Competitive advantages of the company. Competitive advantage of firms on a global scale

The world does not stand still, information is constantly updated, and market participants are in search of marketing ideas, ways of doing business, and new views on their product. Any business is tested for strength by its competitors, so when developing a development strategy, it is wise to take into account their influence, market share, positions and behavior.

What is competitive advantage

Competitive advantage is a certain superiority of a company or product over other market participants, which is used to strengthen its position when reaching the planned level of profit. Competitive advantage is achieved by providing the client with more services, higher quality products, relative cheapness of goods and other qualities.

A competitive advantage for a business provides:

– prospects for long-term growth;

– stability of work;

– obtaining a higher rate of profit from the sale of goods;

– creating barriers for new players when entering the market.

Let us note that competitive advantages can always be found for any type of business. To do this, you should conduct a competent analysis of your product and the competitor’s product.

What types of competitive advantages are there?

What allows you to create competitive advantages for a business? There are 2 options for this. First of all, the product itself can provide competitive advantages. One type of competitive advantage is the price of a product. Buyers often prefer to buy a product only because it is cheap relative to other offers with similar properties. Due to its low cost, a product can be purchased even if it does not provide much consumer value to buyers.

The second competitive advantage is differentiation. For example, when a product has distinctive features that make the product more attractive to the consumer. In particular, differentiation can be achieved through characteristics that are not related to consumer properties. For example, due to the trademark.

If a company creates a competitive advantage for its product, it can uniquely differentiate its position in the market. This can be achieved by monopolizing part of the market. True, such a situation contradicts market relations, since the buyer is deprived of the opportunity to choose. However, in practice, many companies not only provide themselves with such a competitive advantage of the product, but also maintain it for quite a long time.

4 criteria for assessing competitive advantages

Utility. The proposed competitive advantage should be beneficial to the company's operations and should also enhance profitability and strategy development.

Uniqueness. A competitive advantage should differentiate a product from its competitors, not replicate them.

Security. It is important to legally protect your competitive advantage and make it as difficult as possible to copy it.

Value for the target audience of the business.

Strategies for Competitive Advantage

1. Cost leadership. Thanks to this strategy, the company receives income above the industry average due to the low cost of its production, despite high competition. When a company receives a higher rate of profit, it can reinvest these funds to support the product, inform about it, or beat competitors due to lower prices. Low costs provide protection from competitors, since income is preserved in conditions that are not available to other market participants. Where can you use a cost leadership strategy? This strategy is used when there are economies of scale or when there is a prospect of achieving lower costs in the long term. This strategy is chosen by companies that cannot compete in the industry at the product level and work with a differentiation approach, providing for the product distinctive characteristics. This strategy will be effective when there is a high proportion of consumers who are price sensitive.

• Information about competitors: 3 rules for its collection and use

This strategy often requires unification and simplification of the product to facilitate production processes and increase production volumes. It may also require a high level of initial investment in equipment and technology to reduce costs. This strategy requires careful monitoring to be effective. labor processes, design and development of products, with a clear organizational structure.

Cost leadership can be achieved through certain opportunities:

– limited access of the enterprise to obtaining cheap resources;

– the company has the opportunity to reduce production costs due to accumulated experience;

– management of the company’s production capacity is based on the principle that promotes economies of scale;

– the company provides for scrupulous management of its inventory levels;

– strict control of invoices and production costs, abandoning small operations;

– availability of technology for the cheapest production in the industry;

– standardized production of the company;

2 steps to building a competitive advantage

Alexander Maryenko, project manager of the A Dan Dzo group of companies, Moscow

There are no clear instructions for creating a competitive advantage, taking into account the individuality of each market. However, in such a situation, you can be guided by a certain logical algorithm:

Determine the target audience that will buy your product or influence this decision.

Determine the real need of such people related to your services or products, which is not yet satisfied by suppliers.

2. Differentiation. When working with this strategy, the company ensures unique properties for your product, which are important to the target audience. Consequently, they allow you to set a higher price for the product compared to competitors.

A product leadership strategy requires:

– the product must have unique properties;

– the opportunity to create a reputation for high quality product;

– high qualification employees;

– the ability to protect competitive advantage.

The advantage is the ability to sell the product at higher prices than the industry average, avoiding direct competition. Thanks to this strategy, it is possible to achieve better commitment and loyalty to the brand, under the conditions of competent construction of the assortment and the presence of competitive advantages.

Risks or disadvantages of using a differentiated marketing strategy:

– a significant difference in prices is possible, due to which even the unique qualities of the product will not attract a sufficient number of buyers;

– a product may lose its uniqueness when its advantages are copied by cheaper products.

This strategy is used for saturated markets by companies that are ready to make high investments in promotion. There is no need to talk about low cost - it will be higher than the market average. However, this is offset by the ability to sell the product at higher prices.

3. Niche leadership or focus. The strategy involves protection from major competitors and substitute products. In this case, it is possible to achieve a high rate of profit by more effectively meeting the needs of a narrow audience of consumers. This strategy can be based on any type of competitive advantage - the breadth of the offered range or the lower price of the product.

In this case, the company is limited in market share, but it does not need significant investments to develop the product, which is a chance for the survival of small enterprises.

Risks and disadvantages of using a focusing strategy:

– there is a high probability of large differences in product prices compared to leading brands on the market, which can scare away its target audience;

– the attention of large market participants switches to niche segments in which the company operates;

– a serious danger of reducing the difference between the needs of the industry and the niche market.

Where to Use a Niche Leadership Strategy? Working with this strategy is recommended for small companies. It is most effective when the market is saturated, there are strong players, when costs are high or when costs are uncompetitive in comparison with market leaders.

Three stages of service strategy

Stage I. Innovation. When one of the market participants introduces something new in terms of customer service. The company stands out during this period, given the presence of a new competitive advantage.

Stage II. Addiction. The proposed service is becoming familiar to consumers, and an analogue is gradually being introduced in the activities of competitors.

Stage III. Requirement. For consumers, this offer becomes an integral element of a service or product, becoming a standard.

How to check the level of service in your company

• Conducting informal surveys. The CEO and other managers need to understand consumers’ opinions about the proposed service.
• Conducting formal surveys (focus groups). It would be rational to involve both consumers and representatives of all departments of your company for these events.
• Hire outside consultants to survey company employees. With external consultants, the value of the answers increases (with more candid answers).

How to improve the service

Tatiana Grigorenko, managing partner of 4B Solutions, Moscow

Let's look at general tips for improving service in companies.

1. Surprise, influence emotions. Typically, visitors to the office are offered packaged tea or instant coffee. We decided to pleasantly surprise our customers - the visitor is offered a choice of 6 types of professionally prepared coffee, 6 excellent varieties of tea with signature chocolate for dessert.

2. Break the rules. On modern market It is ineffective to be like everyone else, you need to be better than the rest.

3. Listen to your customers. Do you need to ask your clients what would be of interest to them?

How to create a competitive advantage

When developing a competitive advantage, there are nine criteria for a successful option to consider:

1) Uniqueness.

2) Long-term. Competitive advantage must be of interest for at least three years.

3) Uniqueness.

4) Credibility.

5) Attractiveness.

6) Have ReasonstoBelieve (reason for trust). Specific reasons that will make buyers believe.

7) Be better. Buyers must understand why this product is better than others.

8) Have the opposite. There needs to be a complete opposite in the market. Otherwise it will not be a competitive advantage.

9) Brevity. Must fit into a 30 second sentence.

Step #1. We make a list of all the benefits

Product benefits are sought as follows:

– we ask buyers what competitive advantages they hope to gain from your product;

– make a detailed list of all the properties that the product has, based on the characteristics from the “marketing mix” model:

1) Product

What can you say about the product:

– functionality;

– brand symbols: logo, name, corporate identity;

– appearance: packaging, design;

– required product quality: from the position of the target market;

– service and support;

– assortment, variability.

2) Price

What can you say about the price:

– pricing strategy for entering the market;

– retail price: the selling price of a product must necessarily correlate with the desired retail price, only if the company does not become the last link in the overall distribution chain.

