One of the most fundamental, timeless, and powerful aspects of marketing is development of a competitive advantage. This is done through 4 means - cost, product/service, niche, and...
One of the most fundamental, timeless, and powerful aspects of marketing is development of a competitive advantage. This is done through 4 means - cost, product/service, niche, and sustainability. Describe each of these and give real examples. If you have examples of business that have failed because of using the wrong strategy, or using the right strategy but with poor execution, you can share that as well.
Companies work to build and maintain a competitive advantage so as to keep and also increase market share. Cost, Products & Services, Niche, and Sustainability contribute to this competitive advantage as follows:
Cost is the financial resources expended to manufacture a product. It costs companies money to make a product. Their ultimate objective is to make a quality product at the lowest possible cost. Subsequently, companies usually desire to sell the product at the highest price the market will bear. However, some companies will take a hit on profit margin if they can sell more products at a lower price, instead of much fewer products at a higher price. An example of cost containment is McDonald’s and its’, relatively speaking, lower priced menu items as compared to many other chains. McDonald’s strives to contain costs while offering a varied menu at reasonable prices. Their sustained success over the decades proves they have the right business model
Products & Services
The key to successfully offering products and/or services to consumers is to offer innovative products and services. These must promise and then deliver benefits that the competitions’ doesn’t. This is a way for a business to present itself as unique. A product or service benefit that a competitor does not offer becomes the company’s USP (Unique Selling Point). They can market and promote that they are exclusive to this benefit. As a result they present their business as distinct. This helps them gain a competitive advantage because customers will notice that they are inventive and provide solutions that are not the typical run-of-the-mill offerings of certain competitors. A contemporary example would be Apple, Inc. and their innovative products.
To gain a competitive advantage, companies with good business acumen will target a specific niche market. Generally, they will go after a niche that most of their competitors are not going after. In essence, the company is not trying to promise everything to everyone. They know it’s in their best interests to target a certain subset of a much larger market. Consequently, they target their products, services, advertising, promotions and such to encouraging this niche market to buy from them. In Canada, an example would be Holt Renfrew, an upscale luxury department store, with its’ flagship shop in the heart of Toronto. This store targets the niche of higher-income shoppers (predominantly female), with significant disposable income who are interested in the top high-price, luxury designer fashions. Holt Renfrew is not targeting your typical discount or lower-end department store shopper.
This involves keeping a business viable for the long-term. Companies strive for sustainability through consistent hard work in offering products, services, guarantees, warranties, skilled employees and more to their customers. They work to establish their enterprises as distinct from others so that they develop a following of very loyal customers. This contributes to their sustainability for the long run. An example, I believe, in the retail arena is PetSmart. They offer a plethora of products for pet owners in a unique retail setting. On top of that, they offer Pet Training Classes, Pet Grooming, Animal Adoption Services, and more and do it in a compelling way. They are a pioneering company that has gone beyond the typical paradigm of a local pet shop.