Encyclopedia of Marketing. The main factors of competitive advantages of companies What can be the competitive advantages of a company

Kutuzova T.Yu. General Director of RBS-Consulting LTD (comprehensive marketing support for business). Candidate of Economic Sciences, Associate Professor of the Department of Marketing, Moscow Academy of Entrepreneurship under the Moscow Government
Chapter from the book “Marketing Management”, publishing house “Ves Mir”

1. Gearbox with a low degree of stability. This type of competitive advantage is easily accessible to competitors. For example, a competitive advantage in the cost of labor or raw materials, economies of scale from the use of technology, equipment, etc.;
2. A gearbox with an average degree of stability. It is advisable to include competitive advantages maintained over a longer period of time into this type. For example, patented technology, differentiation based on unique products or services, company reputation, established product sales channels. Achieving such benefits requires intensive and long-term investment in production capacity, R&D and marketing research, and specialized personnel training;
3. Gearbox with a high degree of stability. This type of competitive advantage requires a combination of large capital investments in innovative projects with high quality of their implementation.

You can gain access to innovations in a market economy by purchasing them on the market. However, this path dooms the so-called catch-up development, since, as a rule, not the most advanced new products enter commercial circulation. The buyer of a new technology receives a number of advantages: he does not spend money on developing the discovery, avoids the risk of implementing R&D, and reduces the time for introducing the invention into production.

The greatest benefits are received by enterprises that choose to finance their own in-house developments or establish control over developments outside the company (agreements with research institutes, universities, financing of “venture firms”, etc.) (Table 1).

Table 1. Factors of short-term and long-term competitive advantage

Factors that create temporary competitive advantage	Factors of long-term competitive advantage	Competitive advantages based on competencies
Access to high-quality cheap raw materials Supplier Competitiveness Available know-how – secrets of competitors Alliances Savings on personnel Favorable legislation Reducing the tax burden Lobbying opportunities (relations with government authorities) Climatic conditions Geographical position	Consumer value: operational efficiency, level of automation of production and management, efficiency of corporate information systems, application of resource-saving technologies Uniqueness: advanced technological position, own know-how, patents, licenses, copyrights, staff qualification level, abilities and skills of personnel, R&D development, specifics of corporate culture Novelty: the ability to strategically outperform competitors, ability to expand product markets, policy and implementation of methods for expanding clientele, innovation processes, R&D, information bank of innovative and high technology, high level of logistics.	Focus on “consumer direction” Anticipating new needs Strategic flexibility Speed ​​of business adaptation

However, the formation of a competitive advantage today in many companies occurs in conditions of internal or external instability. In conditions of rapid response to a crisis situation, there are no opportunities to form long-term strategic alternatives, therefore it is necessary to classify strategic and tactical factors that allow increasing the competitiveness of an enterprise in a competitive environment (Table 2).

Table 2. Classification of the main factors that shape the competitive position of a manufacturing enterprise in the market

Classification of competitiveness factors	Strategic factors	Tactical factors
Breadth of market coverage by organized sales	Geographic expansion	Development of regional production and logistics centers
		Organizing the work of regional sales representatives, improving the quality of their work (training)
		Achieving optimal quantity and quality of distribution in target regions (optimal density of product representation)
An effective enterprise “offer” model	Improving the assortment list	Optimization of the assortment list and breadth of assortment
		Research of market needs (real and potential)
		Variety of models/product types
	Opportunities and activity in developing new products	Number of new products
	Increasing quality levels	Level of product quality compared to competitors
	Compliance of the company's pricing policy with consumer needs	Price level compared to competitors
	Improving the level of service	Increasing the efficiency of order formation and tracking
Effective cost management	Efficient inventory management	Optimization of raw materials list
		Optimization and strict control of inventory levels
	Efficient logistics	Optimization of traffic flows
Application of leading technology	Creating an effective import substitution mechanism	Possibility of innovation in the production process / Number of innovations
		Training
	Improvement of technology	Increasing the level of product innovation
	Favorable image of the manufacturer	Manufacturer's fame
	Product branding	TM protection
		Number of new brands
		Number of famous product brands
	Ability to create effective promotion	Communication Activity Index
		Brand awareness

The entire set of factors can be divided into groups of macro-, meso-, and microenvironment. Macroenvironmental factors include economic, scientific, technical, legal, political, social, international and environmental factors (Figure 2).