– pricing for different sales channels; are assumed different prices, depending on a specific link in the distribution chain, a specific supplier;

– package pricing: with the simultaneous sale of several company products at special prices;

– policy regarding promotional events;

– availability of seasonal promotions or discounts;

– possibility of price discrimination.

3) Place of sale

It is necessary to have the product on the market in the right place so that the buyer can see it and purchase it at the right time.

What can you say about the sales meta:

– sales markets, or in which the sale of goods is planned;

– distribution channels for selling goods;

– type and conditions of distribution;

– conditions and rules for displaying goods;

– issues of logistics and inventory management.

4) Promotion

Promotion in this case involves all marketing communications to attract the attention of the target audience to the product, with the formation of knowledge about the product and key properties, the formation of the need to purchase the product and repeat purchases.

What can you say about promotion:

– promotion strategy: pull or push. The Push strategy involves pushing goods through the trade chain by stimulating intermediaries and sales personnel. Pull – “pulling” products through the distribution chain by stimulating consumers, the final demand of their product;

– target values ​​of knowledge, brand loyalty and consumption among its target audience;

– required marketing budget, SOV in the segment;

– geography of your communication;

– communication channels for contact with consumers;

– participation in specialized shows and events;

– media strategy of your brand;

– PR strategy;

– promotions for the coming year, events aimed at stimulating sales.

5) People

– employees who represent your product and company;

– sales personnel in contact with target consumers of the product;

– consumers who are “opinion leaders” in their category;

– manufacturers on whom the quality and price of the product may depend;

– privileged consumer groups also belong to this group, including VIP clients and loyal customers who generate sales for the company.

What can you say about working with people:

– programs to create motivation, with the development of relevant competencies and skills among employees;

– methods of working with people on whom the opinion of the consumer audience depends;

– education and loyalty programs for its sales staff;

– methods for collecting feedback.

6) Process

This one applies to the services market and the B2B market. “Process” refers to the interaction between the company and consumers. It is this interaction that constitutes the basis for purchasing on the market with the formation of consumer loyalty.

• Unique selling proposition: examples, development tips

You can talk about programs to improve the process of providing services to your target clients. The goal is to provide the most comfortable conditions for customers when purchasing and using the proposed service.

7) Physical environment

This also applies to the services and B2B markets. This term describes what surrounds the buyer during the purchase of a service.

Step #2: Rank all the benefits

To evaluate the list, a three-point scale of the importance of characteristics is best suited:

1 point - the benefit of this characteristic for target consumers is not valuable;

2 points - the benefit is not primary, which stimulates the purchase of the product in the first place;

3 points - the benefit received is one of the most significant properties of the proposed service.

Step #3. Compare the list of benefits with competitors

The resulting list of characteristics should be compared with your competitors according to two principles: the presence of this property in the competitor, whether the competitor’s condition is better or yours.

Step #4. Seek Absolute Competitive Advantages

Among the sources of absolute competitive advantages, the following should be noted:

– the product is unique due to one or several properties;

– uniqueness in combination of properties;

– special components of the product composition, a unique combination of ingredients;

– certain actions are performed better, more efficiently and quickly;

– features of appearance, shape, packaging, method of sales or delivery;

– creation and implementation of innovations;

– unique technologies, methods for creating a product, patents;

– qualification of personnel and uniqueness of its human capital;

– the ability to provide the minimum cost in your industry, while assuming higher profits;

– special conditions of sales and after-sales service for consumers;

– availability of access to limited raw materials and resources.

Step #5. Look for “false” competitive advantages

First mover. Be the first to announce the properties of competitors’ products, before they have yet communicated them to their target audience;

Performance indicator. Creating your own performance measurement indicator;

Curiosity and interest. You can stand out thanks to a factor that is not considered decisive when purchasing, but will allow you to attract the attention of the target audience.

Step #6. Make a development and control plan

After identifying a competitive advantage, you need to formulate two further plans for marketing actions - a plan for developing your competitive advantage over the next few years and a plan for maintaining the relevance of the presented advantage.

How to Analyze Current Competitive Advantages

Stage 1. Make a list of evaluation parameters

Create a list of key competitive advantages of your product and competitors.

For assessment, a three-point scale is best suited, on which the following are rated:

1 point = the parameter is not fully reflected in the competitive advantages of the product;

2 points = the parameter is not fully reflected in the competitive advantage;

3 points = the parameter is fully reflected.

Stage 3. Make a development plan

Form your action plan aimed at improving the company's competitive advantage. It is necessary to plan improvements on assessment items that received less than three points.

How to develop competitive advantages

Competitive behavior in the market can be of three types:

Creative. Implementation of measures to create new components of market relations to gain a competitive advantage in the market;

Adaptive. Taking into account innovative changes in production, ahead of competitors in terms of modernization of production;

Providing and guaranteeing. The basis is the desire to maintain and stabilize the obtained competitive advantages and market positions in the long term by adding to the range, improving quality, and additional services to consumers.

The duration of maintaining competitive advantages depends on:

Source of competitive advantage. Can be a high and low order competitive advantage. The low-order advantage is represented by the possibility of using cheap raw materials, labor, components, materials, fuel and energy resources. At the same time, competitors can easily achieve low-order advantages by copying and searching for their sources of these advantages. The advantage of cheap labor can also lead to negative consequences for the enterprise. With low salaries for repairmen and drivers, they can be lured away by competitors. The advantages of a high order are the excellent reputation of the company, specially trained personnel, and production and technical base.

The number of obvious sources of competitive advantage in the enterprise. Large quantity competitive advantages of the enterprise will more seriously complicate the tasks of its pursuers-competitors;

Constant modernization of production.

How to survive a crisis and maintain a competitive advantage

Alexander Idrisov, managing partner of StrategyPartners, Moscow

1. Keep your finger on the pulse of events. One of the employees should collect and analyze information about the state and trends of the market, how these trends can affect the business, taking into account the study of consumer preferences, demand dynamics, data on investors and competitors.

2. Develop the most pessimistic forecast for your company.

3. Focus on paying customers.

4. Focus on a narrow range of tasks. You need to carefully examine your company's business model. This does not mean that you need to abolish all areas of your activity. But it is worth focusing on a narrow range of tasks, abandoning non-core tasks or areas that can be outsourced.

• Reframing, or How to deal with customer objections

5. Consider merging with competitors. Many companies are now ready for alliances with competitors on mutually beneficial terms.

6. Maintain relationships with potential investors. Especially important condition during a crisis, you cannot lose contact with investors; it is better to activate them whenever possible.

Information about the author and company

Alexander Maryenko, project manager of the A Dan Dzo group of companies, Moscow. Graduated from the Faculty of Finance of Nizhny Novgorod State University. Participated in projects (more than 10, six of them as a manager) aimed at increasing the profitability of companies' businesses and solving their systemic problems.

John Shoal President of ServiceQualityInstitute, Minneapolis (Minnesota, USA). Considered the founder of service strategy. At the age of 25, he founded a firm specializing in teaching companies about service culture. Author of five best-selling books on the topic of service, translated into 11 languages ​​and sold in more than 40 countries.

ServiceQualityInstitute formed by John Schole in 1972. Specializes in the development and implementation of service strategies in companies. ServiceQualityInstitute specialists have trained more than 2 million people. The main office is located in Minneapolis, branches are located all over the world (in 47 countries), their share is 70% of the total number of representative offices of the company. In Russia, ServiceQualityInstitute and John Shoal are represented by ServiceFirst.

Tatiana Grigorenko, managing partner of 4B Solutions, Moscow.

4B Solutions Company founded in 2004. Provides outsourcing and consulting services. Areas of specialization: improving customer service systems, crisis management, professional legal and accounting support for business. The company's staff is over 20 people. Clients include the Business Aviation Association, Triol Corporation, Rafamet machine tool plant (Poland), ANCS Group, IFR Monitoring, MediaArtsGroup, and the Gaastra boutique chain.

Alexander Idrisov, managing partner of StrategyPartners, Moscow.

