There are many different ways to get a competitive advantage in the marketplace, and many businesses will focus on a few tried and true methods of gaining a leg up on the competition. These methods can be classified into four different categories which form the basis for understanding how businesses try to compete. Show
TipThe four primary methods of gaining a competitive advantage are cost leadership, differentiation, defensive strategies and strategic alliances. Same Product, Lower PriceCost leadership is the first competitive advantage businesses often attempt to gain. Cost leadership as an advantage occurs when a business is able to offer the same quality product as its competitors, but at a lower price. To use this strategy, a company must find ways to produce goods at a lower cost through the perfection of production methods or by the utilization of resources in a more efficient manner than competitors. Other factors, such as proprietary technology, can also factor into this type of advantage. Cost leadership may be classified as an offensive strategy, whereby businesses attempt to drive competitors out of the market by consistently using price strategies designed to win over consumers. Different Products With Different AttributesDifferentiation is a second strategy that businesses often use to set themselves apart from competitors. In a differentiation strategy, low cost is only one of many possible factors that may set aside a business from others. Business that differentiate themselves typically look for one or more marketable attributes that they have that can set them apart from their competitors. They then find the segment of the market that finds those attributes important and market to them. The process can also work in the other direction with businesses conducting research to determine which things consumers find most important and then developing a niche market for those products or characteristics. Hold Your Positions Through Defensive StrategiesAnother way for a business to gain a competitive advantage is to utilize a defensive strategy. The advantage gained by this type of strategy is that it allows the business to further distance itself from its competition by, in some sense, maintaining a competitive advantage it has gained. Therefore, this strategy is closely related to differentiation and cost leadership because it is a method used by businesses to keep those advantages in place once they have been attained. Whereas the other two strategies are more offensive in nature, this strategy becomes an actual advantage as it becomes increasingly difficult for so-called competitors to offer any real opposition to the business. Pool Resources Through Strategic AlliancesCompetitive advantages can also be gained by businesses that seek strategic alliances with other businesses in related industries or within the same industry. Businesses have to be careful not to cross the line between alliances and collusion, though. Collusion occurs when businesses within the same industry work together to artificially control prices. Strategic alliances, on the other hand, are more along the lines of joint ventures that businesses use to pool resources and gain themselves exposure at the expense of other competitors not in the alliance.
In business, establishing an edge over the competition is the holy grail. Once you have it, sales and success are sure to follow. But actually achieving this minor miracle, especially in a new-to-you international market, requires a significant investment in research, marketing and product development. Since this is what business all strive for when they go global, and there is no magic formula for success, we thought it was the perfect subject for this month’s #TradeElite Twitter chat. FITT’s monthly Twitter chats bring together an expert panel – the “#TradeElite”, typically with diverse geographical, sector and focus backgrounds, and ask them to answer questions about the topics that matter most to you, out there making trade happen. Though we feature a panel, we open every chat to participation from all. And through these interactive chats a wave of useful insights and advice pours in and we share it with you here. Enjoy, and join us next month (scroll to the bottom of the article for details)! Panelists:Rob Ward (@1robward) Co-founder of Grocery Accelerator Ltd, the UK’s leading provider of investment funding, coaching and mentoring for early stage FMCG products in the food & drink grocery market, based out of Norfolk, UK. Simon Slyper (@SimonTradeBuzz) International Trade and Compliance Specialist for Amscan, the largest designer, manufacturer and distributor of decorated party goods and party accessories in the world, based in New York City, USA. Kevin Sullivan (@KPSully448) Regional Account Manager / Food & Beverage Sector Lead at Export Development Canada, based in the Greater Toronto Area, CA Audrey Ross (@tresAudrey) Logistics & Customs Specialist at Orchard International Inc, a full-service provider of turnkey solutions and sourcing for private label cosmetics, beauty, and bath products, based in Toronto, CA Here’s a good place to start: What does it mean to have a competitive edge within a market?
What are some strategies that your business can take to develop close relationships with local businesses in the new market you are trying to enter?
What legal strategies and concerns must your business take into account when entering a new market?
Is it necessary to design new products/services in a new market?
How important is speed to market when it comes to being competitive?
What about marketing, messaging and local endorsements? How important are these and what are some success strategies?
Do you need to have boots on the ground to compete in an international market?
What are some warning signs that you may have trouble competing in a certain market?
Read the rest of the chat and join future discussions by following the #TradeElite hashtag. And stay tuned for the next #TradeElite chat, coming up Thursday, June 14 at 2:30-3:30PM ET, and if you haven’t yet, join us on Twitter at @FITTNews. About the author Author: Pamela HyattI am the Content Marketing Specialist for the Forum for International Trade Training (FITT). You can find some of my work on TradeReady.ca. My background is in copywriting, journalism and social media. My passion lies in connecting people to the stories that are most important to them. View all posts by Pamela Hyatt What are the five main ways to gain a competitive edge?Here are 5 strategies you can implement to gain a competitive edge in your industry:. Cost Leadership. Being a cost leader means your business has the objective of creating more value for customers by having lower prices. ... . Differentiation Leadership. ... . Cost Focus. ... . Differentiation Focus. ... . Analysing Competitors.. What are the 4 methods of gaining competitive advantage?The four primary methods of gaining a competitive advantage are cost leadership, differentiation, defensive strategies and strategic alliances.
What is competitive edge in the market?What Is a Competitive Advantage? Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.
What are the strategies for competing in global markets?Options for Competing in International Markets. Learning Objectives. ... . Exporting. Exporting involves creating goods within a firm's home country and then shipping them to another country. ... . Licensing. ... . Franchising. ... . Joint Ventures and Strategic Alliances. ... . Creating a Wholly Owned Subsidiary. ... . References. ... . Image description.. |
