EFFECTIVE STRATEGIES FOR ACHIEVING A COMPETITIVE ADVANTAGE IN BUSINESS

What does your business have or provide to make it noticeable to both customers and competitors? Whatever it is, that's your competitive advantage. Having it is like standing on a podium that makes you easily visible. The higher the podium, the better you'll be seen.

Since every business wants an edge over their counterparts, it's important you know some effective strategies that can get you the results you need when we talk about this concept.

In the course of this article, you also learn what competitive advantage is and why it's important you gain it in your business.

What is a competitive advantage?

Competitive advantage refers to the set of unique features or offerings that you have and can use to compete against your competitors in the marketplace.

Whatever you have as an edge over your competitors in the industry or marketplace is what we can generally refer to as your competitive advantage. It could be having a better pricing strategy, leadership agility, better customer service, branding, or market positioning, just to name a few.

As Jack Welch, former CEO of General Electric, points out, "If you don't have a competitive advantage, don't compete."

The relevance of having a competitive advantage is that it allows your business to make more profit, gain more market share, gain customer loyalty, etc.

The more intentional you are with your advantage over your competitors, the better your chances are of excelling in the marketplace.

Why is Competitive Advantage Important in Business?

It's a bit obvious that every business wants to offer their customers the best so as to gain their loyalty. This loyalty drives businesses to seek out what advantages they can have to make them the go-to business for the products or services they offer.

So we can generally agree that competitive advantage is good for any business, and here are some other reasons why it's important to you:

1. Better profitability

Having a competitive advantage in the marketplace can bring you a better profit, for sure. On most occasions, your profitability goes a long way toward demonstrating your customer base and their patronage.

This is because it is through their patronage that money comes to your business. So, the more patronage you gain from them, the greater your profitability.

You should also realize that this will happen when you offer something unique that your competitors do not. The more you make use of your competitive advantage, the more profits you'll make as a result.

2. Large market share

Market share describes your influence in the market space. Just as Apple has a large market share in the technology space because of the company's competitive advantage, so too can its effect on you once you harness your own.

In the words of Elon Musk, CEO of Tesla and SpaceX, "If you're entering anything where there's an existing marketplace, against large entrenched competitors, then your product or service needs to be much better than theirs. It can't be a little bit better, because then you put yourself in the shoes of the consumer and they say, 'Why would you buy it?"

By doing more in terms of products and services than your competitors, you'll gain the loyalty of your customers, and your market share will inevitably increase as well.

3. Attractiveness to Investors

Attracting investors to your business is also an effect of having a competitive advantage.

It is true that having a solid advantage to compete against competitors not only attracts customers but investors as well. A profitable business speaks for itself and can be very attractive.

As Warren Buffett, CEO of Berkshire Hathaway, puts it, "The key to investing is not assessing how much an industry is going to affect society or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."

This is what will attract the attention of investors to your business. Once they realize that your business is very profitable, has a wide customer base and loyalty, and has a stronghold in the marketplace, they'll invest in it.

Effective Strategies for Achieving a Competitive Advantage in Business

In the words of Michael Porter, Professor at Harvard Business School, "Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value."

This therefore points in the direction of businesses having effective strategies that can help them achieve a competitive advantage in the marketplace. The following are seven strategies you can use to do so:

1. Cost leadership

On most occasions, the prices of products and services are grossly influenced by the cost of production, mobility, warehousing, etc. If this is reduced, then prices will also drop, which will have a great influence on the price-sensitive target audience.

By working to reduce costs within your industry, you could take the lead in the marketplace. By embracing cost leadership, you'll be crafting a strategy that gives your business a competitive advantage over the competition.

To achieve this, you need to pay attention to efficiency and effectiveness in the production process, trying to cut unnecessary waste that affects your overall cost.

2. Differentiation

In the words of Indra Nooyi, former CEO of PepsiCo, "The companies that win big are those that are able to differentiate effectively."

If you want to win big in the marketplace, then you must consider being different. You cannot offer the same things your competitors offer in the same way they do and expect to stand out.

Your competitive advantage has to spring from your uniqueness in the marketplace.

"Difference" is key in the world of recognition; therefore, you must find the features, styles, or methodologies that your products or services have and that, when you reveal them to the world, will give you the edge that you seek.

3. Innovation

Innovation births competitive advantage across all industries, whether products or services.

As Steve Jobs, co-founder of Apple Inc., puts it, "Innovation distinguishes between a leader and a follower."

It puts you in a position of leadership for others to follow.

By encouraging an innovative culture within your business, investing in research and development, prioritizing creativity, and embracing emerging technologies, just to name a few, you can come up with ground-breaking innovations that put your business ahead of the competition.

This is what your business needs, and with commitment on your end, you and your team can make it work.

4. Focus strategy

To come on strong in the marketplace and to stay ahead of your competitors, you've got to have a focus.

You need to know exactly what you're offering, to whom you're making your offers, and where you're making your offers.

According to Larry Page, co-founder of Google, "lots of companies don't succeed over time. What do they fundamentally do wrong? They usually miss the future. I try to focus on that: What is the future really going to be? And how do we create it? And how do we power our organization to really focus on that and really drive it at a high rate?"

By having an exact focus on the demographic you want your products or services to cater to and knowing what they love best, you can consistently improve to meet their needs.

5. Operational excellence

Operational excellence speaks of optimizing the internal processes of your business with the least amount of time and cost.

Standing out from your competitors will require that you pay attention to your workflow, streamline operations, thereby eliminating waste, and leverage new technologies to make the major processes in your business more efficient and productive.

By maintaining operational excellence, you'll make better and more informed decisions that influence your business and, by extension, your customers too.

6. Customer intimacy

Having a strong customer relationship is a sure way to achieve a competitive advantage over your competitors. Your customers are very important as far as your business is concerned.

As Howard Schultz, former CEO of Starbucks, puts it, "Customers must be at the center of everything you do."

Making them the center of your business will require that you provide a personalized customer experience, excellent customer service, a proactive support team, etc.

These can help you build intimate connections with your customers, which in turn can make them loyal to your business.

7. Strategic partnerships

Sometimes, you may need the alliance and partnership of other businesses in order to gain a competitive advantage over your competitors.

They can be instrumental in the success of standing out among your competitors. Some partnerships can offer complementary skills, ideas, and resources that you need to make the shift in your business.

By collaborating with them, you can leverage their strengths, resources, and ideas that can help you achieve your goal.

Conclusion

Understanding the impact of having a competitive advantage in your industry is essential to your long-term sustainability and relevance.

By applying the strategies of focus, innovation, differentiation, customer intimacy, etc., you will surely put your business in the best place for discovery, recognition, patronage, and loyalty.