StrategyPartners. Field of activity: strategic consulting. Form of organization: LLC. Location: Moscow. Number of personnel: about 100 people. Main clients (completed projects): companies Atlant-M, Atlant Telecom, Vostok, GAZ, MTS, Press House, Razgulay, Rosenergoatom, Russian Machines, Talosto, "Tractor Plants", "Uralsvyazinform", "Tsaritsyno", publishing houses "Prosveshchenie", "Eksmo", Ministry of Information Technologies and Communications of the Russian Federation, Ministry of Regional Development of the Russian Federation, Murmansk Port, Rosprirodnadzor, administrations of the Arkhangelsk, Nizhny Novgorod, Tomsk regions and Krasnoyarsk Territory, Avantix company.

Strategic management is designed to ensure the company's survival in the long term. Of course, when it comes to survival in a competitive market environment, there is no question that a company can eke out a miserable existence. It is very important to understand that as soon as someone connected with a company becomes unhappy with this connection, he leaves the company, and after a while it dies. Therefore, survival in the long term automatically means that the company copes with its tasks quite successfully, bringing satisfaction with its activities to those who enter the sphere of its business interaction. First of all, this concerns customers, employees of the company and its owners.

Concept of competitive advantage

How can an organization ensure its survival in the long term, what must be inherent in it so that it can cope with its tasks? The answer to this question is completely obvious: the organization must produce a product that will consistently find buyers. This means that the product must, firstly, be so interesting to the buyer that he is willing to pay money for it, and, secondly, it must be more interesting to the buyer than a similar or similar product in consumer qualities produced by other companies. If a product has these two properties, then the product is said to have competitive advantages.

Consequently, a company can successfully exist and develop only if its product has competitive advantages. Strategic management is designed to create competitive advantages.

Consideration of the issue of creating and maintaining competitive advantages involves analyzing the relationships and, accordingly, the interaction of three subjects of the market environment. The first subject is “our” company producing a certain product. The second subject Ekt is a buyer who may or may not buy this product. The third buyer is competitors who are ready to sell their products to the buyer, which can satisfy the same need as and a product produced by “our” company. The main thing in this market “love” triangle is the buyer. Therefore, the competitive advantages of a product are the value contained in the product for the buyer, which encourages him to buy this product. Competitive advantages do not necessarily arise from comparing the product of “our” company with the products of competitors. It may be that there are no firms on the market offering a competitive product, but nevertheless the product of “our” company is not sold. This means that it does not have sufficient customer value or competitive advantage.

Types of competitive advantages

What creates competitive advantages? It is believed that there are two possibilities for this. First, the product itself may have a competitive advantage. One type of competitive advantage of a product is its price characteristics. Very often, a buyer purchases a product only because it is cheaper than other products that have similar consumer properties. Sometimes a product is purchased only because it is very cheap. Such purchases can occur even if the product has no consumer utility for the buyer.

The second type of competitive advantage is differentiation. In this case, we are talking about the fact that the product has distinctive features that make it attractive to the buyer. Differentiation is not necessarily related to the consumer (utilitarian) qualities of the product (reliability, ease of use, good functional characteristics, etc.). It can be achieved due to such characteristics that have nothing to do with its utilitarian consumer properties, for example, due to the brand.

Secondly, in addition to creating a competitive advantage in a product, a firm may try to create a competitive advantage for its product in its market position. This is achieved by securing the buyer or, in other words, by monopolizing part of the market. In principle, this situation contradicts market relations, since in it the buyer is deprived of the opportunity to choose. However, in real practice, many companies manage not only to create such a competitive advantage for their product, but also to maintain it for quite a long time.

Strategy for creating competitive advantages

There are three strategies for creating competitive advantage. The first strategy is price leadership. With this strategy, the company's focus when developing and manufacturing a product is costs. The main sources of creating price advantages are:

Rational business management based on accumulated experience;

Economies of scale due to lower costs per unit of production as production volumes increase;

Savings on variety as a result of cost reduction due to the synergistic effect that occurs in the production of various products;

Optimization of intra-company communications, helping to reduce company-wide costs;

Integration of distribution networks and supply systems;

Optimization of the company's activities over time;

Geographical location of the company's activities, allowing to achieve cost reduction through the use of local characteristics.

Implementing pricing strategy creating competitive advantages for a product, the company must not forget that its product at the same time must correspond to a certain level of goodness and differentiation. Only in this case can price leadership bring a significant effect. If the quality of the price leader's product is significantly lower than the quality of similar products, then creating a price competitive advantage may require such a strong price reduction that it can lead to negative consequences for the company. However, it should be kept in mind that cost leadership and differentiation strategies should not be mixed, and certainly should not be attempted at the same time.

Differentiationis the second strategy for creating competitive advantage. With this strategy, the company tries to give the product something distinctive, unusual, that the buyer may like and for which the buyer is willing to pay. A differentiation strategy aims to make a product different from its competitors. To achieve this, the company has to go beyond the functional properties of the product.

Firms do not necessarily use differentiation to obtain price premiums. Differentiation can help expand sales by increasing the number of products sold or by stabilizing consumption, regardless of fluctuations in market demand.

In the case of implementing a strategy for creating competitive advantages through differentiation, it is very important to focus on consumer priorities and interests of the buyer. It was previously said that a differentiation strategy involves creating a product that is unique in its own way, different from the products of competitors. But it is important to remember that for a competitive advantage to emerge, the product's unusualness, novelty, or uniqueness must be of value to the buyer. Therefore, the differentiation strategy assumes the study of consumer interests as a starting point. To do this you need:

It is enough to clearly imagine not just who the buyer is, but who makes the decision on purchase issues;

Study the consumer criteria by which the choice is made when purchasing a product (price, functional properties, guarantees, delivery time, etc.);

Determine the factors that form the buyer’s understanding of the product (sources of information about the properties of the product, image, etc.).

After this, based on the ability to create a product with the appropriate degree of differentiation and the appropriate price (the price should allow the buyer to purchase the differentiated product), the firm can begin to develop and produce this product.

The third strategy a firm can use to create a competitive advantage in its product is focusing on the interests of specific consumers. In this case, the company creates its product specifically for specific customers. Concentrated product creation is associated with the fact that either some unusual need of a certain group of people is satisfied (in this case, the company's product is very specialized), or a specific system of access to the product is created (a system for selling and delivering the product). By pursuing a strategy of concentrated creation of competitive advantages, a company can use both price attraction and differentiation at the same time.

As you can see, all three strategies for creating competitive advantages have significant distinctive features, allowing us to conclude that the company must clearly define for itself what strategy it is going to implement, and in no case mix these strategies. At the same time, it should be noted that there is a certain connection between these strategies, and this should also be taken into account by firms when creating competitive advantages.

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The competitive advantages of a product are its consumer or technical and economic parameters that affect its position in the market.

There are several types of competitive advantages of a product:

1. Price characteristics of the product. Very often, a buyer purchases a product only because it is cheaper than other products that have similar consumer properties. Sometimes a product is purchased only because it is very cheap. Such purchases can occur even if the product has no consumer utility for the buyer.

2. Product differentiation - a product has distinctive features that make it attractive to the buyer. Differentiation is entirely related to the consumer (utilitarian) qualities of the product (reliability, ease of use, good functional characteristics, etc.), and can also be achieved through recognition of a well-known brand.

3. Monopolization - the competitive advantage of a product, which lies in its position in the market. This is achieved by securing the buyer, by monopolizing part of the market.

An organization's competitive advantage is the lasting benefit of applying some unique strategy that creates customer value, based on a unique combination of internal resources that cannot be copied by competitors.

There are two types of competitive advantages of an organization: a) low costs and b) specialization.

Lower costs refers to lower production costs than competitors, as well as the company's ability to develop, produce and sell a product more efficiently than its competitors. Specialization is the concentration on the production of only a certain range of goods, investing in their improvement, the ability to satisfy the special needs of customers and receive a premium price for this, i.e. the price is on average higher than that of competitors.

The competitiveness of a product is a complex of its consumer and cost (price) characteristics that determine the success of the product in the market, i.e. the advantage of this particular product over other competing analogue products offered.

