5 Ways Your Business Can Gain a Competitive Advantage
Want to be a competitor in your industry? Find out the five ways that your business can achieve this.
Having a competitive advantage is important because you want your company to thrive. This can be a result of products or services being unique and difficult for competitors to replicate. By doing this, you can generate value for your company and consumers.
Here are 5 strategies you can implement to gain a competitive edge in your industry:
1. Cost Leadership
Being a cost leader means your business has the objective of creating more value for customers by having lower prices. You can achieve this by improving operation costs or through the mass production of goods that reach economies of scale. The term ‘economies of scale’ refers to the cost per unit of goods being reduced when the output of products increases.
Above all, costs are an important factor that can determine if a potential customer makes a purchase. As a result, the lower your cost- the more your product will appeal to consumers.
2. Differentiation Leadership
On the other hand, if your focus is to become a differentiation leader, your company must consider making products or goods that are dissimilar to your competitors. This is to ensure that customers receive quality or innovation from your products. As a consequence, this approach will allow you to set a premium price. That is, increasing prices to promote exclusivity over products or services.
3. Cost Focus
Another approach is to focus on a cost strategy which requires your company to target a niche market based on price. That is, the cost of your product or service needs to be lower than your competitors. Also, the narrow market targeted by you would be the consumers that are attracted by your products based on demographics.
4. Differentiation Focus
By focusing on differentiation, you can consider providing products or services that fulfil the demand of a niche market. This is due to taking a different sales strategy like the internet or targeting specific consumer bases that you would like to sell towards.
5. Analysing Competitors
You can also consider analyse your competitors to gain competitive advantage. This includes five areas of focus. These are threat of new entrants and substitute products or services; the bargaining power of buyers or suppliers; and rivalry among existing competitors.
Therefore, your company can gain competitive edge with a combination of cost leadership, differentiation or focus and analysing competitors. Consider getting a free Legal Health Check that will assist in analysing the structure, finance and administration of your business or contacting a Competition Lawyer.
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Tashfia is a Legal Tech Intern at Lawpath as part of the Content Team. She is in her second year of Bachelor of Laws and third year in Bachelor of Business Administration at Macquarie University. She is interested in Social Justice and Commercial Law.