Strategies for Competitive Advantage
Summary
TLDRThe video script explores five key strategies for businesses to gain a competitive advantage: cost leadership, where companies like Walmart and AirAsia offer lower prices; differentiation, exemplified by unique products like the iPhone and Tesla; focus strategies, targeting specific markets with cost leadership or differentiation, such as Nissan Leaf for electric car buyers; enhancing products and services, as seen with Microsoft Windows and ATM machines; and creating new offerings, like the iPod and Samsung flip smartphone, to capture the market with innovation.
Takeaways
- 💼 Competitive advantage is a significant benefit that a business has over its competitors, persuading customers to choose them.
- 🛒 Cost leadership is a strategy where a business aims to be the low-cost provider, exemplified by Walmart with its 'always low prices' slogan.
- 🔄 Segway's 9 series, with its competitive pricing, managed to buy over its rival by offering a similar product at a lower cost.
- 🌟 Differentiation involves providing unique and value-added products or services, as seen with iPhone's iOS operating system and Tesla's electric cars.
- 📲 BlackBerry differentiated itself with the introduction of BlackBerry Messenger (BBM), setting it apart from other smartphones.
- 🎯 Focus strategy targets a specific segment of the market, either broadly or narrowly, and can be combined with cost leadership or differentiation.
- 🚗 Examples of overall cost leadership include Walmart and AirAsia, aiming to offer low prices to a wide audience.
- 🚀 Focus cost leadership targets a specific group with low-cost offerings, like Nissan Leaf in the electric car market.
- 🏌️♂️ Focus differentiation targets a specific audience with unique offerings, such as Titleist targeting golfers with high-quality golf balls.
- 🛠 Enhancing products and services is a strategy where companies improve their offerings to attract customers, like Microsoft Windows with regular updates.
- 🆕 Creating new products and services can give a company a competitive edge, as seen with the introduction of the iPod and Samsung's flip smartphone.
Q & A
What is the definition of competitive advantage according to the script?
-Competitive advantage is a significant, ideally long-term benefit to a business, over its competitors which persuades customers to buy from them rather than from competitors.
How does the script describe the cost leadership strategy?
-Cost leadership strategy aims to achieve competitive advantage by providing lower costs than competitors, essentially selling at a lower price. Walmart is given as an example, with its slogan 'always low prices'.
What is the differentiation strategy and why is it effective?
-Differentiation strategy seeks to achieve competitive advantage by offering unique and value-added products or services. It's effective because it allows a company to stand out by being different, like how the iPhone uses a unique iOS operating system.
Can you explain the focused strategy as mentioned in the script?
-The focused strategy targets a specific segment of the market, either broadly or narrowly, and is often combined with cost leadership or differentiation. It aims to cater to the needs of a particular group of customers more effectively than broader strategies.
What are the four specific strategies that can result from combining the focused strategy with cost leadership and differentiation?
-The four specific strategies are overall cost leadership, overall differentiation, focus cost leadership, and focus differentiation. Each targets a specific market segment with a unique approach to cost or differentiation.
Why is AirAsia mentioned as an example of overall cost leadership?
-AirAsia is mentioned as it has been a leading budget airline, aiming to let everyone fly by offering low-priced tickets, which aligns with the overall cost leadership strategy.
How does the Nissan Leaf exemplify focus cost leadership?
-The Nissan Leaf is an example of focus cost leadership because it targets people interested in electric cars and offers the cheapest option, using price as its main attraction.
What is the strategy behind Lamborghini's competitive advantage?
-Lamborghini uses focus differentiation as its strategy, targeting the very rich with unique looks, powerful engines, and strong branding to attract customers who seek exclusivity and high performance.
How does the script illustrate the enhancement of products and services as a strategy?
-The script uses examples like Microsoft Windows, which continually enhances its product, and ATM machines, which were initially an added service but have become a necessity for banks, to illustrate the enhancement strategy.