The competitiveness of a product is a decisive factor in its commercial success. Competitiveness is a complex concept; it includes the compliance of the product with market conditions; compliance of the product with the specific requirements and demands of consumers (in terms of quality, technical, aesthetic, economic parameters), an advantage over competitors in terms of price and quality of the product.

The competitive advantages of the product include:

1. Functionality - the purpose of the product. The presence of not one, but several functions - multifunctionality - is an advantage over other analogue products.

2. Unification - compatibility with spare parts, consumables, software of other models.

3. Standardization - the presence of standard components and parts, which simplifies their replacement and repair.

4. Reliability is a complex indicator that includes 3 parameters:

a) reliability (average operating time in hours before the first failure)

b) durability (service life)

c) maintainability - the ability to eliminate faults (however, many cheap products are designed as non-repairable).

5. Energy performance (fuel or energy efficiency). In addition to the acquisition cost, the buyer can evaluate the cost of consumption - this is the sum of operating costs over the entire service life of the product. Therefore, other things being equal, the buyer will choose a more economical product.

6. Aesthetic indicators.

7. Transportability.

8. Packaging (its convenience and design).

9. Warranty service (warranty period, list of warranty work, proximity to a service point).

10. Availability of related products ( Supplies, batteries, etc.).

11. The presence of substitute goods reduces the competitiveness of the product, because there may be price competition between products different groups, but are substitutes.

12. The presence of complementary products increases competitiveness, because this stimulates demand for the main product (for example, coffee and cream, beer and roach).

FEDERAL AGENCY FOR EDUCATION

Course work on the subject "> on the topic: "Competitive advantages of the company" Checked by ____________________ _____________________ Completed by a student of the group _______ _____________________ CONTENTS INTRODUCTION Today, the competition between firms is moving to a new level, which is not always clear to their management. Too many firms and their top managers They misunderstand the nature of competition and the task ahead: they focus on improving financial performance, obtaining government assistance, ensuring stability, and reducing risk through alliances and mergers with other firms. The realities of modern competition require leadership. Leaders believe. to change, they bring to their organizations the energy needed for constant innovation, they recognize the importance of their home country's position to their firms' competitive success, and they work to improve that position. Most importantly, leaders understand the significance of difficulties and challenges. Because they are willing to help the government make sound - albeit painful - policy decisions and rules, they are often given the title " statesmen“, although few of them consider themselves as such. They are ready to trade a quiet life for difficulties in order to ultimately achieve an advantage over their competitors. The relevance of the research topic is due to the presence of residual phenomena of the economic crisis in the Russian economy, tightening competition, in which, in order to get a client, firms are ready to reduce prices for their products or services, sometimes bringing them to a minimum level. The purpose of the presented research is to expand the theoretical knowledge base on the issue of competitive advantages in order to develop in the future a strategy not only for survival, but also for development for one’s own company. Within the framework of this goal, the following tasks are formulated: - to reveal the meaning of the concept of “competitive advantage”; - consider the types of competitive advantages of the company; - explore several strategies for achieving a company's competitive advantage. The subject of the study is competitive advantages as a form of economic relations, manifested in the consumer-recognized superiority of a company relative to a direct competitor in any field of activity. The object of the study is the process of forming a sustainable competitive advantage of a company or strategy. The theoretical and methodological basis of the study are the works of leading Russian and foreign scientists devoted to the concept of competitive advantages (G.L. Azoev, M. Porter, A. Yudanov...) 1. THEORETICAL FOUNDATIONS OF COMPETITIVE ADVANTAGES OF A FIRM 1.1 The concept of competitive advantages The specific market position of the organization determines its competitive advantages. In general terms, competitive advantage is superiority in some area that ensures success in the competition. The specific content of the concept of competitive advantage depends, firstly, on the subject of competition, and secondly, on the stage of competition. The competitive struggle, which is a consequence of limited resources, forces us to look for an answer to the question of the patterns of behavior of an economic entity in such conditions, this answer is given by science - economic theory, during this struggle, there is a change in the methods of its implementation (policies for achieving competitive advantages, sources of competitive advantages), which is reflected in the evolution of the concept of competitive advantages. Limited resources are manifested at all levels: person, firm, region, country, respectively; the concept of “competitive advantages” can be applied to various subjects of competition1 http://www.dissland.com/catalog/formirovanie_ustoychivogo_konkurentnogo_preimushchestva_na_osnove_intellektualnogo_kapitala.html (access date 01/10/2011).

