In this Challenging Economy you need every advantage you can get, especially in entrepreneurship and business. Gaining the competitive advantage is key to your business sustainability and growth.
What differentiates you from everybody else, and why should people choose you and your business over your competitors? These are questions you should be asking yourself on a constant basis.
Here are some basic strategies that a business may choose to become more competitive
Positioning is better than Prospecting
Everybody is looking for prospects, Clients and customers. This never ending process could eventually burn you out, and is tough to scale and sustain. An easier way to approach your business is to position yourself as the leading authority, expert, specialist or trusted advisor in your sector. This takes strategic and intentional action, but the rewards are exponential. When you are perceived as the expert, people will start coming to you vs you chasing them. Become more exclusive and make it an honour to work with you and your business.
Cost leadership
This is about producing your goods and costs at the lowest cost in your industry. Then you sell them at the same price as everyone else and get the benefit of the extra profit. Or you use your cost advantage to sell at a lower price to gain new customers. Normally this is a good strategy where you’re selling to a broad market.
Sometimes it’s possible to turn a niche market into a mass market by bringing the costs right down.
To get cost leadership usually means that you need to be able to find a way to produce your goods or services in a more efficient way than anyone else, be able to get access to a unique source of lower cost supplies, or be able to completely avoid some costs.
Generally speaking, though, cost leadership is a difficult strategy for a small business to pursue effectively in the long term.
Differentiation
Differentiation is about offering your customers something different, extra or special that they value. Your customers then see your product or service as better or different to your competitors and are willing to pay extra for it.
For this to work for you, then the cost of providing the extra value must be less than the price premium you’ll get. A differentiation strategy often provides some protection from increases in prices from your suppliers. Your customer will find it more difficult to find a substitute and so will accept you passing on supplier price increases.
Market Focus
Focus is about concentrating on a niche market. And using either cost leadership or differentiation within that niche market.
By tailoring your products or services you’ll be in a better position to meet the unique needs of the niche market. They’ll be more likely to buy from you than buy a general market product or service that they then have to adapt. It also leads to a high degree of loyalty towards you.
To be able to use the focus strategy you need to know a particular market segment very well.
For more information on how to benchmark and measure your business competitiveness, contact Paul Redmond on 053 9170507 or email paul@rda.ie