What is the significance of creating new products and services as a competitive advantage?
-Creating new products and services can provide a significant competitive advantage by introducing unique offerings to the market, as demonstrated by the introduction of the iPod and Samsung's flip smartphone with a bendable screen.
How does the script suggest that a traditional shop can enhance its service?
-The script suggests that a traditional shop can enhance its service by offering new services such as an online store, making it more convenient for customers.
What is the example given for a company that uses differentiation to offer a new service?
-The script mentions a motorcycle helmet producer offering a customized helmet service as an example of using differentiation to provide a new service.
Outlines
🏆 Strategies for Business Competitive Advantage
This paragraph discusses the concept of competitive advantage in business, highlighting five key strategies: cost leadership, differentiation, focus strategy, enhancing products and services, and creating new products and services. Cost leadership is exemplified by Walmart and Segway, emphasizing selling products at lower prices. Differentiation is illustrated with iPhone and Tesla, which offer unique products. The focus strategy targets either a broad or narrow market, with specific strategies like overall cost leadership and focus differentiation. Examples include AirAsia and Nissan Leaf for cost leadership, and Lamborghini for differentiation. Enhancing products and services is shown through Microsoft Windows and ATM machines, while creating new products is demonstrated by the introduction of the iPod and Samsung's flip smartphone.
🚀 Innovation and Convenience in Competitive Advantage
The second paragraph delves into the final two strategies for achieving competitive advantage: enhancing and creating new products and services. Enhancing services is exemplified by drive-thru services, which make transactions more convenient for customers. Creating new products is illustrated with the introduction of the iPod, which revolutionized the music player market, and Samsung's flip smartphone with its innovative bendable screen. New services, such as online stores for traditional shops or customized helmet services for motorcycle helmet producers, are also mentioned as ways to attract customers and gain a competitive edge.
Mindmap
Keywords
💡Competitive Advantage
💡Cost Leadership
💡Differentiation
💡Focused Strategy
💡Overall Cost Leadership
💡Overall Differentiation
💡Focus Cost Leadership
💡Focus Differentiation
💡Enhancing Products and Services
💡Creating New Products and Services
💡Tagline
Highlights
Competitive advantage is a significant, long-term benefit for a business to persuade customers to choose them over competitors.
There are five frequently used strategies to set a company apart from its rivals and win a sustainable advantage.
Cost leadership is the first initiative, aiming to achieve competitive advantage by providing lower costs than competitors.
Walmart is a prime example of cost leadership, dominating the grocery retail industry with low prices.
Segway's 9 Series succeeded with a low-cost strategy, eventually buying over its competitor.
Differentiation is the second initiative, focusing on providing unique and value-added products or services.
iPhone is a popular example of differentiation, being the only smartphone with iOS and claiming to be the most secure.
Blackberry differentiated itself with the introduction of Blackberry Messenger (BBM).
Tesla chose to penetrate the motor market with its reliable pure electric cars, setting itself apart from petrol and diesel vehicles.
Focused strategy targets either a broad market or a narrow market, combining with cost leadership or differentiation.
There are four specific strategies combining focus with cost leadership and differentiation.
AirAsia is an example of overall cost leadership, offering low-priced tickets to make flying accessible to everyone.
Nissan Leaf targets cost leadership in the electric car market by offering the cheapest option.
Fleet, a badminton brand, focuses on offering good equipment at a lower price, targeting only badminton players.
Lamborghini exemplifies focus differentiation, targeting the very rich with unique looks and powerful engines.
Titleist, a golf brand, targets golfers with its differentiated golf balls, claiming to be the number-one choice in golf.
Enhancing products and services is the fourth initiative, with examples like Microsoft Windows and ATM machines.
Creating new products and services, like the iPod and Samsung flip smartphone, can achieve competitive advantage.
New services, such as online stores for traditional shops or customized helmet services, can attract customers.
