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Competitive Advantage

Companies regionally and beyond have been making an effort to find their place in the market. Performance of activities that direct the flow of goods and services from the company to the esteemed customers has been the main concern for business men and women and for companies as well. This is the sole objective for companies and businesses that want to excel in the market that is becoming extremely dynamic in the recent years. Gaining a competitive edge has been a goal of many businesses (Riley 2012, par. 2-13). Businesses and companies are facing a challenge with establishing a stable strategy in marketing. One of the ways of arriving at this is to attain a sustainable competitive advantage over competing firms and products in a given market.

Ideally, competitive edge is a gain made by companies or business people over competitors through the provision of greater value to consumers. This can be achieved by lowering prices or by providing better services and benefits that would justify the prices that the company set. Competitive advantage is thus a multifaceted concept. Potter asserts that there are four “generic” strategies of business that may be applied for the purposes of gaining competitive advantage (Bonanno & Haworth 2008, pp. 495-510). These strategies relay the extent to which the range of activities of business is narrow compared to wide and the extent to which companies seek to differentiate what they offer to the customers in the market. Potter's marketing strategies are summarized in the Figure 1 above. Strategies of cost leadership and differentiation aim for competitive advantage in a wide scope of industries and market segments. All the same, these strategies are applied in a narrow market.

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Cost leadership has an objective of having the lowest prices in the market. The conventional method of attaining this objective has been through production done on large scale, which makes it possible for the company to maximize economies of scale. Cost leadership is potentially imperative. A lot of market segments are provided with the focus on cost minimization. If the attained selling price could be more or less equal to the average price in the market, then the producer with the lowest price will theoretically enjoy higher profits than anyone else (Riley 2012, par. 2-13). Cost leadership is normally linked to a large-scale production by companies providing “standard” goods with comparatively little differentiationand that are usually readily available to many consumers.

Intermittently, a low-cost producer can discount the product for the sake of maximizing sales, specifically if there is a cost advantage over the competition in the market. By so doing, an increase in the market share can be realized. Cost leadership strategy requires close cooperation between all functional areas of a company. For a company to be the lowest-cost provider, it is certainly going to attain high productivity levels, utilize high capacity, have bargaining power to consult the lowest price offers for inputs of production, implement lean methods of production like Just-In-Time (JIT), use effective technology in the process of production, and access the best channels of distribution. In terms of costs, businesses endeavour to have a lower-cost advantage in either one or several market segments (Riley 2012, par. 2-13). Company's product will be elementary: it may be as good as those priced highly and featured in the market while at the same time be available for a big number of customers.

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The strategy of differentiation presents a situation whereby the business endeavours to differentiate its product in one or several targeted market segments. Special needs of the customer in the market segment imply that there are business opportunities to offer goods that are uniquely different from those of market competitors, who may be looking for wider customer groups (Davila, Epstein, & Shelton 2006, pp. 23-56). The most significant issue for any company taking up the differentiation approach is to make sure that customers actually have various wants and needs. This means that they have to ensure that there is a suitable reason for differentiation and that competitors' products that exist currently in the market are not meeting these customers’ wants and needs. This differentiation focus strategy is perceived to be a classic niche marketing approach.

A number of small business organizations are in a position to establish a niche market segment by using the differentiation approach, setting prices higher than products that are not differentiated by specialist expertise, or by other means aimed at increasing customer value. One of the companies that has excelled in differentiation strategy is Tyrrells Crisps, the emphasis of which was on smaller hand-fried first-class segment of industry. For differentiation leadership businesses aim to succeed in much bigger markets and attain competitive advantage by cutting across an entire industry. This approach takes into account the choice of one or several criteria applied by buyers in the market and then taking a unique position to meet such criteria (Riley 2012, par. 2-13). This approach is normally associated with charging the best price for the product usually to show higher costs of production and additional value-added features offered to the customer.

