Competitive Advantages

Competitive Advantages BMI3C

Competitive Advantage • An advantage a business has over its competitors • May be • Sustainable (i.e. an advantage you can maintain over your competitors in order to hold onto customers) • Non-sustainable (i.e. an advantage that your competitors could take away from you in order to shift sales in their direction)

Sustainable Competitive Advantages • Develop a unique selling proposition (USP) • develop something (a benefit) that the competition does NOT have and likely will not develop or match

Sustainable Competitive Advantages • Lower production costs • reduce costs • use cost-efficient, high-technology manufacturing systems and processes to reduce the costs associated with its products • (eg. move to another country with lower resource costs, fewer taxes, & a lower cost of living)

Sustainable Competitive Advantages • Service a niche market • recognize an opportunity to create a niche market & take advantage of it

Sustainable Competitive Advantages • Create customer loyalty • this is called relationship marketing • the consumer develops a strong relationship with the product or the retailer

Activity • For each type of sustainable competitive advantage, give an example of a company that you think is a good example • USP • Lower production costs • Niche market • Customer loyalty

Non-sustainable Competitive Advantages • Promotion • consumers advertise their products to place their brands in the minds of the consumer (eg. Tim Hortons – “roll up the rim to win”) • brand awareness - the major goal of the company is to aim for top-or-the-mind awareness • means that the consumer is most likely to think about one brand of product or service before they thinks of any other

Non-sustainable Competitive Advantages • Placement • to compete, a product must have a placement in the market, the more placement it has, the more competitive it is • if a product has exclusive distribution in a market, it is very competitive (eg. only bottled water in a vending machine) • a marketing goal for some companies is to eliminate the competition • superstores move in and small retail stores go out of business (eg. Chapters) or large companies buy smaller companies and then discontinue their brands

Non-sustainable Competitive Advantages • Quality • one way to compete against other products is to be the best of its type (eg. stronger, faster, lighter, easier to open, easier to close) • companies are constantly adding features to improve the product and taking away features that are not beneficial • the finest quality products are deemed to be top-of-the-line and are sought after by some consumers (eg. Cars: Mercedes; Lexus)

Non-sustainable Competitive Advantages • Benefits of use • the value of a product is in what the product will do for the person who buys it • marketers highlight the benefits that distinguish its’ product from the competition, hoping to appeal to the competition

Non-sustainable Competitive Advantages • Price • price is only a competitive advantage if the product is less expensive than a competitor’s AND all features of the product are equal • if the products are different, then price is not the main competitive advantage

Non-sustainable Competitive Advantages • Design features • design influences the way a product looks and what it does • design features and changes in design have to catch consumers’ interest to have a competitive edge (eg. cars, fashion industry) • package design also competes for the consumer’s attention (eg. the shape of the bottle, the pattern of the label, the way it opens, the handle) • packages can also be practical and attract attention that way (eg. squeeze bottle, jar that turns into a glass, decorative cookie tin can become a storage container)

Activity • With a partner, list 10 products, and their main competitive advantage • What are the most sustainable competitive advantages?

Competitive Advantages