Business and Economics Unit 2-Lesson 2

Key knowledge: identifying the reasons businesses seek to build or create a competitive
advantage, for example, to stay in business, meet the changing demands of a competitive
global market, achieve efficiencies, lower costs, and improve their profit margins.

Competitive Advantage
 Competitive Advantage refers to factors that allow a company to produce goods or
services better or more cheaply than its rivals.
 These factors allow the productive entity to generate more sales or superior margins
compared to its market rivals, both of which lead to increased profit.

Gaining competitive Advantage

 Pricing/discounts
-Reducing to cost of producing the item either by using new technology or
finding another way to make it more cheaply.
-Outsourcing part of their business to someone else who can produce it more
cheaply, perhaps overseas.
-Reducing their prices which may lead to lower profits but may be better for
the business in the long term.
 Advertising
-Social media
-Print media
-TV
-Billboards
-Free trial promotions
 Improving quality/functionality
-Performance: How does the product reform.
-Features: What additional features does this product have.
-Reliability: Does it work without fail.
-Conformance: Does it meet expected standards.
-Durability: Will the product last a reasonable amount of time.
-Serviceability: How quickly can it be repaired if it does break down.
-Aesthetics: Does the look, smell, fell, sound etc appeal to customers.
-Perceived quality: Does the consumer think it’s a quality product.
 Responding to consumer needs
-Ensuring good, and responsive customer service.
-Delivery and repairs are quick and efficient.
-Products are adjusted or improved by customer experience.
-More and more customers want things that are produced ethically and have
minimal impact on the environment.