Competitive Advantage
Definition:
The definition of Competitive Advantage:
· An advantage that we get or gain from our competitor by offering the consumer a greater value, a greater benefit or a lower price from our product or service.
There are two basic components about the Competitive Advantage:
1. Cost Advantage: means if our products have a same type and the same benefits with our competitor product but our price is lower than to them, it means that we have a competitive advantage base on the price. In this case we will get lower profits.
2. Differentiation Advantage: means if our product can offer a consumer with a greater value or benefits than your competitor. Differentiation Advantage allows the company to sell the product with higher price than your competitor but in the situation that your product is have a better benefits or values. Differentiation advantage can maintain average profits.
The two components above are use to build or to create the Competitive Advantage itself.
Example:
To compete PT Toyota Astra Motor with their Avanza, PT Astra Daihatsu Motor has launched Xenia. Xenia and Avanza are very similar, they also use the same chasis for the body and use also the same machine (VVT-I K3-VE). But they are also having differentiation.
1. There are 4 types of Avanza (1.3 E M/T, 1.3 G M/T, 1.5 S M/T, 1.5 S A/T) and 3 types of Xenia (1.0 VVT-i Mi, 1.0 VVT-i Li, 1.3 VVT-i Xi).
From the type above, we can see that Toyota Avanza offer the consumer with more various types; because Avanza offer 4 types but Xenia only offers the consumer with 3 types. It means that Toyota Avanza has the competitive advantage from their type.
2. Daihatsu Xenia offer the consumer with 7 various colors (Classic Silver, Midnight Black, Exotic Beige, Ocean Blue, Wine Red, Aqua Blue, and Lime Green ) but Toyota Avanza also offer the consumer with 7 colors choice too (Silver Metallic, Champagne Metallic, Red Mica,Dark Blue Mica, Black Mica, Aqua Metallic, and Light Green Metallic). In this case, Toyota Avanza and Daihatsu Xenia have their own advantage from their own colors.
3. About the price, Toyota Avanza approximately have higher price than Daihatsu Xenia. The price of Toyota Avanza is around Rp 111.600.000,00 – Rp 146.900.000,00. The price of Daihatsu Xenia is around Rp 90.300.000,00 – Rp 119.500.000,00. To easy the comparison, I choose Toyota Avanza 1.3 E G M/T and Daihatsu Xenia 1.3 VVT-i Xi. With the same type of machine, the price of Toyota Avanza 1.3 E G M/T is about Rp 125.400.00,00 but Daihatsu Xenia 1.3 VVT-i Xi only Rp 119.500.000,00. It means that Daihatsu Xenia offers the consumer with a better price, so Daihatsu Avanza has what we call a cost advantage.
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