Competitive Advantage is the advantage one firm has over its competitors, enabling it to generate more business. Each component of the market mix is important to attain a competitive advantage. The best strategy to stay ahead of our competitors is placing the right product, at the right price, at the right place, at the right time.
The following are the strategies for competitive advantage:
Product Mix: A product is a combination of various physical attributes like color, design, features, performance and nonphysical attributes like value, quality, etc. A product is differentiated from its competitors based on its design, technology, usefulness, value, convenience, branding, packaging, and/or warranty.
Price Mix: The price of a product is dependent on the cost of material, product differentiation, competition, market share, and the customer’s perceived value of a product. The following are strategies applied to fix product price:
- Fix price based on competition
- Skimming: Pricing the commodity high in comparison to its competitors, then reducing it gradually
- Penetration Pricing: Fixing price lower than the competition
- Psychological Pricing: Pricing which is more appealing to the customer like $49.99
- Cost-Plus: Pricing by adding the cost of bringing the product to market and profit
Place: A variety of distribution channels are available today. Deciding the best channel plays a key role in gaining an advantage. The various channels could be retail, wholesale, Internet, direct sales, and/or peer-to-peer.
Promotion Mix: Effectively communicating about the product to the target market is very critical. Promotion decisions could include special offers, introductory offers, endorsements, advertisements, user trials, joint ventures with supplies and distributors, direct mailing, and personalization.
