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Competitive advantage gives your business an edge over and above its rivals and an ability to generate greater value for the company and its shareholders alike. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralise or overcome your position. In an increasingly aggressive business environment, especially in today’s economic climate, every advantage counts to establish your business at the top of the markets within which you operate.
Seeking to obtain a competitive advantage is something which every successful business strives to achieve every day, firstly to get ahead of competitors and then to stay ahead. There are many ways to create clear water between you and your competitors but they can mostly be grouped into two categories, comparative and differentiation. These two groups are further broken down into many more elements and different markets and different propositions will lend themselves to some but not all of the options. So how do you choose the right competitive advantage strategy for your business?
The starting point is to identify what your business is already doing well and building on that platform. You are currently winning business against your competitors (if you weren’t you wouldn’t be in business) and understanding the reasons for this is the first step in building the tactics and strategies upon which true, demonstrable competitive advantage can be achieved.
Customers are often a good source of information at the start of this process and often over-looked or not included at all. After all, they have chosen to buy your product or service rather than those supplied by your competitors. Therefore, they have already made a value based decision on why your proposition is better than your competitors.
Superior products and future product development, commercial creativity or beneficial contract terms, price differentiation, same service at lower cost or higher quality service at a higher cost and customer / supplier relationships are all sources of competitive advantage to name but a few. Competitive benchmarking is also critical to gaining the best outcome from such strategies. After all, you want to be different and better in order to create as big a competitive advantage gap as possible.