HOW TO BUILD A COMPETITIVE ADVANTAGE

For us to build a competitive advantage, a company can use one of three main
methods: cost, differentiation, and specialization
(NEXT SLIDE)
First is the Cost. Yung company has a cost advantage kapag makakapagproduce ng
product or makakapagprovide ng service at a lower cost kesa sa mga kalaban niya or
competitors. Companies with this advantage, they typically or they usually produce in
higher quantities and benefit from one or more elements, example, first is
 Access to low-cost raw materials
 Efficient processes and technologies
 Low distribution and sales costs
 Efficiently managed operations
Given those four elements, yung mga companies, they can capitalize on a cost
advantage in one of two ways:
 Yung una ay they can price their products the same as their competitors but
make more profit because yung costs are lower.
 Second naman ay pede nilang babaan yung prices below those na chinacharged
ng mga competitors nila to attract more customers and gain market shares.
In these two cases, the loss on margin or the difference between the price charged and
the cost to make the product is offset by higher sales volumes. This can include offering
lower prices for the same goods or earning more profits by having lower production
costs because of the four elements nga. Madalas, yung mga larger companies have the
cost advantage over smaller companies, as they may produce more and benefit from
purchasing their materials in bulk kasi diba may discount kapag bulk yung orders mo.
Some businesses or companies may even own the production companies that create
their materials, further increasing their cost advantage.
(NEXT SLIDE)
Eto yung some of the areas in which companies may adjust spending to improve their
cost advantage:
 Material cost
 Processes
 Distribution
 Management
 Automation
 Patents
Yung isa pang advantage ng cost ay pede tayong makagain ng mas maraming long-
term customers kasi nga when we reduce prices to increase cost advantage, mas
maeengganyo sila magpurchase ng magpurchase. This can increase profits over the
lifetime of the company.
Competing on price can be effective, but if you slash prices too much you risk
decreasing profit margins to an untenable level.

(NEXT SLIDE)
Yung second method is the Differentiation
Sa market natin ngayon, yung barrier to entry has dropped significantly in recent years.
As a side effect, these industries have seen substantial increases in competitive
products. So dahil nga very competitive na yung market natin, vital or critical yung
differentiation for a product’s survival
(NEXT SLIDE)
What are Types of Product Differentiation?
We have three types, first is the Horizontal Differentiation. Horizontal differentiation
refers to any differentiation that is not associated with the product’s quality or price
point. Instead, these products offer the same thing at the same price point. When
making decisions regarding horizontally differentiated products, ang basis neto ay yung
customer’s personal preference. Example ng Horizontal Differentiation ay Pepsi vs.
Coca-Cola, for me halos same price lang sila pero ayoko nung lasa ng pepsi kaya mas
gusto ko yung coca cola, ganun yung horizontal.
Second ay Vertical Differentiation. In contrast naman sa horizontal differentiation,
vertically differentiated products are extremely dependent on price. Dito magkaiba yung
price points and marks of quality. Nageexist dito yung general understanding na kung
lahat ng option ay same yung price, piliin mo pa rin yung “the best. Para mas magets
niyo, ang example ay Branded products vs. generics. If magkakataon na same price,
siyempre mas pipiliin mo yung designer. Sino bang pipili sa generic lang aside sa mga
bare minimum enjoyer?
Last is the Mixed Differentiation. Also called “simple differentiation,” mixed differentiation
refers to differentiation based on a combination of factors. This type of differentiation
gets lumped in with horizontal differentiation. So dito kasama na yung price and hindi
lang yung experience mo. Example ay Vehicles of the same class and similar price
points from two different manufacturers like Ferrari and Lamborghini.
(NEXT SLIDE)
Third method naman ay Specialization. Nagfofocus lang to sa benefits and quality ng
product that may attract potential customers. Companies use this technique to target a
specific market instead of the general public. Some companies that use product
specialization build their reputation as experts in the specific market which they're
targeting, meaning yung products nila become the standard for that specific market.
San Miguel Corporation, Ayala Group of Company, and Apple. Lahat ng company na ‘to,
they have something in common: They are all known for a specific product or services.
Yes, they offer variations on that product/services. Yung San Miguel nagooffer din sila
sa transpo pero kapag sinabi mo kasi yung name na ‘yan, matic alak maiisip natin.
Yung apple they offer other services din pero iphone ang maiisip natin agad and yung
ayala group of companies, they also do business in the field of constructions pero bpi or
banking ang maiisip natin sakanila. Ayun yung specialization, it is a marketing technique
that focuses on the benefits and quality of a product.
(NEXT SLIDE)
What are the benefits of product specialization?
 Market concentration: reducing marketing efforts to target specific customers
instead of the mass public therefore reducing advertising costs.
 Competition reduction: Specific markets usually have a set amount of companies
that operate within them, which often means fewer competitors.
 After-sale product sales: Consumers who buy these specialized products may be
more likely to buy more products that enhance their purchases from the
company. For example, bumili ka ng nike shoes, may possibility na magpurchase
rin ng medyas to supplement your initial purchase.
 Increased focus on product-specific ads: A combination of market concentration
and reduced competition means some companies can dedicate marketing efforts
to developing specific ad campaigns.