The most complete interpretation of the concept of “competitive advantage” existing in economic research is reflected by the definition of G.L. Azoeva. In accordance with this interpretation, competitive advantages are understood as “concentrated manifestations of superiority over competitors in the economic, technical, organizational spheres of an enterprise’s activity that can be measured economic indicators(additional profit, higher profitability, market share, sales volume).” According to G.L. Azoev, superiority over competitors in the economic, technical, organizational spheres of an enterprise’s activity is a competitive advantage only if it is reflected in an increase in sales volumes, profits and market share2. Thus, competitive advantage is those characteristics and properties of a product or brand, as well as specific forms of business organization that provide the company with a certain advantage over its competitors. The key success factors influencing competitive advantage include: - technological: high research potential, ability for industrial innovation; - production: full use of production economies of scale and experience, high quality production, optimal use production capacity, high performance, necessary productivity flexibility; - marketing: use of marketing economies of scale and experience, high level of after-sales service, wide product line, powerful sales network, high speed of product delivery, low sales costs; - managerial: the ability to quickly respond to changes in the external environment, the presence of managerial experience; ability to quickly bring a product to the market from the R&D stage; - others: powerful information network, high image, favorable territorial location, access to financial resources, ability to protect intellectual property3. The main task of a company in the field of competition is to create such competitive advantages that would be real, expressive, and significant. Competitive advantages are not permanent; they are won and maintained only through continuous improvement in all areas of the company's activities, which is a labor-intensive and expensive process. 1.2 Types of competitive advantages of a company Let's consider the typologies of competitive advantages of a company. First typology (internal and external competitive advantages) Internal competitive advantage is based on the company's superiority in terms of costs, which allows the cost of manufactured products to be lower than that of competitors. Lower costs give the company an advantage if the products meet the industry average quality standard. Otherwise the product worse quality can be realized through a reduction in its price, which reduces the share of profit. Accordingly, in this option cost advantage does not provide benefit. Internal competitive advantage results from high productivity and effective cost management. Relatively low costs provide the company with greater profitability and resistance to lower sales prices imposed by the market or competition. Low costs allow, if necessary, to carry out a pricing dumping policy, setting lower prices in order to increase market share; low costs are also a source of profit that can be reinvested in production to improve product quality, other forms of product differentiation, or used to support other areas of business . In addition, they create effective protection against the five forces of competition (M. Porter). Such as the emergence of new competitors, the possibility of substitute products, the ability of consumers to defend their interests, the ability of suppliers to impose their conditions, competition between long-established firms. Internal competitive advantage is based mainly on a proven production process and effective management of enterprise resources. External competitive advantage is based on the distinctive properties of a product or service that have greater “customer value” for the buyer than similar products of competitors. This allows you to set higher sales prices than competitors that do not provide the corresponding distinctive quality. Any innovation that gives an organization a real increase in its success in the market is a competitive advantage. Organizations achieve competitive advantage by finding new ways to compete in their industry and entering the market with them, which can be called in one word - “innovation”. Innovation in a broad sense includes both the improvement of technology and the improvement of ways and methods of doing business. Innovation can be expressed in a change in the product or production process, new approaches to marketing, new ways of distributing goods, new concepts of competition, etc. The most typical sources of obtaining external competitive advantages include: - new technologies; - changes in the structure and cost of individual elements in the technological chain of production and sale of goods; - new consumer requests; - emergence of a new market segment; - changes in the “rules of the game” in the market. A special source is information about your business plus professional skills that allow you to obtain and process such information so that the final processing product turns out to be a real competitive advantage. Competitive advantages based on cost alone are generally not as durable as advantages based on differentiation. (Cheap labor refers to the advantage of low rank). Competitive advantages of a higher level or order, such as proprietary technology, differentiation based on unique products or services, an organization's reputation based on enhanced marketing activities, close relationships with customers can be maintained for a longer period of time. Typically, high-order benefits are achieved through long-term, intensive investment in production capacity, specialized training, R&D, and marketing investments. To remain competitive, an organization must create new advantages at least as quickly as its competitors can copy existing ones.4 Second typology (by degree of sustainability) Distinguishes between sustainable and unsustainable competitive advantages Third typology (by sphere of manifestation) By sphere manifestations highlight: - competitive advantages in the field of R&D, expressed in the degree of novelty, the scientific and technical level of applied R&D and R&D, the optimal structure of R&D costs and their economic efficiency, in patent purity and patentability of developments, timeliness of preparation of R&D results for production development, completeness taking into account the conditions of consumption of developed products, the duration of R&D; - competitive advantages in the sphere of production, expressed in accordance with the level of concentration of production and the type of market (high level of concentration in conditions of pure monopoly, monopolistic and oligopolistic competition, low level in conditions of a free competition market), in the use of progressive forms of organization of production (specialization, cooperation, combination ), in the amount of production capacity of the enterprise, in the use of advanced equipment, technology, construction materials, in the high professional and qualification level of labor personnel and scientific organization labor, efficiency of use of production resources, efficiency of design and technological preparation of production and efficiency of production in general; - competitive advantages in the field of sales, expressed in improved pricing, more efficient distribution of goods and sales promotion, more rational relations with intermediaries, more efficient systems of settlements with consumers; - competitive advantages in the service sector, expressed in more effective pre-sales and after-sales service of products, warranty and post-warranty service. Fourth typology (by type of manifestation) By type of manifestation, it is necessary to distinguish between technical, economic, and managerial competitive advantages: - technical competitive advantages are manifested in superiority in production technology, superiority of technical characteristics of machines and equipment, technological features of raw materials used in production, technical parameters of products ; - economic competitive advantages consist in a more favorable economic-geographical position and a more rational location of the enterprise, greater economic potential of the enterprise, more efficient use of enterprise resources, which allows reducing the cost of production, better than competitors economic characteristics manufactured products, the best financial condition enterprises, making access to credit resources easier and expanding investment opportunities; - managerial competitive advantages are manifested in more effective implementation of the functions of forecasting, planning, organization, regulation, accounting, control and analysis of production and economic activities. Fifth typology of competitive advantages The following types of competitive advantages are distinguished: 1) competitive advantages based on economic factors; 2) competitive advantages of a structural nature; 3) competitive advantages of a regulatory nature; 4) competitive advantages associated with the development of market infrastructure; 5) competitive advantages of a technological nature; 6) competitive advantages associated with the level of information support; 7) competitive advantages based on geographical factors; 8) competitive advantages based on demographic factors; 9) competitive advantages achieved as a result of actions that violate the law. Competitive advantages based on economic factors are determined by: 1) the best general economic state of the markets in which the enterprise operates, expressed in high industry average profits, long payback periods on investments, favorable price dynamics, high levels of disposable income per capita, the absence of non-payments, and inflationary processes etc.; 2) objective factors stimulating demand: large and growing market capacity, low sensitivity of consumers to price changes, weak cyclicality and seasonality of demand, lack of substitute goods; 3) effect of scale of production. 4) the effect of scale of activity, which manifests itself in the ability to satisfy a wide variety of consumer needs, while setting high prices for the product due to its complex nature; 5) the effect of learning experience, which is expressed in greater labor efficiency due to specialization in types and methods of work, technological innovations in production processes, optimal loading of equipment, more complete use of resources, introduction of new product concepts; 6) economic potential of the enterprise. Competitive advantages of a structural nature are determined mainly by the high level of integration of the production and sales process in the company, which makes it possible to realize the advantages of intracorporate connections in the form of internal transfer prices, access to total investment, raw materials, production, innovation and information resources, and a common sales network. Within the framework of integrated structures, potential opportunities are created for concluding anti-competitive agreements and coordinated actions of group members (both horizontal and vertical), including with government authorities. A powerful source of strengthening a company's competitive position is the use of relationships between its various divisions and strategic business areas. The phenomenon when income from the joint use of resources exceeds the amount of income from the separate use of the same resources is called the synergy effect. Structural competitive advantages also include the ability to quickly penetrate unoccupied market segments. Competitive advantages of a regulatory nature are based on legislative and administrative measures, as well as on government incentive policies in the field of investment volumes, credit, tax and customs rates in a certain product area. Such competitive advantages exist due to laws, regulations, privileges and other decisions of government and management authorities. These include: - benefits provided to the region or individual enterprises by government authorities; - the possibility of unhindered import and export of goods outside the administrative-territorial entity (region, territory); - exclusive rights to intellectual property, ensuring a monopoly position for a certain period. Advantages of a regulatory nature differ from others in that they can be eliminated relatively quickly by repealing the relevant legislation. Competitive advantages associated with the development of market infrastructure arise as a result of varying degrees: - development of the necessary means of communication (transport, communications); - organization and openness of labor and capital markets, investment goods and technologies; - development of a distribution network, including retail, wholesale, futures trade, services for the provision of consulting, information, leasing and other services; - development of inter-company cooperation. Technological competitive advantages are determined by the high level of applied science and technology in the industry, special technical characteristics machines and equipment, technological features of raw materials and materials used in the production of goods, technical parameters of products. Competitive advantages associated with the level of information support are determined by good awareness and are based on the availability of an extensive data bank about sellers, buyers, advertising activities, and information about the market infrastructure. The absence, insufficiency and unreliability of information becomes a serious obstacle to competition. Specific advantages based on geographical factors are associated with the ability to economically overcome the geographical boundaries of markets (local, regional, national, global), as well as the favorable geographical location of the enterprise. In addition, the geographic barrier to entry for potential competitors into the market is the difficulty of moving goods between territories due to inaccessibility Vehicle for transportation of goods, significant additional costs for crossing market borders, loss of quality and consumer properties goods during their transportation. Demographic-based competitive advantages arise from demographic changes in the target market segment. Factors influencing the volume and structure of demand for the products offered include changes in the size of the target population, its gender and age composition, population migration, as well as changes in the level of education and professional level. Competitive advantages achieved as a result of actions that violate legal norms include: - unfair competition; - directly or indirectly fix sales or purchase prices or any other trading conditions; - restrict or control production, markets, technological development or investment; - share markets or sources of supply; - apply different conditions to the same transactions with other parties, thereby placing them at a disadvantage; - raise the issue of concluding contracts depending on the acceptance by other parties of additional obligations that are not related to the subject of these contracts, etc. 2. STRATEGIES FOR IMPLEMENTING COMPETITIVE ADVANTAGES 2.1 Strategic competitive advantages of the company and ways to implement them in the domestic market The main task in strategic orientation firm is the choice basic strategy competition regarding a certain area of ​​business. A competitive strategy must be based on two essential conditions: - it is necessary to determine the strategic goal of the company in relation to of this product or services in terms of the scale of competition. - it is necessary to choose the type of competitive advantage. The strategic goal of the company involves targeting the entire market or a specific segment. Basic competitive strategies vary depending on what advantage they rely on. Here it is necessary to decide what type of competitive advantage to give preference to - internal, based on cost reduction, or external, based on the uniqueness of the product; which is easier to defend in a competitive market. The main factors influencing competitive advantage include: - technological: high research potential, ability for industrial innovation; - production: full use of production economies of scale and experience, high quality production, optimal use of production capacity, high productivity, necessary production flexibility; - marketing: use of marketing economies of scale and experience, high level of after-sales service, wide product line, powerful sales network, high speed of product delivery, low sales costs; Leadership due to the advantage of lower costs than competitors gives the company the opportunity to resist its direct competitors even in the event of a price war. Low costs are a high barrier to entry for potential competitors and a good defense against substitute products. The main factors of superiority in costs include: the use of advantages due to the effects of scale and experience; - control over fixed costs; - high technological level of production; - stronger staff motivation; - privileged access to sources of raw materials. As a rule, these advantages manifest themselves in the manufacture of standard products of mass demand, when the possibilities of differentiation are limited and demand is price elastic, and the likelihood of consumers switching to others is high. The cost minimization strategy has disadvantages. Cost reduction techniques can be easily copied by competitors; technological breakthroughs can neutralize existing internal competitive advantages associated with accumulated experience; due to an excessive focus on cost reduction - insufficient attention to changes in market requirements, a decrease in product quality is possible. This strategy is aggressive and is most easily implemented when the enterprise has access to exclusive, low-cost resources. Strategy of differentiation by segments (classes) of manufactured goods The main goal of each differentiation strategy is to give the product or service properties that are distinctive from similar competing goods or services, which create “customer value” associated with the advantage of the product, time, place, service. Customer value is the utility or overall satisfaction they