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Differentiation is concerned with setting a better price that can cover extra costs of production and as well give consumers vivid reasons to prefer the product over other products that are less differentiated. There are a number of ways in which this can be attained even though it can be challenging because it requires sustained and substantial investment in marketing activities. Such ways include high quality of products taking into account matters of reliability, features, durability, and benefits. It may also require branding to improve customer relationships, increase brand recognition and enhance brand loyalty. Making use of industry-varied distribution in every major channel, like the brand or product, is a vital item that retailers would stock. Being consistent in supporting promotional activities requires the use of sponsorship and advertisement among other options. Differentiation leadership has been extremely useful for such companies like Mercedes and Nike. These brands achieve economies of scale, although they do not depend on a strategy of cost leadership to compete (Riley 2012, par. 2-13). Brands and businesses are focused on persuading consumers to be loyal to their brands and make payment for a premium for their offers.

There are various internal and external factors that influence the ability of a company to gain competitive advantage. Generally, company’s competitive advantage strongly relies on its ability to get help from innovative activities. Having an understanding of such factors affecting process and product innovation and the effects therein is important for choosing a strategy of innovation that is one of the determinants of success in innovation (Oxera Consulting 2005, pp. 12-34). Both internal and external factors in business and product process innovation are important in gaining a competitive edge. Such factors include industry maturity, technological opportunities, customer needs and expectations, investment attractiveness, company size, intensity of competition, export orientation, and origin of ownership.

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Basically, innovations are primary tools of gaining competitive advantage and are important to ensure the growth of a company. With the dynamism in technological changes along with globalization and fluctuating customers' demands, competitive advantage for businesses is a temporary phenomenon. Innovations by companies help them in dealing with competition and improving the game in the market.

Industry maturity looks at the main concepts in industry evolution theories in that the basis of competitiveness focuses on the process innovation other than the product as business grows. Initially, businesses compete based on product differentiation and will strongly invest in the development of a new product (Oxera Consulting 2005, pp. 12-34). Maturity in the market accompanied with more defined customer needs compels business to shift competition focus to economy of range and expenses, making more investments in the processes of doing business for the reason of becoming more efficient and effective. Attaining competitive advantage would thus require a company to put more effort in process innovations rather than in product innovations.

Needs and expectations of the customer is another factor to consider. These are important for process innovations. Businesses should not produce products that they will struggle to sell, and instead offer products that will sell. Strong customer orientation and customer satisfaction are very important concepts in Total Quality Management (TQM). Companies, whose focus is the customer will be accurate while responding to the needs of the customer, will be in a position to evaluate the level of satisfaction and enhance the processes for the purpose of making customers satisfied (Oxera Consulting 2005, pp. 12-34).

Market demand is key and the best incentive for innovations. Demand determines the activities and the rate of invention. Every rational company that earns high profits is very quick to respond to economic stimuli. Demand grows usually before innovative activities implying that market needs assurance stimuli for business to innovate and use other emerging technologies. This factor is usually known as “market pull” in a way that market pulls the innovations. Generally, market demand affects activities of innovation (Davila, Epstein, & Shelton 2006, pp. 23-56). The benefits that come along with innovations are ever proportional to the size of the market. Businesses can choose to use innovations if they realize that the potential of selling is big enough. The most significant characteristics of the market demand that a business must consider include demand growth, the length of demand, selling potential, demand elasticity, and demand indefiniteness.

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There has been a debate on the value of technological opportunity in comparison to the demand in the market. Entrepreneurs are motivated by technological opportunities. This is a technology push. The rate and direction of change in technology is defined by technology appropriateness not demand in particular industrial usage (Oxera Consulting 2005, pp. 12-34). Technological opportunity dimensions include technological significance, expected contribution of technology of a given invention, performances of technology, i.e. the degree to which an invention performs better than other options or performs some other functions that have not been performed in the past and that it is feasible technically, the possibility of technological completeness, and correctness of an invention.

Gaining competitive advantage will also make attracting investments an important part of business operations. The ability to control and benefit from business innovations plays a significant role in investment into innovations. If there are anticipated benefits, then a company would carry out inventions. The challenge has always been to choose between product and process innovations (Petsas & Giannikos 2005, pp. 231-248). Well, both innovations provide potentials in the desired end. The only difference comes in since product innovations influence the welfare of the user directly, while process innovations are a result of special efforts to enhance efficiency.

Intensity of competition and concentration in the market stimulates innovation for competitive advantage. Modest competition mostly impacts innovations of products and combined process and product innovations as intensive competition affects innovations in the process (Oxera Consulting 2005, pp. 12-34). When completion is low, activities of innovation dwindle. The same research is needed to expound on this aspect.