Figure 2. An extensive system of tactical factors and indicators that allow assessing the level of competitiveness of an enterprise.
Click on the image to enlarge it

Among the factors of the immediate environment (mesoenvironment), both the factors of the positioning of the enterprise in question in the market and the factors influencing changes in the surrounding competitive environment of the enterprise are of greatest importance. These factors determine the development opportunities of the enterprise, and are significant due to the high dependence of the implementation of the growth strategy in the market on the factors that determine the activities of the immediate environment of the enterprise.

The microenvironmental actors (internal factors of the enterprise) that determine the competitiveness of the enterprise are, first of all, the following: available equipment and technology, controlled quality of raw materials and products, availability of finance and qualified personnel, list of services offered, established system of product promotion channels, distribution.

Example:

According to the calculated competitiveness index, in comparison with the maximum value among the analyzed market participants, it can be stated that Komus Packaging is the undisputed market leader. Based on the calculated indicators, a diagram (polygon) of competitiveness was constructed.

In order to identify the potential for developing the competitive position of an enterprise in comparison with the starting (identified) one, a matrix is ​​formed for assessing the competitive potential of the enterprise, which allows you to visually assess the position of the enterprise based on the integral competitiveness index, taking into account the extrapolation of sales dynamics (Tr) and the market share of each competitor in the market (d ).

Matrix for assessing the competitive potential of an enterprise

It has been established that at the development stage, special attention should be paid to monitoring the position of the competitors of the enterprise being surveyed in terms of business development level (Kashtan and Tefo) and market share (Protek d = 10.7%).

Tumanov K.M. Innovative competitive advantages in shaping the competitiveness of an enterprise. (accessed July 26, 2013)

Rüli E. Resource management as a factor of strategic success // Problems of management theory and practice, 1995, pp. 102–107.

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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 challenge facing them: 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 leaders. 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 appropriate—if painful—policy decisions and rules, they are often given the title of “statesmen,” although few of them consider themselves 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 firm'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 an 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 advantage. 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 areas of an enterprise’s activity, which can be measured by 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 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; - 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, a product of poorer quality may be sold through a reduction in its price, which reduces the share of profit. Accordingly, in this embodiment, the cost advantage does not provide benefits. 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 product of processing 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 efforts, or close relationships with customers, can be maintained over 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 of labor, the efficiency of use of production resources, the efficiency of design and technological preparation of production and the 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 of a more favorable economic-geographical position and a more rational location of the enterprise, greater economic potential of the enterprise, more efficient use of the enterprise's resources, allowing to reduce the cost of production, better economic characteristics of the products compared to competitors, a better financial condition of the enterprise, making it easier access to credit resources 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, and the 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, capital, investment goods and technology markets; - 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 of machines and equipment, technological features of raw materials used in the production of goods, and 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 the unavailability of vehicles for transporting goods, significant additional costs for crossing market borders, and loss of quality and consumer properties of 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 identical transactions with other parties, thereby placing them at a disadvantage; - make the issue of concluding contracts dependent on the acceptance by other parties of additional obligations that are not related to the subject of these contracts, etc. clause 2. STRATEGIES FOR IMPLEMENTING COMPETITIVE ADVANTAGES 2.1 Strategic competitive advantages of the company and ways of their implementation in the domestic market The main task in the strategic orientation of the company is the choice of a basic competitive strategy in relation to 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 regarding a given product or service 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; managerial: ability to quickly respond to changes in the external environment, availability 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 property. Basic competitive strategies include: - cost leadership strategy; - differentiation strategy; - focusing strategy. Cost leadership strategy When choosing a cost leadership strategy, a company addresses the entire market with the same product, neglecting differences in segments, trying as much as possible to reduce the cost of manufacturing products. It targets a wide market and produces goods in large quantities. At the same time, the company focuses its attention and efforts not on how the needs of individual consumer groups differ, but on what these needs have in common. In addition, this strategy provides the widest possible boundaries of the potential market. The focus of the entire strategy is to create internal competitive advantage, which can be achieved through higher productivity and effective cost management. The company's goal in this case is related to the use of cost superiority as the basis for increasing market share through price leadership or generating additional profits. 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 the 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 through an efficient cost structure, differentiation can be achieved in a variety of 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 different 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 more characteristic of the market for industrial goods and 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. The presence of 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 of the product. Focus strategy A focus (specialization) strategy is a typical business strategy that involves concentrating on a narrow market segment or a specific group of customers, as well as specializing in a certain part of the product and/or geographic 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. A focus strategy takes the form of a focused low-cost strategy if the segment's buyers' price requirements for the product differ from those of the primary market, or a focused differentiation strategy if the 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 foreign and domestic 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 various factors are intensively used. 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 at the moment that is important, but 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 are not particularly important 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 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. In Germany, large companies with a hierarchical management system are more common. In addition, we can recall the American and Japanese control systems. These national characteristics significantly influence the positions of firms when targeting 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 the English word benchmark (bench- place, to mark - note), 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. Proper use of the experience of competitors 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 a company with a created reference model of its 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 performance of one’s products with the business performance of a sufficiently large number of 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 in the external marketing environment, 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. With the help of benchmarking, you can improve the best technologies of 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, is given to a company by the introduction of new technology or “know-how” created by the company 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 the implementation of 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:

