How to Achieve a Sustainable Competitive Advantage
The most common routes to sustainable competitive advantage involve one or more of the following basic strategies: differentiation, low cost, niche, preemptive move, and synergy.
Differentiation – your product is distinguished from that of your competitors by giving customers more value and greater perceived benefits than they could obtain elsewhere. You have to clearly state what your product has, or can do, as compared to your competitor's product – why your product is different and therefore better!
Low Cost Strategy – should not be confused with the idea of ??being inexpensive, or dare I say it, "cheap". It's about value. In today's tough economic times, customers demand more value for their money, causing marketers to examine creative ways to deliver additional value to their customers. While value does not necessarily mean that the customer will pay less for your product, it does generally insist that they will receive more for their money.
Niche – a strategy that concentrates, or focuses, on a specific market segment. This focus can be combined with other strategic marketing techniques, such as differentiation or low cost, to achieve sustainable competitive advantage. It is very difficult to be all things to all people; however, it is reasonable to assume that you can cater to the needs to a specific market segment.
Preemptive Move Strategy – involves obtaining a strategic advantage by being the first to enter the market with a new product or service, a new use for an existing product, a new transaction process, or other innovation. If implemented successfully, this strategy can create barriers to entry for others that attempt to follow you into the marketplace.
Synergy ( or Joint Venture ) – Companies, or individuals, that combine assets and skills to achieve a strategic advantage. Examples of the synergy strategy could include: sharing customer databases, expanding your product mix, increased market reliability, cross-selling, reduced operating costs, and so on.
In order to sustain a competitive advantage, it is imperative that you position your product while it is unduly emphasized expresses your products' value. Remember that value is measured through the eyes of the customer.
Bill Balou, MBA