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The size of the company also affects how it is going to deal with competition in the market in an effort to gain competitive advantage. The returns on innovations for a company are comparable to the size of the company. Another factor that determines the chance of a company attaining a competitive advantage is the origin of ownership. However, there is not much empirical evidence to support this assertion as far as product and process development is concerned. Additionally, there is an issue of export orientation. According to Higon & Driffield (2007, pp. 10-15), about 43% of SMEs operating in foreign markets take hold of innovations when compared to 26% of such companies that do not export.

Customers have greater confidence in their close people than in marketing ads. They are contended by the massive skills, therefore, leading to a thriving enterprise. Consequently, knowledge of customers has been the key to competitive advantage for several leading trademarks. Contrary to the greater number of social media users, majority of pioneering corporations appear to exercise communal customers skills to attain a significant gain. Communal customers' skills consist of live discussions among the groups in online societies and communal systems, which are thought to be of less worth (Tarkoff 2012, par. 3-7). Customers further become more important, connected, and spoken due to social networks, hence changing a traditional organization of enterprises.

Almost half of customers anticipate overhaul in a fortnight, and 80 percent prefer to transfer their enterprises if overhaul prospects are not attained. For enterprises to remain successful in the business for a long time they ought to strengthen their relationships with customers. If they succeed, communal customer’s skills could aid in minimizing operating expenses and benefit the enterprise by means of income creation. Customer’s work, trade and exploration, and progress are the main points in which enterprises consider tangible contact during communal customer’s skill (Petsas & Giannikos 2005, pp. 231-248). It becomes exceedingly challenging to meet the needs of modern customers.

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Recently, many of pioneering corporations realized the advantage of paying close attention to their communal customers skills plan. Customers look for professionals who can quickly satisfy their needs. Maintaining high customer satisfaction while at the same time managing the expenses is not easy (Verhees, Meulenberg, & Pennings 2004, pp. 13-37). Communal client skills involving group organizations allow enterprises to provide customers with a self-help option. Not only do they minimize media transfer but also reach greater number of customers.

A greater percentage of resolutions offered in an industrial maintenance debate for Hewlett Packard were presented by willing donors. In view of debates’ inauguration in 2009, 40 million customers have been aided in solving HP problems out of 500 million positions. As depicted by HP, $50 million is saved by the debate in each year through aid expenses. Enterprises have with time improved provision of their goods and services through numerous marketing activities (Tarkoff 2012, par. 3-7). It is believed that creating a trade plan in the course of developing communal customer’s knowledge is a less expensive and useful method of making income. It is effective because customers are likely to trust goods proposed by their reference groups than business letters issued daily.

Among the known super fans is a beauty dealer Sephora owned by Hennessy, which made communal customers knowledge in the company of an online chatter society. It made a scenario whereby customers would unite in their passion for cosmetics and the producer would encourage them to exchange their ideas (Tarkoff 2012, par. 3-7). Beauty chat society customers squander most of their time on makeup compared to Sephora customers, while the top occupiers and busy society customers known as super fans squander more than ten times (Oxera Consulting 2005, pp. 12-34). Enterprises use lots of money on product investigations although there are advanced means of initiating relevant consumer and product update apart from centered peers and investigations.

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Communal networks form new lines of networking amid enterprises and the relevant client, providing a discussion for business and invention, which could form little skilled development and advanced improvement. Communal creation upholds many little, although essential developments, on top of upsetting creations that could significantly move to the enterprise or the whole company. This communal creation has saved huge amount of money to various corporations.

The initial communal generated tribute tag, believed to be the Barclay card disc, has facilitated in the reduction of protests by 50 percent and improved customer’s custody by 25 percent leading to a yearly corporation advantage not less than $10 million. Recently, top creative corporations have recognized the advantage of devoting in their client skills plan. Customers are invited to participate in an innovative task in the corporation, which they are keen to accomplish by solving each other’s general troubles, presenting ideas for enhanced goods and declaration of their passion for the products they admire through online customers societies and relevant social sites.

