When it comes to starting any business, figuring out what product or service to offer, designing and creating a logo and building a business plan comes to mind first. One concept that seems to be forgotten is gaining a competitive advantage. This is what differentiates a successful business from a failing business as well as your competitors. It can contribute to higher price points, brand loyalty, and generally more customers. It overall creates more value for your company and shareholders. There are many strategies to gaining a competitive advantage, but when it comes to establishing a business the basics come first.
Strategies to Gain a Competitive Advantage
- Differentiation Strategy: Basically speaking, it means your company offers a product or service that is unique in the industry and from your competitors. It could also mean that you have created a unique brand that differentiates your business from others. A good and obvious example of a company that utilizes this strategy well is Apple. Creating your own niche will include leveraging unique skill trades and abilities. Differentiation requires thorough research, time, and investment.
- Cost Leadership Strategy: It is also known as “Low-Cost Strategy”. This is when a company intends to provide consumers with prices lower than the competition. Methods such as reducing costs by lowering mark-up prices or reducing costs by increasing market shares are the basis of cost leadership strategy. This strategy focuses on a broad market that is usually price sensitive. This includes emphasizing low prices without losing out on the quality of the product or service. Some businesses choose to outsource their product or service to reduce the cost. Well-known businesses that use this strategy are Walmart and McDonalds.
- Focus Strategy: This strategy focuses on a specialized niche. The business creates unique or customized products for a particular market. Although the business has a specialty, it does not limit the company from offering other products and services. Their plan is directed to fulfilling the needs of a limited target market. You must have the resources, competence, and skills to serve a specific segment. Focus strategy requires extensive market research to truly understand the niche market. A business such as Rolls Royce uses this strategy to target high spenders and through this method has become one of the leads in the luxury automobile industry.
Prosper Business Solutions for You
These are just a few strategies used to gain a competitive advantage. As it clearly demonstrates, having a competitive advantage is crucial to your business if success is the end goal. Although these are some of the main strategies, not all the mentioned strategies will benefit your business. You need careful consideration and experience to determine which strategy is best. Consulting with a business management service company can provide assistance to identify the best strategies for your company. A company such as Prosper Business Solutions will not only help you identify the best strategy but will also help you break down and develop a plan to follow this strategy. Through many years of experience and extensive network connections, they will work alongside you to figure out the best business solutions for your company. Contact Prosper Business Solutions for a business consultation today.