GAINING A COMPETITIVE ADVANTAGE
Gaining a competitive advantage can take extensive research and strategic planning. Leveraging every advantage can go a long way toward establishing your business as the leader in your particular industry.
Your target audience is a focused group of consumers to whom your company markets its products and services. You've differentiated this target market by any number of demographic, socioeconomic, and common needs or characteristics that turn them into the perfect sales audience. However, your competition may also be focusing on this target market as well. By uncovering certain characteristics, or identifying value in targets they may be missing, you can find and gain a competitive advantage over your competitors.
Typically, businesses attempt to gain cost leadership as their first competitive advantage. This is where a business is in the position to offer the same quality products as the competition, but at a cost that is lower. Cost leadership happens when a business figures out a way to yield products at a lower cost through perfecting production methods or through using resources in a far better and more efficient manner than the competition.
The next strategy that companies may use for setting themselves apart from the competition is differentiation. With this strategy, reducing prices is only one of many possible factors that can set a business apart from others. Companies that differentiate themselves usually seek out one or more features or advantages they have that will set them apart from the competition. Then they locate the sector of the market that will find those unique features or advantages essential and market to that sector.
Companies can gain a competitive advantage by seeking strategic alliances with other companies within the same industry. However, companies likely need to be careful not to cross any lines between alliances and deceit. This deceit can happen when companies in the same industry attempt to collude to control prices. On the other hand, strategic alliances are more like joint ventures that companies use to combine resources and gain exposure for themselves at the expense of competition that is outside the alliance.
Often, customers will pay more for better quality products or services. If you have more expertise, superior design, or access to higher-quality materials, product quality could be your competitive advantage. If this is the case, you would need to find market sectors that will purchase your higher-priced products.
If promoting a well-known brand is your competitive advantage, you’ll need to reach consumers who see the brand in a positive way, who need it, and can buy it. While some brands, like detergents, can cut across multiple market sectors, others, like business software products, will need more focus.
By placing an emphasis on customer satisfaction, you can compete on superior service. Many customers are willing to pay a premium to receive better service. Customer service that focuses on creating higher levels of customer satisfaction might imply employees have good people skills and are trained in customer relations as well as the products they support. Since customer service can get costly, businesses whose competitive advantage is customer service might be best to avoid the lower-cost market sectors and target the high-value sectors.
Regardless of what advantages you may find and implement in your line of business, your work is far from done. Even after you gain a competitive advantage, you will have to maintain it continuously to be successful.
If you're interested in learning what we can do for your business, contact a Relationship Manager at a branch near you to discuss your business needs and the solutions BancorpSouth can offer.
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