In conditions of high saturation of commodity markets, where supply exceeds demand, each product (and the producer and seller behind it) is forced to wage a fierce struggle for consumer preferences. Many products simultaneously offer the same or different ways to satisfy the same customer need at equal or slightly different price conditions. In this situation, consumer preference is given to a product that is defined in marketing as competitive.

In order to identify the essence of the category “competitiveness” of products as such, first of all, it is necessary to take into account that, in relation to the conditions of a market economy, it should be considered from the point of view of the consumer.

Often, the assessment of the competitiveness of a product, reflected in modern economic literature, is based on taking into account only two, albeit integral, indicators - its quality and consumption price.

In practice, the criteria by which a consumer evaluates and selects a product include a much larger number of indicators than price and quality. Therefore, when assessing the competitiveness of a product, it is necessary to take into account not only the consumer’s requirements for its price and quality, but also requirements related mainly to the sphere of concluding a transaction and operating the product, such as prompt delivery, availability of spare parts, organization of service, reputation of the manufacturing country and a specific supplier etc. .

Thus, the marketing concept leads to a broader concept of the real competitiveness of a product, which depends not only on the quality-price ratio and not only on meeting consumer criteria, but also on the competitiveness of the entire marketing activity of the company.

The study of the theory and practice of marketing makes it possible to assert that the main principle for assessing the competitiveness of a product is its comparison with the corresponding needs of the buyer.

The consumer’s costs for satisfying his needs through a product or service consist (add up) of two items:

Purchase costs (sale price);

Expenses associated with the cost of operating the product during its service life. In general, the total amount of these expenses acts for the consumer as the price of satisfying the need (the price of consumption).

The consumption price level appears to the buyer as an integral element of the competitiveness of a product and depends, first of all, on the consumer properties of a particular product.

Thus, competitiveness can be defined as a complex characteristic of a product that determines its preference in the market compared to similar competing products both in terms of the degree of compliance with a specific social need and in terms of the costs of satisfying it, which ensures the possibility of selling this product at a certain point in time at specific market. It follows that competitiveness is determined by the quality and cost features of the product, which are taken into account by the buyer according to their immediate importance for meeting needs.

The competitiveness of a specific product (product) is characterized by a certain set of parameter indicators (Fig. 1.1).

As can be seen from the data in Fig. 1.1., the basis for the competitiveness of a product is made up of two groups of parameters - technical and economic, each of which, in turn, is divided into groups, subgroups and specific parameters.

Fig.1.1.

Note. Source: .

Currently, ensuring competitiveness is of great importance. However, as the understanding of the nature of competitiveness has evolved, a new concept has emerged - “competitive advantage”, which represents any exclusive value that an organization possesses and which gives it superiority over its competitors.

To understand the essence of the concept and its “competitive advantage,” we also give a broader interpretation of it.

Competitive advantages are unique tangible and intangible resources that an enterprise owns that allow it to win the competition; it is the organization’s high competence in any area, which provides the best opportunity to overcome the forces of competition, attract consumers and maintain their commitment to the company’s products. The integral characteristics of a company's competitive advantage are the degree to which it is known or receptive to the company's consumers, attachment to specific conditions and reasons, and susceptibility to the ambiguous influence of many heterogeneous factors. Therefore, in the process of strategic planning, after analyzing the external environment and management analysis of the company in order to determine the competitive advantages of the organization in order to formulate the optimal strategy of the company, it is necessary to carry out a comparative analysis of the strengths and weaknesses of the enterprise with similar characteristics of competitors and assess the degree of awareness and receptivity of the identified strengths of the organization by consumers.

