Competitive Advantage

Many firms strive for a competitive advantage, but few truly understand what it is or how to achieve and keep it.A competitive advantage can be gained by offering the consumer a greater value than the competitors, such as by offering lower prices or providing quality services or other benefits that justify a higher price. The strongest competitive advantage is a strategy that cannot be imitated by other companies.

Competitive advantage can be also viewed as any activity that creates superior value above its rivals. A company wants the gap between perceived value and cost of the product to be greater than the competition.

There are three generic strategies that firm's may use to gain competitive advantage: cost leadership, differentiation, and focus. A firm utilizing a cost leadership strategy seeks to be the low-cost producer relative to its competitors. A differentiation strategy requires that the firm posses a non-price attribute that distinguishes the firm as superior to its peers. Firms following a focus approach direct their attention to narrow product lines, buyer segments, or geographic markets. Focused firms will use cost or differentiation to gain advantage, but only within a narrow target market.

Creating a blog

I have successfully created a blog.

Distribution Channel

Distribution channels include wholesalers, e-commerce websites, catalog sales, consultants, a direct sales force who sell over the phone, in person or both, dealers, home shopping networks and retailers. The distribution channel or channels selected can dictate what the rest of the marketing strategy would be, as they influence the buyer directly. Advertising and other marketing methods would then appeal to the buyer's demographic. Small businesses with limited resources or financial support must perform a careful market analysis to determine which distribution channel is best suited for their customers.

PRICING STRATEGY

While developing pricing strategy, it is important to remember that there is an implicit relationship between price, value and volume. In developing your pricing strategy, it is also essential to recognize the dynamic market relationships between price, perceived value and volume, or quantity.

We usually will pay higher prices for things that have high-perceived value and are scarce in terms of quantity available like a limited edition Ferrari. At the opposite end of the spectrum, we expect to pay low prices for mass produced items that are not readily distinguishable among competing brands like copy paper.

Determining a value price is a little more difficult because one person's expensive, or yet another person's perception of cheap. So how do you determine the right price for your products or services? It requires taking into account all three factors of price, value and volume to achieve the right balance of all  these factors to maximize customer acceptance and your sales and profits.

Pricing is customer centric and therefore, you should not rely on what someone else tells you are good for your customers. Their customers are usually not the same as yours. Test your pricing strategies to confirm what works best for you, given your cost structure, profit goals and what your specific market will consume at various price points is essential.