Competitive advantage refers to the ability of a company to deliver products, services or benefits, either at a lower cost or an improved level than other players in the same industry. These two main types of competitive advantage determine whether your company succeeds by being a cost leader or by differentiating its offering. Businesses typically pursue either one or the other competitive advantage, because unless you have a monopoly it is almost impossible to achieve both.
Recruiting talented staff is a primary concern for businesses operating in competitive markets. In spite of high unemployment, companies report a shortage of skilled workers that could reach 95 million by 2020, according to "Business Insider." Social media increase your chances of finding talented employees in your industry by offering access to approximately 1.5 billion users who are Internet-literate, well-networked and often have established expert status. You save money by posting vacancies on social media, which is cheaper than traditional advertising. In addition, the targeting options offered by platforms such as LinkedIn and Facebook enable you to reach jobseekers with specific experience and interests.
Social media activities take place in real time. The 2012 London Olympics were dubbed the first social media Olympics ever, because before each sporting event was over the social networks were buzzing with commentary, reports and opinion. With little or no delay between receiving information and disseminating it, your company can provide rapid social media responses to customers and gain an advantage over competitors who don’t respond as quickly.
Monitoring and measuring your brand via social media enables you to track what your customers are saying online about your company and products. It offers a competitive advantage by providing information on comparisons customers draw between you and your competitors, which helps you to make decisions about pricing and customer preferences. By using tracking programs such as social plug-ins from Google Analytics, Klout or RowFeeder, you can identify the demographic profiles of your followers, customize your products and market them accordingly.
Blogging is one of the most successful social media activities, one which few businesses can afford to ignore. Creating a business blog and posting non-marketing information regularly provides value to your customers and helps to build your reputation as an expert in your field. This gives you a clear differentiation advantage by setting you apart from your competitors. Using your social media profiles to share your blog posts and encourage your followers to share them further brings them to the attention of users who might not visit your blog or website otherwise.
Word of mouth has always been one of the most effective methods of increasing sales. Business growth leads to cost efficiencies, which can support a cost leadership advantage, while business efficiencies support a differentiation advantage. In addition, social media give you the opportunity to engage with your customers in a public forum, create conversations and resolve problems. For example, UK–based telecom firm BT created a team to respond to complaints coming in via Twitter and found that customers preferred the option of posting their problem instead of phoning in and holding on for the call center.
Using social media to complement traditional or online marketing and advertising is an accepted way to save costs, reach a targeted audience and generate sales leads. Pay-per-click advertising, or PPC, charges the advertiser only when a user clicks on the advertisement. This makes it more effective and less costly than traditional advertising. In addition, social media offers the potential for an advertisement or blog post to spread virally from user to user, which happens when users share your posts with their own networks.