Did you know that 410,348 businesses forwarded their applications to commence operations in June alone? Add that to the number of businesses that are currently in operation. It’s hard not to admit to the palpability of the competition that you’re looking at.
Perhaps now is the time to ask yourself, “what is a competitive advantage?” Competitive advantage in businesses is what sets you apart from the rest. Essentially, it guarantees that your operations will remain a concern with a healthy market share.
To gain a competitive advantage, you must first understand what it means. Here’s the breakdown.
What Is a Competitive Advantage?
These are all the factors that ensure you produce superior services to your rivals. In addition to goods and services being superior, they are also affordable. The factors increase your sales revenue and margins because of the significant market share you command.
Value is central to understanding sustainable competitive advantage. Before introducing any product to the market, you must ask yourself this question. Does your product have a real benefit that your targets need?
A positive reply to the question generates demand for your offerings. However, other businesses might also join in the scramble for your market. You’ll need to turn to other sources of competitive advantage to maintain and expand your market base.
You can improve your business’s customer experience or offer your products at a price that the competition can’t match. The goal is to provide something that makes customers choose your establishment over the others on, say, Google maps ranking.
Types of Competitive advantage
Cost leadership is perhaps the most common type of competitive advantage. It’s the lower pricing of products and services due to operational efficiencies. Businesses pass on the expenses they save from increasing their efficiency to their customers through cheaper pricing.
Differentiation is also common, especially when cost leadership isn’t attainable. It entails making your products unique in terms of appearance or quality. Differentiation conditions clients to associate your product with status in most cases.
Focus is another form of competitive advantage that you can gain from niche markets. In this strategy, you identify needs that other businesses are not willing to meet. Then you research the need to get a thorough understanding of how you can meet it.
The good thing about the focus strategy is the higher profit margin it generates. Clients wouldn’t mind paying a premium for a service they can’t get elsewhere, yet they crave it. You won’t have to battle for the attention of your clients too much since niche markets have minimal competition.
Rise Above the Rest
Every day, someone somewhere opens up a business that’s similar to yours. This means you have to double your efforts to retain your market share. But why expend all that energy when you only need a little competitive advantage?
The answer to what is a competitive advantage is now clear. Strive to gain it. Discover more articles by browsing through the website.