How To Gain A Competitive Advantage In Business 3 Proven Strategies

A competitive advantage is a way in which you can create value for your customers that your competitors cannot. This may be lower cost, faster service, better customer service, more convenient location, higher quality, or other factors. For example, a restaurant offering the best food in town (best-tasting, highest-rated, most well-known chef, or some other measure of quality) would have an advantage other its competitors by offering a higher-quality product. Alternately, a business could focus on reducing overhead and production costs to offer a market-quality product at a below-market price. Being able to offer this product at the price that they do would then be their competitive advantage. Creating a competitive advantage involves analyzing your business’s strengths and those of your competitors, and then learning how to take advantage of these factors.

Take this one step further by seeking to understand your customers on a personal level. What are their hobbies? What do they care about? What aspects of your business or your product resonate with them? Demographic information can be discovered through customer interaction, surveys, or analyzing customer information.

For example, if you own a Chinese food restaurant, the quality of food, the location, or perhaps the speed of the delivery service may all contribute to a customer choosing you over your competition. Don’t be afraid to ask your customers directly. You can make a survey for them to fill out, or just approach them, but your key objective is to discover why it is they choose you. If many customers list location, for example, you can work on other aspects of your business to create an even greater advantage.

Compare this to your list of advantages. What strengths do you have that your competition does not have? Which strengths does your competition have that you do not? The areas of strength that you have are the areas you should focus on expanding. Remember not to be a “me too” competitor as much as possible. For example, if your competition has one recipe that many customers come to that restaurant for, simply imitating their recipe will not add to your competitive advantage. Instead of trying to copy your competitor’s advantages, strengthen your own to create a unique set of strengths that cannot be replicated. Remember that your competitors can include more than lookalike businesses. For example, a Chinese restaurant competes with other Chinese restaurants, but also with other dining choices.

Detailed customer knowledge is equally important as competitor knowledge. Gaining in-depth insights about your customer portfolio will allow you to maximize revenue potential, increase customer retention, and boost prospective customers. You can use a mix of many tools and methods to measure consumer insight and both your position in the market and the positions of your competitors. Along with traditional company information resources, consider social media analysis tools that allow consumer insight mining on a large scale. [5] X Research source

For example, you may have a major strength in terms of product quality. You can further add to this strength by focusing even more heavily on fantastic quality, but also trying to deliver your product faster, and at a lower cost.

Examine your entire production process. This includes everything from purchasing supplies, to how your workers produce your products, to how your product is sold. Consider investing in technology that can reduce costs. If you own a restaurant, for example, purchasing energy-efficient equipment can reduce your operating costs. If your business has an excellent credit rating compared to your peers, you can finance these purchases at a lower cost. Examine how your workers are producing as well to make sure they are not wasting resources and that they are producing as much as possible.

Hiring better staff, improving training standards, managing staff closer, offering rewards and incentives for strong service, and offering more convenient hours of operation can all help generate an advantage. It is important to create a culture of excellent service. If your service advantage is based on a few simple factors (like longer hours), your competition can easily replicate it.

You’ll need to first determine exactly what quality means in a particular market. For example, do customers want maintenance-free products, better design, or longer life? What does quality mean to your customers? Look at best-selling products in your market. What aspects of these products make them desirable? Focus on taking your unique talents and background and using these. For example, if you are in the restaurant business, and you spent three years overseas studying cuisine, you can use your experiences and contacts there to establish truly unique recipes. Focusing on hiring the right people, and using higher quality supplies can dramatically enhance the overall quality of your product or service.

This process can also work in the other direction by conducting research to determine which things consumers find most important and then developing a niche market for those products or characteristics. For example, people with arthritis have trouble opening cans and jars. You could design a gadget that makes it easier for them and then advertise in medical publications. Make sure your product has both attractive features and benefits. A feature is something that the product has or is, such as a drill that has interchangeable drill bits. A benefit is a positive outcome that the user experiences as a result of using the product, like how using an umbrella keeps you dry in the rain. [7] X Research source When a product has both of these, it’s much more possible to gain a competitive edge.

For example, you may own an Asian-themed restaurant located in a mall. This would provide an economic moat, since it is unlikely the mall would want to open multiple Asian-themed restaurants in the same area. This prevents new business from competing with you. To create the moat, you may be able to negotiate a site monopoly on your type of business if you are located on a multi-business site like a mall or strip shopping center.

Sometimes you may need to take chances to keep ahead of the pack and differentiate your business, but with big risk often comes big reward. Just remember to do your research before diving head-first into new ideas.