One reason many businesses fail is that they don’t have a clear value proposition. If you don’t know why your target customers would choose your business over your competitors, neither will they. A value proposition is needs-based. To establish your business’s main value proposition(s), market intelligence is essential. Focus on the right value proposition and do it better than your competitors and you will gain a competitive advantage.
This article is a deep-dive into how to secure a competitive advantage in your niche. It will examine competitive strategies that win customers, and detail how you can most effectively apply them to your business. Want to strengthen your value proposition? SurveyMonkey can help. You’ll learn some of the features of SurveyMonkey’s leading market research platform that will generate the intelligence you need to make more informed business decisions and optimise your return on investment.
Businesses have a competitive advantage if they possess some attribute that outperforms their rivals. That is, they have the competitive edge in their respective niche. It may be, for example, that the business has a technological advantage and can either produce goods or services more cost-effectively or at a higher quality. A competitive advantage puts a business on the fast-track for growth as it is a clear and differentiated value proposition for customers. With a competitive advantage, businesses can build brand loyalty and better acquire new customers, adding profitability and winning a greater market share. Gaining a competitive advantage should be a universal business goal. It is the key to success.
There are as many types of competitive advantage as possible business attributes. Every aspect of your business could generate a competitive advantage. But, in general, the three pillars of competitive advantage are:
First-mover advantage is when a business identifies a need that is not currently being fulfilled by any of its competitors and offers a solution. For example, Uber successfully disrupted the UK taxi market with its use of technology and cheaper fares. Cost-based advantage is when a business achieves the best value on the market. This isn’t necessarily the lowest price point but might be the best quality for the best price, for instance. An example of cost-based pricing is Ryanair, which offers flights on average for a fee below its competitors, while Apple employs a value-based pricing strategy considering not only production costs but what customers are willing to pay. And genuine USP, or unique selling point, is when your product or service offers something different from alternatives on the market. Again, the difference has to align with the needs of your target customers. Here, Starbucks is a good example. The café chain spotted a need to have a cosy space similar to a living room, where customers could spend time while consuming coffee and snacks. Now, it also pioneers novel drinks that sell at a premium.
However, as mentioned, these three pillars incorporate any number of attributes that could be utilised to gain a competitive advantage. For example, your shop may have the most knowledgeable employees in town – and if you advertise that fact, customers are more likely to choose your business to get the best customer service.
We’ll get into how to turn the pillars of competitive advantage into competitive strategies. But first, it’s important to note that competitive advantage should be continuously managed or else it risks being short-lived.
Competitive advantage may be temporary or long-term. This defines whether the competitive advantage is sustainable or unsustainable.
A sustainable advantage is an ongoing competitive edge over your competitors. For instance, your branding is stronger than your competitors’ and you are the must-have product in your industry. As the saying goes, no-one buys a Rolex to tell the time. Another example, as mentioned above, is Apple, which has a loyal following despite above-average pricing.
An unsustainable advantage is one that only lasts a short time, usually because the strategy was time limited. For example, a new product feature may generate a competitive advantage – until your competitors catch on and update their products in a similar way.
So how can you get ahead – and stay ahead? You need a competitive strategy. Here’s an overview of the best five competitive strategies.
Pricing is crucial and depends on a number of factors. However, in general if your product or service is a similar quality to that of your competitors but costs less you will gain a competitive advantage. But bear in mind, this competitive advantage has to be long-term if you are going to achieve a sustainable advantage. An example of cost leadership is Primark, which sells fashion at a fraction of the price of its competitors.
Set yourself apart from your competition with a superior product or service. Differentiation simply means, in this context, you have a genuinely unique selling point. You bring something to your market that none of your competitors do, that is, you’re the only one fulfilling a specific need, or, you do it best. For instance, streaming giant Netflix also produces its own content to secure differentiated sustainable competitive advantage.
The strength of your positioning comes down to branding and corporate assets. Branding, or your corporate identity, is vital for establishing a competitive advantage. Have some keywords in mind that you would like your target customers to associate with your business, for instance, you might aim for ‘trustworthy’ or ‘value for money’. The second part, corporate assets, relates to your resources – tangible or intangible. It might be your intellectual property or technology, for example. If your assets outperform those of your competitors, you will gain a competitive edge. For instance, McDonald’s has a strong brand because of its agile approach to positioning, regularly refining its products and services and particularly focussing on family experiences.
