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Competitive Advantages

Learn about sustainable and non-sustainable competitive advantages, including examples of companies that excel in each category. Understand how unique selling propositions, lower production costs, serving niche markets, customer loyalty, promotion, placement, quality, benefits of use, price, and design features can give a business a competitive edge.

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Competitive Advantages

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  1. Competitive Advantages BMI3C

  2. 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)

  3. 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

  4. 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)

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

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

  7. 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

  8. 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

  9. 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

  10. 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)

  11. 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

  12. 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

  13. 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)

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

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