Question

Write 2/3 page and explain eight ways to gain a competitive advantage and provide an example for each. You can write a scenario for a business of your choice to answer this assignment.

Answer 1

There are many ways a business can gain a competitive advantage over its competitors and new entrants. Let us discuss a few of them.

1. By reducing the price- When a company reduces the prices of its product in the market, it automatically attracts new consumers and gains a competitive advantage over other companies. To reduce costs, the company can try to bring down the cost of its operation through higher productivity, etc
2. Seeking feedback - The company can try to receive effective feedback from the consumers about the features they would like in their products in the future. This will increase their competitiveness in the market. For example, the company can conduct surveys and provide questionnaires in exchange for a discount to the consumer. This helps in a better response and provides help to the efforts of product development.
3. Expanding product line - By introducing variants like different flavors or types in the existing product line, the company can gain valuable competitive advantage. For example, Coca-cola offering diet coke with its normal carbonated drinks to cater to diet-conscious consumers.
4. Forming mergers - Forming an alliance or acquiring a company that has critical expertise in a particular field can help the company in increasing its competitiveness in the market. For example, a retailer can acquire an IT firm to deal with its e-commerce website which would help in attracting more consumers who like to shop form online.
5. Finding alternatives- Companies can try to find an alternative to their suppliers, raw materials and other activities that can help them in bringing down the prices of their products/services. For example, by exchanging a supplier selling expensive raw materials with a cheaper supplier, the company can save a lot of money which would help in lowering down the prices.
6. Establishing high switching costs- The company can try to increase the switching costs in their products/services which makes it difficult for the consumer to switch products and services. Example - smartphones companies use their ecosystem to ensure that their consumer finds it difficult to switch from one brand to other.
7. Enhancing the brand - A company can gain valuable competitive advantage by directing its marketing efforts to create a brand for itself in the market. This form of branding can help in differentiating from other competitors and will help it be successful in the long run. Example - Through the pricing and branding, Apple has positioned itself as a premium smartphone which helps in keeping its profits margins higher than other companies in the industry.
8. Developing technology - Through efforts in research and development, companies cant try to bring in newer technology which helps it in answering the needs of the consumers in a more effective manner. This helps it in gaining a competitive advantage. Example - Apple bringing in touch smartphones while other companies were using physical keyboards.