receive from using a product, as well as the minimal operating costs over its life. The main point of differentiation strategy is understanding the needs of customers. In this case, we can say that with a certain set of qualities of an exclusive product or service, the company creates a permanent group of buyers in a specific market segment, i.e. almost a mini-monopoly. Unlike cost leadership strategy, which can only be achieved in one way - by effective structure costs, differentiation can be achieved in various ways. The main approaches used in the differentiation strategy include: - development of such product characteristics that reduce the buyer’s total costs of operating the manufacturer’s products (increased reliability, quality, energy saving, environmental friendliness); - creation of product features that increase the effectiveness of its use by the consumer (additional functions, complementarity with another product, interchangeability); - giving the product features that increase the level of customer satisfaction (status, image, lifestyle). Based on the nature of the focus, innovation and marketing differentiation strategies can be distinguished. Innovative differentiation An innovative differentiation strategy is a real differentiation associated with the production of truly different products using various technologies. This strategy involves acquiring competitive advantages through the creation of fundamentally new products, technologies or upgrades and modifications of existing products. In this case, differentiation affects not only the product itself, but also the technology being implemented, which requires taking into account the factor of scientific and technological progress. Scientific discoveries and evolving technologies offer new ways to meet consumer needs. Real differentiation is typical in to a greater extent for the goods market industrial purposes, products of high-tech industries, where the largest gap in competition is determined by an effective innovation strategy. Marketing differentiation A marketing differentiation strategy involves achieving competitive advantages by creating distinctive properties associated not with the product itself, but with its price, packaging, delivery methods (without prepayment, with the provision of transport, etc.); placement, promotion, after-sales service (warranties, service), a trademark that creates an image. Availability distinctive qualities usually requires higher costs, which leads to higher prices. However, successful differentiation allows a firm to achieve greater profitability because consumers are willing to pay for product uniqueness. Differentiation strategies require significant investments in functional marketing and, especially, in advertising in order to convey to consumers information about the claimed distinctive features goods. Focus strategy Focus (specialization) strategy is a typical business strategy that involves concentration on a narrow market segment or a specific group of customers, as well as specialization on a certain part of the product and/or geographical region. Here, the main goal is to meet the needs of the selected segment with greater efficiency in comparison with competitors serving a wider market segment. A successful focus strategy achieves a high market share in the target segment, but always leads to a low market share in the overall market. This strategy is the preferred development option for firms with limited resources. The focusing strategy takes the form of a focused low-cost strategy if the price requirements of segment buyers differ from the requirements of the main market, or a focused differentiation strategy if target segment requires unique product characteristics. Like other basic business strategies, a focus strategy protects a firm from competitive forces in the following ways: focusing on a segment allows it to compete successfully with firms operating in different segments; the firm's specific competencies and capabilities create barriers to entry for potential competitors and the penetration of substitute products; pressure from buyers and suppliers is reduced due to their own reluctance to deal with other, less competent competitors. The reason for choosing such a strategy is the lack or lack of resources, strengthening barriers to entry into the market. Therefore, the focusing strategy is, as a rule, inherent in small companies5 http://www.logistics.ru/9/2/i20_64.htm (accessed January 15, 2011). 2.2 Problems of realizing competitive advantages in the international market Everything that was said above about competition and competitive strategy, can equally apply to both the external and internal markets. At the same time, international competition has some peculiarities. Feature one Each country, to one degree or another, possesses the factors of production necessary for the activities of firms in any industry. The theory of comparative advantage in the Heckscher-Ohlin model is devoted to the comparison of available factors. The country exports goods in the production of which intensively use various factors. However, factors, as a rule, are not only inherited, but also created, therefore, in order to obtain and develop competitive advantages, it is not so much the stock of factors that is important this moment, how much is the speed of their creation. In addition, an abundance of factors can undermine competitive advantage, while a lack of factors can encourage renewal, which can lead to long-term competitive advantage. The combination of factors used differs in different industries. Firms achieve competitive advantage when they have low-cost or high-quality inputs that are important when competing in a particular industry. Thus, Singapore's location on an important trade route between Japan and the Middle East made it the center of the ship repair industry. However, gaining a competitive advantage based on factors depends not so much on their availability as on their effective use, since MNCs can provide missing factors by purchasing or locating operations abroad, and many factors move relatively easily from country to country. Factors are divided into basic and developed. The main factors include Natural resources, climatic conditions, geographical location, unskilled labor, etc. The country receives them by inheritance or with minor investments. They do not have special significance for a country's competitive advantage or the advantage they create is unsustainable. The role of the main factors is reduced due to a reduction in the need for them or due to their increased availability (including as a result of the transfer of activities or procurement abroad). These factors are important in extractive industries and agriculture-related industries. Developed factors include modern infrastructure, highly qualified workforce, etc. It is these factors that are most important, as they allow you to achieve a higher level of competitive advantage. Feature two The second determinant of national competitive advantage is the demand in the domestic market for goods or services offered by this industry. By influencing economies of scale, demand in the domestic market determines the nature and speed of innovation. The volume and nature of growth in domestic demand allow firms to gain a competitive advantage if: - there is demand abroad for a product that is in great demand in the domestic market; - there are a large number of independent buyers, which creates a more favorable environment for renewal; - domestic demand is growing rapidly, which stimulates the intensification of capital investment and the speed of renewal; - the domestic market is quickly becoming saturated, as a result, competition is becoming tougher, in which the strongest survive, which forces them to enter the foreign market. Firms achieve competitive advantage by internationalizing demand in the domestic market, i.e. when preference is given to foreign consumers. Feature Three The third determinant that determines a national competitive advantage is the presence in the country of supplier industries or related industries that are competitive in the world market. In the presence of competitive supplying industries, the following are possible: - effective and quick access to expensive resources, for example, equipment or skilled labor, etc.; - coordination of suppliers in the domestic market; - assisting the innovation process. National firms benefit most when their suppliers are globally competitive. The presence of competitive related industries in a country often leads to the emergence of new highly developed types of production. Related industries are those in which firms can interact with each other in the process of forming a value chain, as well as industries that deal with complementary products, such as computers and software. Interaction can occur in the field of technology development, production, marketing, and service. If there are related industries in the country that can compete in the world market, access to information exchange and technical cooperation opens up. Geographical proximity and cultural kinship lead to more active exchanges than with foreign firms. Success in the global market of one industry may lead to the development of the production of additional goods and services. For example, the sale of American computers abroad has led to increased demand for American peripherals, software and to the development of American database services. Feature Four The fourth important determinant of industry competitiveness is the fact that firms are created, organized and managed depending on the nature of competition in the domestic market, with different strategies and goals being developed. National characteristics influence the management of firms and the form of competition between them. In Italy, many companies that successfully operate in the global market are small or medium-sized (in size) family businesses. More common in Germany large companies with a hierarchical management system. In addition, we can recall the American and Japanese control systems. These national characteristics significantly influence the positions of firms when focusing on global competition. Of particular importance for achieving high competitiveness in the industry is strong competition in the domestic market; competition in the domestic market creates advantages for the national industry as a whole, and not just for individual firms. Competitors borrow progressive ideas from each other and develop them, since ideas spread faster within one nation than between different nations. These advantages are enhanced when competitors are concentrated in one geographic area. The role of the government The role of the government in the formation of national advantages lies in the fact that it influences all four determinants: - on the parameters of factors - through subsidies, capital market policies, etc.; - on demand parameters - by establishing various standards and carrying out public procurement; - on the conditions for the development of related industries and supplier industries - through control over advertising media or regulation of infrastructure development; - on the strategy of firms, their structure and competition - through their tax policy, antitrust legislation, by regulating investments and the activities of the securities market, etc. All four determinants can also have the opposite effect on government. The role of government can be positive or negative. The determinants of national competitiveness are a complex system that is in constant development. Some determinants regularly influence others. The action of the system of determinants leads to the fact that competitive national industries are not distributed evenly throughout the economy, but are connected in bundles, or “clusters,” consisting of industries that depend on each other. 2.3 Benchmarking as a strategy for achieving competitive advantage6 http://www.support17.com/component/content/296.html?task=view (accessed January 12, 2011) The term “benchmarking” comes from English word benchmark (bench- place, to mark- mark), is a way of studying the activities of business entities, primarily their competitors, with the aim of using positive experience in their work. Benchmarking includes a set of tools that allow you to systematically find, evaluate and organize the use of all the positive advantages of other people's experience in your work. Benchmarking is based on the idea of ​​comparing the activities of not only competing enterprises, but also leading firms in other industries. Competent use of competitors' experience and successful companies allows you to reduce costs, increase profits and optimize the choice of strategy for your organization. Benchmarking is a constant study of the best practices of competitors, comparing the company with the created reference model own business. Benchmarking allows you to identify and use in your business what others do better. Benchmarking is based on the concept of continuous performance improvement, which involves a continuous cycle of planning, coordinating, motivating and evaluating actions with the goal of sustainable improvement of the organization's performance. The core of benchmarking is finding the best business standards for use by the research organization. It focuses not on simply measuring and comparing achievements, but on how any given process can be improved by applying best practices. Benchmarking requires a company to be humble enough to accept that someone else may be better at something, and wise enough to try to learn how to catch up and even surpass others' achievements. Benchmarking reflects an organization's continuous improvement efforts and helps integrate disparate improvements into a unified change management system. Types of benchmarking - internal - comparison of the work of company departments; - competitive - comparison of your enterprise with competitors according to various parameters; - general - comparison of the company with indirect competitors according to selected parameters; - functional - comparison by function (sales, purchasing, production, etc.). General benchmarking is a comparison of the production and sales indicators of one's products with the indicators of a business. large quantity producers or sellers of a similar product. Such a comparison allows us to outline clear directions for investment activity. The parameters used to compare product characteristics depend on the specific type of product. Functional benchmarking means comparing the performance parameters of individual functions (for example, operations, processes, work methods, etc.) of a seller with similar parameters of the best enterprises (sellers) operating in similar conditions. Competitive benchmarking examines the products, services, and processes of an organization's direct competitors. Benchmarking is close to the concept of marketing intelligence, which means the constant activity of collecting current information about changes external environment marketing, necessary for both the development and adjustment of marketing plans. However, marketing intelligence aims to collect confidential information, and benchmarking can be seen as the activity of thinking about strategy based on the best experience of partners and competitors. F. Kotler identifies benchmarking with basic analysis - the process of “searching, studying and mastering the most advanced practices and technologies used by organizations in various countries around the world, with the goal of making your organization more effective.” Benchmarking is becoming a powerful lever for enhancing a company's competitiveness and the art of understanding how and why some companies achieve significantly better results than others. Benchmarking can help you improve best technologies other companies, i.e. it is aimed at mastering “the most advanced world experience.” CONCLUSION In conditions of fierce competition and a rapidly changing situation, firms must not only focus on the internal state of affairs, but also develop a long-term strategy aimed at creating sustainable competitive advantages. Accelerating changes in the environment, the emergence of new demands and changing consumer positions, changes in government policy, and the entry of new competitors into the market lead to the need for constant analysis and optimization of existing competitive advantages. The most significant or long-term competitive advantage, in my opinion, gives a company the implementation new technology or “know-how” created by the firm itself through innovation. Not every company can create this competitive advantage (the main problem is the lack of sufficient financial and human resources). From the study we can conclude that there is no competitive advantage that is uniform for all companies. Each company is unique in its own way, therefore the process of creating competitive advantages for each company is unique, since it depends on many factors: the company’s position in the market, the dynamics of its development, potential, the behavior of competitors, the characteristics of the goods produced or services provided, the state of the economy , cultural environment and many other factors. At the same time, there are some fundamental points and strategies that allow us to talk about general principles of competitive behavior and implementation strategic planning aimed at creating a sustainable competitive advantage. REFERENCES 1. Azoev G.L., Chelenkov A.P. Competitive advantages of the company. - M.: JSC Printing House NEWS, 2007. 2. Benchmarketing [Electronic resource] 3. Golovikhin S.A., Shipilova S.M. Theoretical foundations for determining the competitive advantages of a machine-building enterprise 4. Zakharov A.N., Zokin A.A., Competitiveness of an enterprise: essence, assessment methods and mechanisms of increase 5. Porter M. “International competition”: trans. from English: ed. V.D. Shchetinina. M.: International relations, 1993 6. Fatkhutdinov R.A. Strategic management. 7th ed., rev. and additional - M.: Delo, 2005. - 448 p. 7. Shifrin M.B. Strategic management. - St. Petersburg: Peter, 2008, p. 113 8. Yagafarova E. F. Abstract of dissertation research on the topic “The role of intellectual capital in the formation of a sustainable competitive advantage of a company”

