public's adoration and preference for the company's products. Coca-Cola, for instance, has a strategic advantage over its competitors.
Comparative advantage and differential advantage are the two most common competitive advantages.
- Comparative advantage: It is when a firm produces a product or service more efficiently than its opponents, resulting in higher profit margins.
- Differential advantage: It is when a firm's products or services are perceived as being superior to those of its competitors. A differential advantage is driven by sophisticated tech, patent-protected items and mechanisms, better staff, and a strong brand identity. These factors support substantial profit margins and market dominance.
Based on the preceding, a company has a strategic advantage when its products and services grow its market share by increasing efficiency or productivity.
In contrast, to maintain their competitive advantage, companies should choose innovation, dependability, knowledge, and effort to discover what will set them apart from their competitors and make it difficult for them to copy or imitate.
Companies can also use economic trenches, such as strengthening their brand by using regulations to barrier new entrants in the market, and defending their intellectual property, to maintain a sustainable competitive advantage.
How can a business gain a competitive advantage in 5 ways?
If all of the preceding seems complex and demanding, below are five areas companies can base on to gain a strategic advantage and instructions on how to do so.
1. Understanding the competitors
The more a company understands its competitors' strengths and weaknesses, the more it can differentiate itself from them and determine what will make it stand out to potential customers.
How can a company comprehensively, methodically, and without the possibility of error study its competition? The internet is no longer sufficient for the company, so AI and devToM will be implemented.
devToM enables users to stay ahead of the competition, react promptly, and innovate more quickly by identifying competitors' pros and cons! Companies can also plan and design their product following market trends and patents and construct distinctively robust products.
With AI Competitive Analysis reports, users know all market activity, and you can plan product strategy based on real-time data. Additionally, devToM's cutting-edge AI performs a double competitive analysis by examining similar products, projects, and competitors.
In addition, with devToM, users can monitor competitor activity and generate reports based on real-time market data. By developing a solid positioning strategy, businesses can stay abreast of industry trends and forge their course based on them.
All of the above can be accomplished in significantly less time and for a lower cost than would be required for a wholly targeted competitive research without devToM.
In addition, competitive analysis is an ongoing process that should be continued or performed only once. Thus, devToM allows the company to use it continuously and conduct targeted analyses rapidly, as often and whenever it desires.
- 30-Day Free Trial with no hidden fees or credit card required
- Instantaneous and straightforward access; no downloads required
- Each business can add its data to benefit from the free trial period
- Unrestricted access to all devToM capabilities
devToM is an AI-powered platform for Product Development that converts and manages product concepts. It is a SaaS application that enables product intelligence by combining artificial intelligence, unstructured data, and best practices.
Regarding devToM, professionals can rapidly identify risks and opportunities, analyze the market with real-time data, and design innovative products based on market trends. They can also collaborate more effectively with their teams and develop successful products.
2. Cost Leadership
A company has a competitive advantage when it determines the prices of its products and those of its competitors. Therefore, most businesses aim to sell customers low-priced, high-quality products.
However, the lowest price does not guarantee the best results for the company. So, businesses must determine the customers' willingness to pay to find the ultimate price a client will pay for a service or product.
In this way, businesses can maximize profit without losing customers by determining a customer's willingness to pay.
It is crucial to view price sensitivity as a strategic tool in the context of competition. If customers are willing to pay the same price for your products as your competitors, consider how to increase their willingness to pay for yours.
With the knowledge that certain factors may increase customers' willingness to pay, companies can implement strategic changes that give their business a competitive advantage.
The good news is that devToM allows businesses to determine the price of their products, despite the challenges it could face due to the competition.
Differentiation is one of the most fundamental characteristics for a business to gain a competitive edge. Since differentiation will set the company apart from the competition, attract the attention of its audience, and prevent other rivals from imitating or copying it. Innovation is the most crucial characteristic in this area, and the company can be inventive in several areas, including:
- Brand identity
- Customer service
- Color and aesthetics
- Better or cheaper shipping
The good news has not changed! devToM enables businesses to distinguish themselves from the competition and chart their path to innovation while protecting and patenting their products.
4. Attention to detail
The attention to detail pertains to the company's public image. To gain a competitive advantage, a business should avoid scandals, complications, and legal infractions such as penalties, fines, etc.
Additionally, its staff should be appropriately qualified, trained, easily managed, and able to adapt quickly. Finally, the company's good reputation is the ultimate precondition of its continued existence and market leadership.
AI technology safeguards businesses against financial scandals and more.
Cooperating with a competitor and forming strategic alliances with other businesses is the final way a company can gain a competitive advantage. Strategic partnerships resemble joint ventures in that businesses use them to pool resources and increase their visibility at the expense of non-alliance competitors.
However, the company must be cautious not to alter its identity, lose its current customers, or upset its employees.
In the meantime, consideration should also be given to the dissolution of the partnership, both in terms of the company's long-term viability (e.g., whether it will retain the gained audience) and the subsequent relations between the companies, which are now again competitors.
AI and devToM can significantly gain a strategic advantage at the abovementioned stages. However, gaining a competitive advantage is a complex and time-consuming process. So why not take advantage of AI technology's opportunity to simplify it by making the processes above more accessible?
devToM provides a 30-day free trial to test it and enjoy its benefits.
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