The modern world can be characterized by a continuous contest between organizations. A firm must have a competitive advantage (CA) over rivals to attract more clients and have greater marketplace success alongside higher profitability (Thompson et al., 2020). A truly beneficial CA must be sustainable rather than temporary, meaning that a business must maintain its CA in spite of opponents’ best efforts to nullify, replicate, or surpass the edge (Thompson et al., 2020). Depending on their goals and capabilities, companies can choose from five distinct strategic approaches (SAs) to achieve a sustainable competitive advantage (SCA).
The first SA toward obtaining a SCA is a low-cost provider strategy. Such a course aims at a cost-based advantage by offering products or services of reasonable quality but at a lower price than rivals (Kuswatuka & Zimuto, 2019; Thompson et al., 2020). The approach can appeal to a broad range of customers while preventing other businesses from participating in the competition, thus leading to a higher profit margin (Kuswatuka & Zimuto, 2019; Thompson et al., 2020). For example, Walmart is a corporation that has a durable market position due to having overcome rivals by supplying cheaper products (Thompson et al., 2020). A low-cost provider strategy is a way to stand out among other companies and satisfy clients’ needs.
The second SA that can be helpful in achieving a SCA is a broad differentiation strategy. The method is based on distinguishing a product or a service from what is offered by competitors in a way that would appeal to a vast group of customers (Thompson et al., 2020). A crucial aspect of such an approach is always to be innovative so that rivals would not be able to replicate any unique features (Thompson et al., 2020). For instance, Rolex discerns from others by offering luxury and prestige, while Johnson & Johnson guarantees reliability in baby products (Thompson et al., 2020). Companies adopt a broad differentiation strategy to distinguish from their competitors while attracting a wide range of buyers.
A focused low-cost strategy is the third SA that can be used to acquire a SCA. Companies that embrace such a method provide products or services at a lower price but to a particular client segment or a distinct market niche (Thompson et al., 2020). For example, IKEA concentrates on modular furniture that is ready for assembly and offers its items to the furniture market (Thompson et al., 2020). Accordingly, private-label manufacturers supply supermarket customers with cheaper products than branded ones (Thompson et al., 2020). A focused low-cost strategy prioritizes a narrow group of buyers interested in certain prices.
The fourth SA practical in obtaining a SCA is a focused differentiation strategy. The approach concentrates on a specific client segment whose needs can be satisfied by customized attributes of certain products or services (Thompson et al., 2020). For instance, Lululemon focuses on high-quality yoga clothing for people involved in the practice, while LinkedIn specializes in connecting individuals interested in social networking for business and occupation (Thompson et al., 2020). A focused differentiation strategy is based on unique offerings meant to meet the demands of a narrow group of customers.
The fifth SA toward achieving a SCA is a best-cost provider strategy. Businesses that adopt the method deliver more value in terms of quality, performance, and service and conquer buyers’ price expectations (Thompson et al., 2020). The approach aims at acquiring better differentiating attributes while maintaining lower costs (Thompson et al., 2020). For example, Target provides limited-edition lines by prominent designers but also creates an atmosphere that appeals to discount store shoppers (Thompson et al., 2020). A best-cost provider strategy offers high-quality products for lower prices.
To conclude, companies can achieve a sustainable competitive advantage depending on their ability to manage costs and their preference in the manner of distinguishing from others. Businesses can choose to embrace one of the five strategic approaches to attract different customers for a long period. Although a SCA can be obtained in several ways, each requires firms to put substantial effort into overcoming their competitors.
References
Kuswatuka, E., & Zimuto, J. (2019). An investigation of survival strategies employed by microfinance institutions for competitive advantage. Business & Social Sciences Journal, 4(2), 64-83.
Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2020). Crafting & executing strategy. McGraw Hill.