Yung three methods na nadiscuss, based siya sa what we call as Porter’s Generic
Strategies. These generic strategies are defined along two dimensions: scope and the
strength. Strategic scope is a demand-side dimension that captures the size and
composition of the target market. Strategic strength is a supply-side dimension that
defines the firm’s core competencies. In formulating how to best apply a given strategy,
Porter created a matrix with one axis defined by the firm’s core competencies,
and the other by market scope.
(NEXT SLIDE)
I. WAYS TO GAIN COMPETITIVE ADVANTAGES
(NEXT SLIDE)
1. Foster a Positive Corporate Culture:
 Create a work environment where employees feel valued and supported.
Finding the best people isn’t just important for productivity and cost reduction. It’s
also important because having happy workers means that your customers have
better experiences. Customers know the difference between buying from a
company where workers aren’t happy. They know that when workers are
supported, the quality of care is better and products have fewer issues.
Customers want to buy from companies that take care of their people because
this means that they take care of their customers. This provides you with a
competitive edge.
 Boosts their morale, productivity, and customer service.
 Example ay sa BPI, super dami nilang benefits and kapag may event, included
lahat

(NEXT SLIDE)
2. Identify Untapped Niches:
 May saying sa business field na kapag nangingisda tayo , there are two types of
fish. Yung una yung mahahanap mo sa mga oceans and yung second ay yung
mahahanap mo sa mga lakes or rivers. For obvious reasons, fish that grow in
oceans are bigger, pero mas mahirap sila hulihin. Yung mga fish naman that
grow in lakes and rivers are easy to catch but tend to be smaller compared to
their ocean counter-parts. Same lang to ng principles pagdating sa customers. If
were looking to gain a competitive advantage, it can be easy to go after known
niches where customers are easy to find. However, looking for niches where
customers are under-serviced can provide you with a market advantage.
 Capitalize on underserved market segments for innovation.
 Tailor offerings to meet specific needs and preferences.
 Examples: Uniqlo (quality/minimalist designs), Potato Corner (diverse flavors).

(NEXT SLIDE)
3. Understand Your Ideal Customer:
 Deep understanding of target audience demographics and behaviors. When
targeting the right customer, dapat aware tayo sa buying process, sinong
involved sa mga decisions, what information is needed and at what time, these
can help not only the sales team but also the and post-sales support teams win
business and retain lifelong customers. Kapag kasi nakita ng mga customers mo
na naiintindihan mo yung needs nila and ano yung mga kailangan talaga nila,
there is a huge possibility na among the choices, ikaw yung pipiliin nila. Pipili ka
 ba ng hindi ka naiintindihan? Siyempre hindi diba kasi mahihirapan ka lang and
hindi dapat ikaw yung magadjust.
 You can tailor products, services, and marketing to address customer needs.
 Examples: Apple (premium brand image), Mercury Drug (healthcare needs).

(NEXT SLIDE)
4. Highlight Your Strengths:
 Leverage unique capabilities to differentiate from competitors. Eto yung mga
processes, technology, or knowledge/expertise/experience. Whatever they are,
these offer value to your customers and are what customers what to buy from
you. Consider how you can use these strengths in innovative and creative ways
to gain new business, tap new markets, etc.
 Build trust and loyalty among consumers.
 Examples: Coca-Cola (Iconic Marketing), Goldilocks (Rich Heritage), Greenwich
Pizza (Thin crust)

(NEXT SLIDE)
5. Craft a Unique Value Proposition:
 Communicate unique benefits and value to customers. Dapat lagi tayong may
tanong ns so what. In other words, what makes our service and support better?
How is it more valuable? What does it offer that your competition does not? Don’t
stop until you can come up with a single statement na makakasagot sa so what
mo.
 This value prop should resonate with customer needs and preferences.
 Examples: Mang Inasal (Unli-Rice)

(NEXT SLIDE)
6. Reward Behavior Aligned with Your Mission:
 Whether you seek to reward top performers in your organization, or to
acknowledge customers who have been your best buyers, rewarding behavior
has many benefits. First and foremost, rewards such as travel incentives, provide
opportunities to combine leisure with business and build relationships outside of
the office environment. In fact, of top performing companies, 90% of them use
rewards.
 Incentivize behaviors that align with brand values.
 Foster customer loyalty and engagement.
 Examples: BPI(Cash and Recognition) SM Supermall (Reward Points), Shopee
(Coins).