1. Yagafarova E. F. Abstract of dissertation research on the topic "The role of intellectual capital in the formation of a sustainable competitive advantage of a company" [Electronic resource] URL:
2. S.A. Golovikhin, S.M. Shipilova. Theoretical foundations for determining the competitive advantages of a machine-building enterprise [Electronic resource] URL: http://www.lib.csu.ru/vch/8/2004_01/023.pdf (access date 12/18/2010)
3. Shifrin M.B. Strategic management. - St. Petersburg: Peter, 2008, p. 113
4. Azoev G.L., Chelenkov A.P. Competitive advantages of the company. - M.: JSC “Printing house “NEWS”, 2007.
5. A.N. Zakharov, A.A. Zokin, Competitiveness of an enterprise: essence, methods of assessment and mechanisms for increasing [Electronic resource] URL:

⏱ reading time: 15 minutes

The goal of a marketing strategy is to understand and cope with the competition. Some companies are always ahead of others. Industry affiliation does not matter - the gap in the profitability of companies within one industry is higher than the differences between industries.

The differences between companies are especially important during times of crisis, when the created competitive advantage is an excellent foundation for profitable growth.

Competitive advantages of the company

• Advantage Any success factor that increases a consumer's willingness to pay or reduces a company's costs.
• Competitive advantage- a success factor that is significant for the consumer, in which the company surpasses all competitors

Building a competitive advantage means achieving a greater gap between costs and customer willingness to pay for a product than your competitors.

Step 1. Determine success factors

The answer to the question “how to create a company’s competitive advantage” is not so important. If you are confident that you will achieve competitive advantage through 24/7 delivery, then you will find a solution to realize this competitive advantage. It is much more difficult to determine what exactly they will become.

To do this, first of all, we write down all the advantages, or success factors, that are important for buyers. For example, like this.

Step 2. Segment the target audience

A separate shuttle for business class passengers is an advantage. But achieving this competitive advantage is completely irrelevant to those flying in the economy segment. Determining competitive advantages always occurs for a specific segment of the target audience - with its specific needs and desires.

The decision to sell to “everyone” leads to questions about where to look for these “everyone” and what to offer them. It turns out that “everyone” must be searched “everywhere” and offered “everyone”. This strategy will kill the budget of any company.

Let's take the example of achieving competitive advantages for a company selling flowers. Among the target audience, we will highlight the segments of those who buy flowers impulsively, prepare a pre-planned gift or, say, decorate their homes.

Having determined for whom we are going to create a competitive advantage, we will evaluate whether it is worth it - we will give an assessment of the market capacity and the intensity of competition in each segment.

