Competitive Advantage

Overview

A little competition is a good thing but it could also be costly and risky. How competition are being handle could be a direct link to the success or failure of the business. A business must create a competitive edge and having this means possessing an advantage over the competitors.

Competitive advantage exists when a business’ product or service is being patronized by its target market customers because they find it better than that of its competitors. Unfortunately, many entrepreneurs are having difficulty in finding an appropriate starting point due to lack of knowledge on the systematic investigation needed to develop a real competitive advantage. To create a solid strategic plan, the first step is to define and analyze the target market first. What are you selling and to whom?

Identifying market or customers

Market is a group of customers or potential customers who have a purchasing power and unsatisfied needs. A perfect way to identify what the customers want is by talking to them. Customer feedback can be a cheap and valuable tool in creating a competitive edge. To clearly identify the market or the customer base, the following questions could be a guide:

* Are the customers primarily male or female?

* Approximately how old are the customers?

* Where would be the location of the prospective customers?

* What is the average income level of the customers?

* What are the customers’ needs?

* What motivates the customers to buy? Is it the price, quality, credibility, customer service, location, etc.?

* When do the customers typically buy? Is it daily, weekly, monthly, annually, or seasonally?

* What products or services are customers willing to spend more on?

* What products or services are customers willing to spend less on?

* What are the customers’ buying trends and habits?

Segmentation Variables

The total market should be divided into appropriate segments. An entrepreneur must consider...