In today’s world, with big corporations that have the influence and wealth of nations and startups springing up everywhere, your business’s viability will depend on how your product will stand out in the market. You can do it by enhancing your Competitive Advantage.
The former CEO of General Electric, Jack Welch, has said, “If you don’t have a competitive advantage, don’t compete.”
Does this mean that your startup is bound to fail if your product doesn’t stand out? Well, it’s about finding your competitive advantage and promoting them the right way to gain prospective investors or loyal customers. Your product doesn’t have to be different from others or solve a unique problem others can’t solve. Instead, you have to find one unique selling point using which you can promote your product in no time.
How do you understand the competitive advantage of your startup? That’s what we are going to look at in this blog.
Main Areas To Focus
There are four main areas you can look for the competitive advantage of your product:
- Your product: How unique and innovative is your product?
- Your product’s cost: How cost-effective is your product? Where can you cut costs to deliver the product at a lower price?
- Distribution: The accessibility of your product or service. What are the unique ways in which you distribute your product?
- Execution: What are the exceptional advantages and capabilities of your Startup team?
You don’t need to have all of these competitive advantages to become a key player in the market. However, as an entrepreneur, you can identify one of two of these factors that stand out and emphasize them in your marketing and promotion. That way, you will attract both investors and customers according to the competitive advantage you identified for your startup.
How To Develop A Competitive Edge For Your Startup?
Many entrepreneurs start a business because they find a competitive edge in the market and have the skill to develop the product according to that need. Others might need to research to identify their competitive advantage, as they may have introduced their product to a very competitive market.
Either way, your identified competitive edge will have centre stage in your elevator pitch, business model, taglines, and advertising. It is the first thing that will attract someone to your product and the determining factor in conversions.
Strategies To Find Your Competitive Edge In The Market
There are value disciplines a business owner should focus on when identifying the competitive edge for their startup.
Value disciplines, given by Michael Treacy and Fred Wiersema, are factors that help an organization excel by focusing on what it is good at. The value position is determined by the opinion of people outside the enterprise, like the organization’s customers or suppliers.
There are three types of value disciplines: Operational Excellence, Customer intimacy, and Product leadership. Let’s look at them one by one.
How well is your startup doing on an operational level? An enterprise with a great team, streamlined operations, and influential economies of scale will provide its customers with the best products at low costs.
- The team that you put together for your startup is critical. They should have the right expertise and commitment to the product you are delivering. Often, startups rely on their team for success. Business owners should invest in the group to give you the right solutions for the problem.
- The technology your startup uses is another factor that determines operational excellence. Using the right technology will make the production process streamlined and cost-effective, with favourable economies of scale. As a result, your product will have good quality and proper deliverance at a fair price.
- The business model: A well-researched business plan is your most significant advantage. Create a program that brings out something unique to the market.
How do you handle the problems of your customers? The type of customer service you provide makes a lot of impact in landing a sale and retaining customers. Building a long-term bond with the customers should have prominence over single purchases.
Suppose you are planning to gain a competitive advantage through customer intimacy. In that case, you can deliver tailor-made products and provide one-to-one solutions to your client’s problems. By increasing customer satisfaction, you can ensure that they’ll make you their supplier in the future. You need an exhaustive Customer Relationship Management to tackle this.
Apple Inc. is the best example of a company that gained a competitive advantage through product leadership. Macintosh was the first successful personal computer with a mouse and a graphical user interface. Innovative and unique product lines remain Apple’s most significant selling point.
If your strategy involves Product leadership, you need to invest in Research and Development. You should create innovative solutions or state-of-the-art products to become the market leader.
Micheal Porter’s Activity Positioning Strategy
In 1996, Micheal Porter wrote “What is Strategy,” introducing the concept of activity positioning strategies. They are paths that businesses can take to gain a competitive advantage within value disciplines. If you are a product leadership strategy to gain an edge in the market, the Activity Positioning Strategy tells you which routes to take.
There are three activities in this positioning framework: variety-based, needs-based, and access-based activities. Let’s look at each of them.
In this strategy, a business produces just a part of an entire industry’s products or services. It limits its choice of products in that industry but creates more specialized solutions. It allows the company to scale through specialization and allocating resources to specific areas that lead to innovation, better services, and lower costs.
Many startups use this strategy in India. This way, a company creates its niche where competition is minimal as the specialization is high. A company that produces equipment for cardio-related issues is an example of this.
Here, the company gives prominence to the customer’s needs and finds solutions. Hence, to do this, a business identifies the pain points of its target audience and builds a business model to deliver products accordingly. The service provided from the initial contact till the delivery of the product or service is essential here, for-profit and market retention.
Pinterest illustrates how a ‘Needs-based strategy’ is used to build a niche market. It appeals to a specific audience, mainly women, who like to use networking to discover and buy new things. As a visual-based list interface, it attracts designers, artists, and creators who can sell their products to interested audiences or use the interface to promote their works.
Its success has been tremendous in that 93% of users have used the platform to plan for purchase, and then 52% have gone online to buy it. In addition, it is the second-highest source of referral traffic to Shopify.
Access-based positioning targets customers with similar needs but with varied access routes to the product or service. Access means how easily they can reach that product or service. It can be defined as customer geography or customer scale. So, a business needs to develop different delivery methods to serve its customers effectively.
Ecomexpress is an excellent example of this type of competitive advantage. It provides delivery services to all e-commerce industries in India. That way, it fills the access gap between the buyers in remote areas to the e-commerce companies based in the cities.
These can be used as startup tips for gaining a competitive advantage for your company. These strategies are employed by companies when they make business models and compile intelligence about market competition and new opportunities.
Is Your Competitive Advantage Sustainable?
The sustainability of your business model is also essential when it comes to long-term success and conversion. For example, while product leadership or cost leadership strategies can give substantial advantages, they may not be sustainable or long-term. This is because the market fluctuates, and new players bring more value and service.
That is why it’s crucial to identify a sustainable competitive advantage that stands the test of time. Your business model should target a niche market with a genuine need and then provide them with the best quality of service. Finally, be flexible in your strategies and adapt to changes that constantly impact the market.
Identifying What Works For You
Ultimately, it comes down to the business idea you want to invest in and your target audience. Your success as an entrepreneur is identifying the best competitive advantage for your product in the market.
There is no need to struggle because of the lack of information about your competitive advantage. Instead, do a SWOT (Strengths, Weaknesses, Opportunities, and Strengths) analysis of your business plan. Then, conduct surveys of potential customers in your industry to know their specific needs and focus on them. You can also put up a launch page for your business and invite responses from your target audience.
Incorporate that information into your business model. Then, identify the best way to position your business plan and promote your brand or your product with that advantage in focus. The right amount of strategizing for the right market will help you overcome any challenges.
Do you ever feel that you have a lot of problems in your business but no one to help you out? Well, fret no, we have a solution for you. Just fill out this tiny form and let us help you find a solution to your business problems.