Your business has a competitive advantage when customers believe your products and services are superior to your competitors’.
Many small business owners do what they see will succeed. Tempting, but it can get you into trouble. Why would customers buy from you if you’re indistinguishable from your competitors, who they already have history with? From the customer’s point of view, you’re the more risky alternative.
How do you lower that risk? By crafting a competitive advantage and clearly communicating your advantage to the customer. Let’s take a look at the most popular forms of competitive advantage:
Price/Value Competitive Advantage
- This competitive advantage can include things like:
- Improved process efficiencies
- Skilled staff
- Favourable location
- Optimal outsourcing
- Access to cheaper resources and inputs
- Cost avoidance
- Superior technology
- Lower marketing expenses
- Efficient distribution channels
- Effective partnerships or alliances
- Lower overhead
- Waste reduction
Your small business may have lower costs than your competitors, while still seeing reasonable profit margins, by either selling your products at average prices to earn a profit higher than the competition, or at below average prices to gain market share. If superior prices aren’t possible, you can also get an advantage over the competition by offering superior value in your products or services.
Niche Markets Competitive Advantage
Serving a niche market means selling to a region overlooked or not currently being served, or a distribution channel.
You can get a niche market advantage by offering a product or service with unique attributes that customers of an underserved market love. There’s a potential for high demand here, which means you may be able to offer your product or service for a premium price. In this case, you’ll need to keep up with research and demand. Stay innovative while remaining connected to the customers in your niche.
Adaptability Competitive Advantage
Your small business may get an advantage over competitors through your ability to adapt to changing markets and demands. Small businesses can often adjust processes and procedures much faster than some larger competitors. When you adapt faster and more accurately, your business may be able to offer a superior product or service to the market first, before your competitors can get back on their feet. This opens up the possibility of a monopoly (where you would be the only company in the market offering the product or service) for a while.