Calls to the media decrease when customers provide aid to themselves through group originated societies. They also have a high expenditure due to enquiry of information and aid from society associates. They engage when requested to contribute in forming fresh and advanced goods. The fresh leading competitive advantage is the collective knowledge about the customers. In it, enterprises do not rise to the confrontation of communal networks but utilize it to work out difficult enterprise troubles, stimulate enterprise transformation and be in the front line of the collection (Tarkoff 2012, par. 3-7).

An enterprise is said to have expanded competitive advantage when it obtains qualities that permit it to execute at a superior stage compared to relevant companies in similar corporations. Starbucks coffee provisions are advantageously situated to guarantee aggressive gain. Enterprises attain competitive advantage through the use of various generation tactics. The tactics ought to be exceptional, of great worth, and non-replaceable. Sustainable, aggressive advantages are gains that can be imitated with ease hence perceivable for a greater length of time. For the gains to be sustainable, the rivalry ought not to react immediately.











The creation of a sustainable competitive gain necessitates customer’s reliability, bigger site, distinctive goods, appropriate allocation procedures, enhanced seller dealings, identification of customer’s labor, and various fundamentals of gains. Competitive advantage is the intentional gain held by an enterprise against opponent units in an aggressive company (Oxera Consulting 2005, pp. 12-34). Accomplishment of competitive advantage reinforces and places an enterprise well in the enterprise surrounding. This gain happens when a group attains or improves an aspect that surpasses its opponents. The aspects involve access to ordinary property or specialized human individuals.

There is some advantage in the contest that ought to be lively and the opposition should not perform it in the genuine manner for it to be sustainable. As seen earlier, the gain is not imitated with ease and could be preserved for a lengthy time. Competitive gain is the verification of top presentation and guarantees existence and major introduction in the selling field. Excellent presentation is the final preferred objective of an enterprise, whereby competitive gain is the basis (Tarkoff 2012, par. 3-7). Competitive advantage also offers enterprises the capability of being in front of current or probable struggles and guarantees sells control.

There are various principles taken in evaluating the possessions of an enterprise (Verhees, Meulenberg and Pennings 2004, pp. 13-37). Among the principles is value. This is used to determine whether the resources permit an enterprise to formulate tactics that develop competence. Another principle is scarcity. It is used to ascertain whether many enterprises own the relevant resources. If they are not available, then they are said to be rare. The resources are also evaluated on the basis of their distinctive background circumstances. They are determined on whether they can easily be imitated. The resources must not be replaceable. A set alternative must not be available for the order to be fulfilled. After the above principles have been fulfilled, an enterprise could be pronounced to acquire a sustainable competitive gain. The enterprise is also said to acquire a gain in the market which proceeds until the principles are not fulfilled totally. Consequently, the enterprise gets superior earnings compared to rival enterprises in the market.

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There are numerous types of sustainable competitive advantages that enterprises can develop. Among them is customer’s dependability. Customers ought to commit to purchasing products from an obvious trader. It is attained during selling of trademarks, arrangements, and devotion courses. Devotion courses are compared to target cards. When a client utilizes the target card, it records entire proceedings and maintains them in the information store. The information store records customer’s requests and requirements not in the target. This, however, allows target to provide goods not available in their supply. Target also keeps the trade made on customers’ cards. Additionally, target is able to record customers, who utilize their cards at other dealers and end up supplying the goods later.

The site of an enterprise is determined by customers in choosing places to make purchases. A good example are Starbucks coffee shops, which are situated in areas where there is a high demand of the product. The enterprises aim at a particular region of the enterprise and spread to the other areas later. Due to their situation tactics, little advertising is done on them. Traders make efforts to get goods at a cheaper rate and distribute them at a rational price (Tarkoff 2012, par. 3-7). Distribution is difficult and time consuming, which is the reason some vendors do not like the plan.

Companies make distinctive products to prevent imitation from their opponents. They create personal trademarks, which enhance their development and marketing, hence customers know where to get particular goods. Improved customer relationships increases sales in firms. Customers' overhaul is time consuming but when it is recognized, it enables a retailer to succeed compared to other vendors in the market. A retailer develops several source advantages, therefore, thriving in the market. For instance, many customers would notice an enterprise where quality and substantial client services are offered. This, however, boosts incomes of only the preferred producer.

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