Competitive AdvantagesSection 3.2

By: Jennie Nguyen

Competitive advantages

Businesses look for and need to have competitive advantages over their competition

• A true competitive advantage is one that is sustainable over the long term (it has to last, it has to be able to keep the company going)

Sustainable VS. Non-sustainable

Sustainable• Unique selling position• Lowering production costs• Servicing a niche market• Creating customer loyaltyNon-Sustainable• Promotion• Placement• Quality• Price• Benefits of use• Design features

Sustainable• Developing a unique selling proposition (USP)

- Something that your product has, that other companies do not have, and are not likely to develop.

- Example: patents, licenses, supplier(s) will only sell to you

• Domino’s Pizza: “you get hot fresh pizza delivered to your door in 30 minutes or less – or it’s free.”

- Pioneer of this concept- Is it sustainable?

(how can companies create this ?)

Sustainable, continued

• Lowering production costs- More cost-efficient, high technology systems,

and processes set in place to reduce price- Example: Many companies are outsourcing

work to other countries, why?

• HTTP://www.forbes.com/2003/08/27/cx_ld_0827bestcountries.html

• HTTP://www.outsource2india.com(how else can companies lower production costs?)Outsource: companies are going to get rid of it, (sell it to

another company) (contract)

Sustainable continued• Servicing a niche market

- Providing something for a small market, and by doing so, keeping competitors out of the market.

Why does this work? Does it always last?

- Example: many high-tech companies provide specialized software for companies

- Example: Software tailored to their individual needs (billing software for dentists, do it yourself tax returns for free)

Sustainable Continued

• Creating customer loyalty- Relationship marketing, where as the consumer develops a strong relationship with the product or retailer and will NOT consider buying from someone else, unless their chosen one makes a MISTAKE!!-Example: What is your favourite kind of ketchup?

•http://www.marketresearchworld.net/index.php?option=com_content&task=view&id=2055

- Example: What is your favourite kind of facial tissue?

Non-Sustainable

• Promotion- place brand in the mind of the customer - “top of mind”- Roll up the Rim- Began in 1986, to help increase coffee sales- Many Canadians look forward to it each year

Non-Sustainable Continued• Placement

– Products must be placed in an area where customers can buy them

– Considering the number of products made in other countries, competition can appear at any time

– IF a product had exclusive distribution in an area, or location, it has a very competitive advantage because no other similar products will be found there

– Example: Fleetwood Park’s Sold Coca-Cola until recently

Non-Sustainable Continued• Quality

– Something can compete with another product/service in its category if it’s the best of its type

– Businesses try to do this everyday• Stronger, Faster, lighter, easier to use, all NEW- Finest quality products can be hard to find

Non-Sustainable Continued

• Benefits of use– value is not in the product itself, but what the product can do

for you• If a product can do more or perform better than another, it

will have a competitive advantage• Example: Laptops double as DVD players on plane rides• How is this advantageous to consumers?• Example: Once car manufacture offers “Better Safety”

while another offers “Better Service”

Non-Sustainable Continued• Price

– Price is only a competitive advantage for you if you are cheaper than the competition

– Some stores run “Store sales only”.– Some manufacturers or franchises run “product line sales”– All retailers/franchises must adhere to the sales

• Example” Nike running a sale on all running shoes – all retailers must follow (may have some restrictions)

• Example: Subway running “sub of the day” promotions – all subways must follow

Non-Sustainable Continued

• Design features (product appeal)– Design influences the way we perceive a product and

what it does– Example: Companies design cars to perform similar but

they all have a very distinct look– Often consumers will want one product over another

based on the style of the product– PACKAGE design also falls into this category