In recent days, the competition in the market has been the toughest one and therefore for a company to get competitive advantage over them is not an easy task to do so. You not only need to manage your products effectively, but you should also have good relationship with your customers. For this purpose the companies gives more value to its customers . Moreover, there are two steps that are quite helpful for a company in gaining the competitive advantage in the market.
01- In the first step, competitor analysis is made by which the company identifies the strength of weaknesses of competitors and then go for threats and opportunities. It is actually a SWOT analysis of company.
02- In the second step, competitive marketing strategies are made by which the company seriously position itself among competitors and ascertain a path to give competitive advantage.
In Competitive Analysis, the company tries to know everything about its competitors so that it can prepare an effective marketing strategy. By doing so, the advantages and disadvantages of competitive advantage are ascertained by the company.
How to get a Competitive Advantage
- Identification of Competitors:
Competitors are actually those organizations who manufacture the same goods and services to the same customers and at similar prices. Competitors include
01- Manufacturer of similar class product.
02- Supplier of similar services.
03- Companies that compete for the similar customer dollars.
- Assessing Competitors:
The objectives of the competition are important to ascertain. Following are the important areas that should be ascertained in the assessment of the competitors for getting a competitive advantage.
- Current profitability
- Growth of market share
- Cash flow
- Technological leadership
- Service leadership
- Other goals
The competition also depends upon the resemblance of the marketing strategies of two companies. The strategic group in an industry should be identified which follows the similar set of strategies. For this purpose two important things should be considered. The first is that the rivalry must exist among competitors. The second thing is that all the angles should be analyzed to ascertain the right competitors.
Selection of Competitors & the Policies
The company should focus on the fact that it can select a number of competitors to attack and avoid. Attacks may be made on either strong competitors or weak ones, but weak competitors are quite easy to target and are less profitable.
On the other hand dominating over the strong competitors gives higher profit mostly. Customer value analysis is the useful tool in assessing the strengths and weaknesses of the competitors. Customer value analysis tool provides an idea of how the customers rank various offerings of the competitors according to the perceived value.
The important steps of customer value analysis are as follows:
01- Identification of the main attributes that are considered by the customers according to their importance.
02- Assessment of the performance of the company and competitors on the valued attributes.
There are many benefits linked with the competition like,
03- The total demand increases with higher competition.
04- The New Product Development Process costs and market costs are shared between competitors and application of new technologies are easily made available.
05- Product differentiation is promoted and less attractive segments are also targeted.
06- The bargaining power against labor or regulators is improved which lowers the antitrust risk.
Designing of Competitive Intelligence System
The competitive advantage is acquired by designing of the broader competitive strategy of the company. There is no single strategy that is best for all the companies. The main functions of competitive intelligence systems are as follows.
01- Identification of the important categories of competitive information is ascertained along with their best sources.
02- The continuous updating of competitive information is made by the system through the published data and field.
03- All the information is checked to know the reliability and validity and then the system interprets all this information to organize it in an effective way.
04- The managers and other decision makers can get the useful key information that facilitates their decision making process.
Types of Competitive Strategies
- Approaches to Marketing Strategies:
There is no single strategy of marketing that is best for all the companies therefore different companies approach different strategies in their strategic planning process. There are three stages of approach to any marketing strategy which are as follow.
2- Formulated marketing
3- Entrepreneurial marketing
- Basic Competitive Strategies:
Following are some of the basic competitive strategies that are quite helpful in gaining competitive advantage over competitors.
- Overall Cost Leadership:
The position of lowest cost producer in the industry is gained by adopting this strategy of overall cost leadership. The company adopting this strategy keeps the prices of its products, low as compared to the prices of the competing products and by doing so it can gain a large market share.
In this strategy, the company offers products that have unique features or customer benefits, which are not provided by the products of competitors. With this strategy the company gains a leadership position of manufacturing unique products in the market and this in turn help it to compete with the low cost leaders.
Competitive advantage can be obtained by adopting this focusing strategy in which smaller sub segment is targeted with quality products and offerings that can best match to the needs and wants of the targeted customers.
Competitive Position & Strategies
The companies that are competing in any market with similar products or services differ in their resources and objectives. Any company facing competition can take any of the following four forms.
- Market Leader:
The company that has the largest market share is known as a market leader and it adopts certain strategies that are related to its position in the market. Mostly it starts introduction of new products, changes in prices, promotion spending & distribution coverage etc. Other companies follow the market leader initiatives. Following are the three steps that are taken by a market leader.
Expanding the total demand
Protecting market share
Expanding market share
- Market Challenger:
The runner-up company that fights to overtake the leading position in the market is the market challenger. The market challenger can adopt any one of the following strategies.
01- Attack the leader
02- Avoid the leader
03- Attack other companies
04- Acquire smaller companies
- Market Follower:
A company that possess the runner-up status, but that three tries to keep the share and not break the boat is called the market follower. The market follower analyzes the factors causing success and failures to the market leader and tries to improve the products and programs of market leader with less investment. They can also be attacked by others so they keep the prices of their products as low with high quality.
- Market Niche:
A company that targets smaller segments of the market which are ignored or overlooked by other companies is called market niche. These market niches have limited resources, but can acquire higher profit margins because they know their targeted segments very well. Their main focus is at the specialization which may be in the following forms.
- End-user specialist
- Specific customer specialist
- Customer size specialist
- Geographic market specialist
- Quality-price niche etc.
On the basis of this competitive analysis believe that any company can get a competitive advantage over their rivals, if they implement their plans and strategies according to the analysis.