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Achieving and maintaining a competitive advantage is essential for any small business to succeed in today’s market. It can help create a preference for a company among its target audience and help drive sales, referrals, and profits. Understanding how to identify and use your competitive advantages will help you create effective business and marketing strategies that can give you an edge over your competition.
If you are looking for ways to do this, keep reading this Balboa Capital blog article. It explains how to gain a competitive advantage, and we think you will find it helpful.
Competitive advantage definition.
A competitive advantage is a business’s edge over its competitors; it makes customers choose one business over another. To achieve a competitive advantage, companies must consider various elements and factors. These include pricing strategies, customer service strategies, marketing strategies, product/service differentiation, and operational efficiency.
All these elements must be considered when creating a competitive advantage strategy. When a business has an advantage, it can capture more market share and, as a result, gain more customers.
Example of competitive advantage.
An independent coffee shop opened in a small city with three large-chain coffee shops within a two-mile radius. First, the coffee shop’s owner considered external factors such as current market trends and the competition in the market area. Then, to add value and differentiation, the shop’s owner roasted single-origin and custom-blended coffee beans on-site, something the large-chain coffee shops do not do. Finally, the owner decided to offer specialty ingredients like oat milk, almond milk, coconut blend milk, organic milk, organic brown rice syrup, and raw sugar, among others.
By doing so, positive word-of-mouth traveled fast, and the independent coffee shop gained a competitive edge over its rivals, even with slightly higher prices. The coffee shop’s marketing efforts included a press release announcing the grand opening, regularly scheduled posts on social media, and a customer loyalty program that gives customers points for each purchase.
How to get started.
Before you can map out your strategy to get an advantage over your competitors, you must answer this question: What does your small business offer that none of your rivals offer? You can only answer this if you conduct a competitor analysis, which is an essential part of any business strategy. It helps to identify areas of opportunity and potential threats in the market. By analyzing your competitors, you can gain insights into their strategies and use them to inform your decisions.
Competitor research involves looking at your competitors’ actions regarding product offerings, pricing, marketing strategies, customer service, etc. It also consists in understanding the industry trends and analyzing the competitive landscape to identify areas where you have an advantage over your competitors. With this information, you can make informed decisions on how to position your company in the market and capitalize on growth opportunities.
Write this information down, and be as specific as possible to identify your advantage. If you end up having more than one advantage, do not worry. It is common for companies to have several advantages. Just make sure to choose the one with the most significant potential to set your business apart and boost sales.
Have an effective pricing strategy.
Pricing is an essential part of any business’s success. It can be the difference between making a profit and losing customers. In addition, developing an effective pricing strategy can give your business the edge to stand out from the competition. For example, if your prices are much higher than the competition’s, you might lose sales. Conversely, prices that are too low might be perceived as unfavorable by your target audience.
Take a look at your competitors’ prices, and adjust yours if required. The goal is to offer quality products and services at prices that are lower or competitive with other comparable products and services. When setting prices, ensure that you are maximizing your profits; otherwise, you might need to set unrealistic sales goals that you and your team will find challenging.
Leverage technology.
Leveraging the latest technologies can help your small business gain a competitive edge. Technology can be used to automate processes, track customer data, monitor inventory, improve efficiency and reduce costs. It can also be used to create innovative products and services that can differentiate your company from the competition.
By leveraging technology, you can gain an advantage in the market by providing better customer service, faster delivery times, and more personalized experiences for your customers. Technology-driven competitive advantages are essential for businesses to stay ahead and remain profitable in the long run.
Hire the best employees.
Think of a time when you dined at a restaurant, shopped at a local retailer, or hired a plumber, landscape company, accountant, or other business and had a great experience. When you have an exceptional customer experience, you are more likely to become a repeat customer and spread the word on social media and with your friends and family.
Top-notch customer service results from well-trained employees who understand their roles and are committed to meeting or exceeding customers’ expectations. In short, employees are a part of a business’s competitive advantage. That means you should hire the best employees for your company and provide them with the training and tools they need to succeed.
Conclusion.
There are countless businesses in every industry, and the companies that have a competitive advantage are the ones that continually focus on improving their operations and their external and internal branding efforts. Small businesses often have limited resources and need to make the most of what they have, but it can be done.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.