Competitive Advantage

Every companies need to differentiate themselves with something special to attract new customers. This something new can (but may not necessary lead) to a competitive advantage. Competitive advantage is what distinct a product or service provider from all others. This lies in the perceived value by customers and their willingness to appreciate the distinction. This distinction must bear a perceived value, benefits (direct or indirect), features, or uniqueness by users. The different types of competitive advantage may be classified as following:

Cost based, differentiation in product or service, and focused, Segment-Specific niche-based competitive advantage strategies.

Cost Competitive Advantage

Cost competitive advantage is realised when a firm able to exercise cost leadership by maximum value offering to its consumers. The firm ability to harness its resources and available technologies, cost saving techniques/ methods, production centres/countries, eliminating middle man/steps, improve logistics or any other creative approach such as reengineering or product redesign, all of which with the aim to generate cost advantage to consumers. Uber for example was able to offer ride sharing service at lower prices than all available service providers. Walmart, which is the most profitable company in the U.S.A. is able to provide cheaper products to its customers through outsourcing production to China and other countries. Amazon is able to expand services and become a hub for shoppers through their website, an e-commerce platform that makes it easy to compare, shop and realise savings. Toyota was able to gain global recognition through reputation of efficiency and value for money cars. Easy jet and Airasia are examples of low cost carriers that offer the same service essentially with rivals, only at a lower price.

Product and Service Differentiation

One other way a firm can realise competitive advantage is through the differentiation of services and product offerings. Uniqueness in value offering occurs, then differentiation in services and products is realised. Cost competitive advantages is no longer realised in the face of new value offering, new delivery method, new technology or new experience. When lower cost is no longer relevant, a firm must think of new value or added value to keep customers from turning to alternative offerings. A Rolex is an example of great product image, a Mercedes is an example of great quality, a Google search engine is the best and fastest in generating search results. To maintain a competitive edge in services or product differentiation, a firm must constantly be innovative and enhance product or service quality and image, with distinct difference in mind.

Segment-Specific, Focus, and Niche Strategies

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