Thus, the success of an enterprise in competition requires the enterprise to develop its distinctive abilities and competencies, allowing it to win the competition for consumer demand. The solution to this problem is also determined by the fact that once achieved successes in the market in the absence of constant and targeted work to increase them will after some time be canceled by the retaliatory actions of competitors, which determines the need to form an appropriate approach to company management, which would not only ensure the process itself adaptation, but also created the conditions for its effective functioning on an ongoing basis. Therefore, strategic planning should consist of creating a comprehensive system for managing the company’s competitive advantages, and an effective strategy should be based on their retention and development (Fig. 1.2.).

Fig.1.2.

Another distinctive characteristic of competitive advantage is its viability and ability to develop. Competitive advantages are not eternal due to two reasons: the constant attempt of individual competitors to imitate them, and due to the turbulence of the external environment (changes in the external environment lead to changes in competitive advantages). This distinctive feature of competitive advantage underlies a company's core competencies, which describe a firm's ability to specialize or produce a unique product. They indicate what the organization can do better than its competitors. If a company knows what its differentiating capabilities are, it can focus on exploiting and developing them without wasting effort in less profitable areas. Core competencies are a source of competitive advantage, and the company's strategy should be aimed at developing these sources. And the success of a competitive strategy does not depend on a single choice of today's key factors, but is the result of cultivating such distinctive organizational capabilities over a long period of time.

The basis of a company's strategic potential is the category of competitive advantages that are difficult to imitate. They identify a competitive advantage that rivals can copy and a sustainable competitive advantage that cannot be copied by competitors. It is preferable for an organization to identify a category of competitive advantages that are difficult to imitate, since due to the constant desire of competitors to copy the distinctive features of the company, its strengths cannot last forever and be completely inaccessible to competitors. But to increase the company’s competitiveness, it is necessary to form and develop such competitive advantages of the enterprise that, if not eternal, could be copied by competitors with a significant investment of time and resources, which, in turn, would give the organization the opportunity to simultaneously develop other distinctive competencies instead of those potentially subject to imitation. Such difficult-to-imitate competitive advantages include the organizational culture of a company; unique characteristics of enterprise management, for example, effective motivational policy, leadership style, clear coordination and control of activities, optimally constructed organizational structure, etc.; distinctive features of the organization’s human resources (highly qualified and rich practical experience of personnel, initiative, originality of thinking, ability to make decisions and bear responsibility for them in non-standard situations, etc.); quality of goods, production, sales and service systems, etc. These may also include higher levels of productivity of production, technical, and commercial personnel, managerial excellence, and strategic thinking at various levels of management, reflected in economic growth.

It should be noted that if the competitive advantages of an organization are protected from imitation by competitors, then they form the “strategic potential of the company.” The “strategic potential of an enterprise” is usually understood as the totality of available resources and abilities for the development and implementation of an enterprise strategy. Accordingly, a strategy based on the strategic potential of the enterprise will be more successful, since such a strategy is more competitive and durable.

The structure of the process of forming competitive advantages that are difficult to imitate is presented in Fig. 1.3. .

Fig.1.3.

The identification of the stage of formation of a company's competitive advantages in the process of strategic planning of an organization is also determined by the focus of this process on determining the meaning of the company's existence and finding ways for the enterprise to fulfill its purpose in the external environment. This relationship is determined by the meaning of the company’s mission itself and the characteristics of this concept. The mission lays the foundation for the formation of a competitive strategy of the enterprise, since it reveals the true functions of the business and sets boundaries for the efforts of the company, setting horizons for its growth. In essence, the formulated mission of an enterprise positions it in the environment, and, accordingly, determines the elements of the company’s environment that influence the possibilities of forming and developing the company’s competitive advantages.