Transcripts
competative advantage is a significant
benefit ideally long-term to a business
over its competitors which will persuade
customers to buy from them rather than
from competitors there are five
frequently used initiative or strategies
to set a company apart from rivals and
winning a sustainable advantage the
first initiative is cost leadership to
be a leader in low-cost this strategy
try to achieve competitive advantage by
providing lower costs than competitors
in simpler words to sell cheap best
example for this is Walmart Walmart
dominate the grocery retail industry by
being the cost leader and selling with
low price it also has a slogan always
low price do you know what this is this
is a nine bit nine but provided
competition to Segway it sold almost the
same product with lower price 9 but
succeeded with this strategy and
eventually bought over its competitor
Segway the second initiative usually
used is differentiation the target is to
be different from others this strategy
achieve competitive advantage by
providing more unique and value-added
products or services than competitors in
simpler words beat the competitor by
being different and unique iPhone is the
most popular example for differentiation
it is the only smartphone using iOS
operating system and they claim to be
the most secured smartphone blackberry
is another smart phone that uses
differentiation approach it introduced
blackberry messenger or bbm to set it
apart from others and from the motor
industry there is Tesla the most
reliable pure electric car on the market
it chooses to penetrate the motor market
where petrol and diesel cars still
dominates the third initiative is the
focused strategy it is the focused
target of a company there are two types
of target broad market where you target
generally everyone or you target on
narrow market a certain type of people
or group this is what we call focus
strategy this focus strategy is usually
combined with either the first or the
second
strategy which are cost leadership and
differentiation if we combine them
together we could see that it can become
four specific strategy the first one is
overall cost leadership this is the
first strategy that we discussed earlier
just target on being the cost leader the
second one is overall differentiation
this is the second strategy that we
discussed earlier purely target to
become different or unique the third and
fourth one is the combination of the two
with focus strategy focus cost
leadership and also focus
differentiation focus cost leadership is
to become a cost leader but targeting
certain group of customers focus
differentiation is to be different but
only target to sell to a certain group
of customers example for overall cost
leadership is Walmart and also AirAsia
AirAsia has one the best budget airlines
for many years their target is to be the
airline to let everyone fly by offering
low priced ticket just like their
tagline now everyone can fly example for
overall differentiation is iPhone and
Tesla like discussed earlier the example
for focus cost leadership is Nissan Leaf
Nissan Leaf is the cheapest electric car
they try to challenge other electric car
manufacturers by offering the cheapest
option to this their target are only
people who wants to buy electric cars
and using the price as their attraction
another example is fleet the Badminton
brand it offers good badminton equipment
for a lower price their focus is only on
badminton players and also using low
price as the attraction Lamborghini is a
good example for focus differentiation
their focus is only on the very rich and
they use differentiation as their
attraction Lamborghini has unique looks
and powerful engine and has a powerful
branding other example is the golf brand
tight list
Titleist is most known for their golf
ball they have a tagline of number-one
ball in golf they only target golfers
and using differentiation as attraction
now let's move to the
fourth initiative the fourth initiative
that a company can do to achieve
competitive advantage is by enhancing
products and services company just
simply try to improve their products to
try and attract customers
one example is Microsoft Windows that
keeps on enhancing their product year by
year ATM machine was not available long
time ago it was an added service
provided by bank to make transactions
easier for customers now it has almost
become a necessity for all banks
drive-thru service is also an example of
a company enhancing their service to
make it convenient for customers
the last initiative is by creating new
products and services some companies who
have the technology and capabilities
will try to invent new products when
iPod was introduced there was nothing
like it anywhere except for the old
Walkman so it achieved great success
because it was the first small music
player Samsung has also introduced
Samsung flip smartphone with bendable
screen that can be flipped new services
could also be an attraction an online
store for your traditional shop could be
a new service for a motorcycle helmet
producer they could offer customized
helmet service strategies for
competitive advantage in business
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