This competitive strategy, also known as the Focus Strategy, is to narrow down your target market to a pinpointed subset. This requires significant analysis of your market to whittle it down to a highly targeted market for which you can become the must-have product or service. In other words, identify your niche and double-down. An example of pinpointing a niche is Lush, which targets ethically conscious cosmetics consumers with their emphasis on handmade products and interactive sales approach.
Customer satisfaction is probably the most accessible competitive strategy. Here things like user-friendliness or customer experience come to the fore. The happier your customers are with your product or service, the better your retention rates and net promoter score (how likely your customers are to recommend you). If you build stronger customer relationships compared to your competitors, you will gain a competitive advantage. Superior customer satisfaction is one part of how supermarket ALDI climbed into the UK’s top four.
These five strategies to gain competitive advantage are tried and tested and can secure sustainable advantage if implemented successfully. But where to start? Know your target market and your customers inside and out.
As with anything, knowledge is power. In business that means market research. To gain a sustainable competitive advantage, that market research has to be continuous. Never assume the needs of your target customers are fixed, or that your competitors are static. This is the route to irrelevance. While there are many ways to conduct market research, all have their own value. For ongoing market research, the most cost-effective solution is regular surveys of your target market and customers.
There are three approaches businesses can use to conduct ongoing market research: Doing It Yourself (DIY), using a survey platform (such as SurveyMonkey) or hiring a market research firm. DIY is the least expensive, although it can result in poor return on investment if bad questions or survey design are implemented. On the other end of the scale, market research firms will also eat into your return on investment with their costs. The survey platform is a popular choice to maximise return on investment with their expertise and technological solutions.
Tip: Use SurveyMonkey Genius to write better survey questions. SurveyMonkey Genius brings together AI, survey experts and machine learning to give personalised recommendations to improve the quality of your surveys and maximise your surveys’ return on investment.
Once your survey questions and design are finalised, you need to send them to your target audience (your target market or customers). This presents another pain point for the DIY approach. Ideally, this process should optimise efficiency and ensure actionable feedback is returned promptly. Further, if you reach the wrong people, you will have data that has to be excluded during analysis.
Tip: Use SurveyMonkey Audience to get insights from your target customers. With SurveyMonkey Audience, you tap into a global panel of over 175 million people in more than 130 countries. Choose from over 50 attributes to reach your ideal survey audience instantly.
A survey can gather either generic or precise insights, depending on what questions are asked and to whom. Essentially the insights you want to gain a competitive advantage are the needs of your market niche and how well you are meeting those needs with your current customers, i.e. customer satisfaction. A series of precise surveys will provide you with the relevant data to determine the strength of your value proposition.
For example, helpful surveys could be:
Tip: Use SurveyMonkey to get the precise insights you need to improve your business and gain a competitive advantage. Our example questionnaires and sample survey templates are compiled by market research survey experts and provide a ready-to-use question bank on all the topics mentioned, and much more. You can get started in minutes.
Survey intel is powerful - if you’re asking the best questions to the right people, that is. Armed with market research survey insights, you will have the right information to see where a competitive advantage is to be gained in your niche and how you can achieve it for your business. Regularly repeating the process, will enable you to grow that competitive advantage and maintain it for the long-term.
Here are three famous brands that won a competitive advantage through one of the competitive strategies outlined above. Did they achieve a sustainable advantage? Let’s find out.
Apple iPhone
Apple caused a sensation in 2007 with the first-generation iPhone. Its competitive advantage did not simply rely on technology but superior design and aesthetics to its competitors – who shortly followed Apple’s launch with their own smartphones. Around quality and build, Apple was able to gain a sustainable advantage through positioning. In the UK, Apple leads the mobile device market for 2022 with more than 50% of the market share.
Snapchat Stories
The social media app popular with Generation Z launched the innovative Snapchat Stories in 2013, attracting more than 30 million users with its first-mover competitive advantage. However, Instagram was not far behind. By 2016 Instagram added the Instagram Stories function – openly copying their rival. Snapchat’s first-mover advantage proved unsustainable. Currently, Snapchat records 363 million daily users. Instagram’s daily user count stands at 500 million.
Amazon
Amazon started as an online marketplace for bookselling back in 1995. Within a month it was shipping books all across the US and internationally. It rapidly expanded to include other product types. Today Amazon is a Big Five American information technology company. Amazon’s competitive advantage was always staying one step ahead in technological innovation. A multinational technology company with its finger firmly on the pulse of market needs, Amazon is the king of quick surveys throughout its customer journey. Amazon’s competitive advantage has been shown to be a sustainable advantage.