Managing the competitiveness of goods and organizations in modern conditions is carried out on the basis of compliance with the following principles:

Analysis of the mechanism of action of economic laws (the law of supply and demand, the law of increasing human needs, the law of economies of scale, the law of competition, the law of saving time, the law of diminishing returns, etc.);

Analysis of the mechanism of action of the laws of organization of structures and processes (the law of composition for constructing a tree of goals, the laws of proportionality, synergy, self-preservation, development, etc.);

Compliance with the requirements of a set of scientific approaches to management (primarily systemic, integrated, marketing, functional, behavioral, structural, reproductive);

Compliance with the previously discussed principles of managing various objects;

Targeting specific markets and needs;

Application of modern information technologies for system and complex automation of management;

Application of modern methods of analysis, forecasting, standardization, optimization (for example, system analysis, functional cost analysis, dynamic programming);

Focus on quantitative methods of assessment, control and operational management of competitiveness;

Economic and managerial factors of the functioning of an organization should not be included in the formula for assessing the competitiveness of an organization, since managerial factors serve as a condition for ensuring competitiveness, and economic factors are the result of managing the competitiveness of an object (if good work there will be an increase in competitiveness, if bad work there will be a decrease);

Models for assessing the competitiveness of objects must take into account the weight of the factors included in them (indicators, arguments);

The factors (indicators) included in the formula (model) should primarily be specific or relative;

The system for managing the competitiveness of objects should include strategic marketing (the first general function), motivation and regulation (the last general function that establishes feedback from consumers and the external environment to developers and manufacturers of goods).

Between these functions there should be common functions for planning, organizing processes, accounting and monitoring the implementation of plans and operational tasks.

Thus, we can say that the presence, use and expansion of a company’s competitive advantages is the stabilization and development of the company’s business by connecting the company to the resources of the outside world, the mobilization of internal resources through their high-quality reorganization, which ultimately contributes to the successful performance of the company and its improvement competitiveness.

The concept of competitive advantage was first substantiated by M. Porter. His concept of the “five forces” that determine competition in the industry formed the company’s understanding of the fact of the influence of the most important environmental factors that require a response to these influences. In response to competitive forces, a firm creates various competitive advantages that enable it to succeed. M. Porter formulated the determinants of competitive advantage and identified three factors promoting formation of competitive advantages. In accordance with this, a hierarchy of levels of competitive advantages was proposed in terms of their significance. Low-ranking advantages (raw materials, cheap labor, scale of production) give the company insufficient competitiveness, since they are easily accessible to competitors and are widespread. Higher-order advantages include the company's reputation, relationships with clients, as well as the investment attractiveness of the company, which forces the investor to invest in a certain area of ​​activity.

Important competitive advantage may be goals and motivation of the owners, managers and staff of the company. There is also a regional aspect of acquiring competitive advantages. Thus, competitive advantages are gained by firms operating in those countries that allow them to quickly accumulate specialized resources and skills. Successful marketing departments play a major role in creating competitive advantage, and firms with extensive and accurate information about markets, competitors, products and technologies are increasingly gaining an advantage.

However, these factors are changeable and do not allow one to maintain competitive advantages for a long time. Therefore, competitive advantages of the highest order are associated with fundamental changes in the company's activities and with strategic factors that determine positions in competition.

M. Porter considers patented technology, differentiation based on unique products or services, high professionalism of personnel, etc. to be competitive advantages of the highest order. Hence, The most important source of creating and maintaining a competitive advantage is the constant renewal and innovative development of production.

In shaping the competitive advantages of a company, I. Ansoff especially emphasizes the high level and quality of R&D and strategic technological factors. These include investments in R&D, new technology and the dynamics of its development, position in competition, dynamics of product renewal and the competitiveness of the company.

The most important competitive advantages of the company are presented in table. 9.1. Based on these data, it is necessary to determine priorities in the formation of competitive advantages and carry out the following analytical activities:

assessment of the priority and relative importance of the relevant factor,

determining the level and intensity of factor participation in the company’s strategy,

determining the relationship between technological competitive advantages and economic, market, socio-political external conditions,

assessment of existing gaps between the necessary changes and the established operating conditions of the company, as well as with its strategy and behavior.

⏱ 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. The more money they are willing to pay 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, etc.

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 what 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 firm, 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 direct data, 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 only possible if sufficient resources are available. 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 has become so due to the fact that most of the company's activities are subordinated to creating 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.

In essence, this is a marketing strategy. This set of actions is almost impossible to copy and surpass.

 

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