Read more about segmentation criteria in our article: “”

Step 3. Determine key success factors

The buyer is demanding. Many factors are important to him - from the consultant’s smile and website design to low prices. But just because a buyer wants something doesn’t mean he’s willing to pay for it.

The value of a competitive advantage is the buyer's willingness to pay for it. How more money are willing to give for the development of a competitive advantage - the higher its significance.

Our task is to form a very short list of key success factors from the long list of various consumer “wants” that can determine the company’s competitive advantages.

In our example, the key success factors are the same for all three target audience segments. In real life, each segment usually has 1-2 of its own factors.

Step 4. Assess the importance of key success factors for target audience segments

What is important to one segment of the target audience may be a weak competitive advantage for consumers from another segment.

If you have an idea to buy flowers to give them this evening, then for an impulsive decision the main thing is appearance (fullness of bud opening) and speed of purchase. This is more important than the ability to choose from a large assortment, the lifespan of the bouquet - it is necessary that the flowers be present and look good this evening.

The opposite situation is buying flowers to decorate your home. Delivery is not a problem, but the question of how long the flowers will last comes to the fore.

Therefore, the importance of key success factors is determined for each segment of the target audience separately.

*) we clarify - CFUs are taken as an example, close to life, but do not reflect the real case.

For our company, identifying the right competitive advantages that allow our clients to attract more consumers, get more money from them and interact with them longer is one of the main blocks of the developed marketing strategy. Therefore, we strive to achieve an ideal situation - when every cell of all tables in this article is expressed in money. You can create a working marketing strategy only by understanding the cost of CFU from the buyer’s point of view, market volume, costs, etc.

All this information can be obtained. But sometimes there is no time or resources for this. Then we recommend using a comparison on a 5 or 10 point scale. In this case, remember that any factual data is better than guesswork. Hypotheses must be put forward based on the company’s big data, monitoring customer reviews, monitoring the sales process of competitors, and not taken from the head “because it seems so to me.” Expert forecasts too often fail.

Step 5. Compare the achieved competitive advantages

At this point, we have figured out what is important to your consumers. This is good. It’s bad that competitors are also aware.

To understand the starting conditions, it is necessary to assess the current degree of development of the company's competitive advantages. Strictly speaking, you only have a competitive advantage when your offering outperforms all of your direct competitors on some key success factor.

The assessment of competitive advantages is made exclusively from the point of view of consumers. The opinion of the company's employees, and especially the management, does not say anything. The director may be proud of the website developed according to his idea, on which millions were spent, but this in no way indicates the convenience of the site for clients.

Step 6. Determine sources of competitive advantage

Any competitive advantage is the result of a company’s activities. Each action incurs costs and at the same time affects the buyer's willingness to purchase the product. Differences in the results of these actions form competitive advantages.

Therefore, we compile a list of all the company’s activities by desegregating its activities into separate processes. In projects, we begin the analysis with the activities that are necessary to produce the basic product or service, and only then add related activities.

Step 7. Linking key success factors and company activities

Competitive advantage is formed at the intersection of various activities. For example, an increase in the assortment in the flower trade requires an increase in working capital, the availability of storage space for products, a sufficient area of ​​sales points, additional qualifications of sellers and service personnel and so on.

We determine which business processes are associated with the development of each of the found competitive advantages and the size of their contribution.

Step 8. Assess the company’s costs for creating competitive advantages

At this step, we look at how much it costs to achieve a competitive advantage. Any company activity has its costs.

In our example, we estimate the level of costs on a 10-point scale, but in real life, a company must more or less accurately know its costs. Pay attention to the calculation methodology - usually accountants tend to record most of the costs in production, thereby reducing indirect costs.

Having understood the size of costs, we determine their drivers. Why are the costs the way they are? Maybe we pay a lot for shipping because the business size is small and we don't have enough freight? There are many cost drivers. They depend on the size of the company, its geographical location, institutional factors, access to resources, etc.

Cost driver analysis helps estimate the costs competitors will have to create a similar competitive advantage. It is difficult to obtain data directly, but by understanding the drivers that influence the amount of costs, we can predict the volume of competitors' expenses.

Step 9. Looking for resources to create a competitive advantage

Maintaining the achieved competitive advantage at a constant level is possible only if there is sufficient resources. In addition, analysis of the resources that the company has helps to choose an area for quickly developing a competitive advantage.

Step 10. Choosing a direction for developing a competitive advantage

We look at the two resulting final pictures and think. There are only three possibilities for achieving competitive advantage:

• increase willingness to buy a product without significantly increasing costs
• dramatically reduce costs with virtually no impact on willingness to buy
• increase willingness to buy and reduce costs at the same time.

The third direction looks the most attractive. But finding such a solution is extremely difficult. Typically, companies simply waste valuable resources trying to create a competitive advantage across the board.

Basic rules for determining competitive advantage.

• We are looking for options that create the largest gap between the buyer’s desire to pay and our costs.
• We don’t try to select all the attractive options at once. Having decided to occupy one peak, we will no longer climb another. It is most profitable to choose a peak that is not crowded with competitors.
• We remember our competitors and what motivates each of them. If you decide to change some business process, how will your closest competitor react to this?

• Success factors. The more you find, the better. Typically, managers tend to focus on a few product features. This reduces the perception of the benefits that the consumer receives and brings your marketing strategy closer to that of your competitors. To find competitive advantages that are less competitive, think about the benefits a company creates for all its stakeholders: customers, employees, suppliers, dealers, and so on.
• Key success factors. The more significant the factor, the more restructuring of the company’s activities it requires. If you are not one of the industry leaders, it is better not to immediately try to compete on the main factors, or groups of factors (“best in quality”)
• Market. The question should not be “can we create a competitive advantage for this segment of the target audience”, but “can we create a competitive advantage for this segment of the target audience and remain profitable.” Having current costs in hand, we assume how much the company will pay to turn a key success factor into a full-fledged competitive advantage
• Current competitive position. It's difficult to build a competitive advantage in which you're hopelessly behind. Especially if it is a capital-intensive or time-consuming process.
• Costs. Competitive advantage can be achieved by focusing on costs that are most different from competitors, are large enough to influence the overall cost structure and are associated with discrete activities.

Fear often gets in the way of building a competitive advantage. The desire to become the best will certainly entail an increase in prices or, conversely, a decrease in the desire to buy our product. Reducing costs reduces the client’s desire to use our service (a ticket to a low-cost airline is cheap, but you can’t take luggage with you, there’s no food, airports are far away). Improving product characteristics leads to increased costs. This is absolutely normal. All that matters is the widening gap between the buyer's willingness to pay and the company's costs.

Step 11. We create competitive advantages by changing the company’s actions

As I wrote above, the creation of competitive advantages is the result of the company’s actions. To make the offer superior to all competitors, it is necessary to reconfigure some of the activities.

For example, achieving a “low cost” competitive advantage. There is no point in trying to compete with a discounter by simply lowering prices. A successful discounter became so because most of The company's activities are subordinated to the creation of this competitive advantage. If a Walmart employee wants to get a new pen, he returns the old one, which is covered in writing. There are no small details in creating a competitive advantage.

Again we look at the connection between the chosen competitive advantage and the company’s activities. Where is this competitive advantage created? And we invest specifically in the development of selected business processes.

Ask yourself the following questions

• Are our actions different from those of our competitors?
• Are we doing the same things but in a different way?
• How can we change our actions to gain competitive advantage?

As a result, determine the minimum and sufficient set of activities that the company must perform in order to form a competitive advantage. Usually they try to copy only obvious things, forgetting that much is hidden under water. It is the complex of activities that creates a competitive advantage that cannot be copied.

Actions aimed at developing a competitive advantage must be connected by a single logic. M. Porter's classic example is the set of actions of SouthWest Airlines that created its competitive advantage. As a result, the airline was the only low-cost airline on the market for 25 years. It is impossible to achieve a similar competitive advantage overnight.

Essentially, this is what it is marketing strategy. This set of actions is almost impossible to copy and surpass.