The ultimate objective of any business is to make profits. However, no matter how good your product or service is, it does not matter if nobody knows, it exists. That is where the role of marketing becomes very essential. We have evolved in an era where progressive policies, globalization and technological advancement has given birth to various business organizations that have a bouquet of offerings for a customer. However, it has also set the market into a hyper-competition mode. As such, the need of any organization to have a differentiating factor that gives them an edge over their counterparts, that is, a company’s competitive advantage becomes crucial for its success and sustenance in its respective industry. This report seeks to analyse the importance of competitive advantage of two notable and world-famous companies and highlight how the respected companies achieved remarkable success by focussing on their competitive advantages.
Netflix Inc is a leading streaming service that enables a viewer to access a wide variety of acclaimed entertainment and informative based content over internet-connected devices (Netflix Inc. 2020). The company is one of the first in its segment to use internet technology to completely drive its business model. By using the internet, the company can collect a significant amount of data on its customer’s viewership. According to Morgan (2019), by employing its highly efficient algorithms that have proven to give an incredible level of accuracy of as close as 80 per cent, Netflix Inc can predict what an individual viewer wants to see and generate personalized recommendations that save the viewer a considerable amount of search time (Morgan 2019). This feature has given the popular streaming giant a strong competitive advantage that has been widely appreciated by its customers and has put the company’s name ahead on the leader board.
When it comes to naming the world’s leading retailing e-commerce company, Amazon leads the way. According to A. Garner (2018), originating in 1995 from a local online book-seller to being the most functional e-commerce company that sells everything from alphabet A to Z, thus delivering on their company logo, Amazon has come a long way and is now popular in 13 countries across the globe. The fundamental reason for Amazon’s success lies in their ability to provide efficient services right from product purchase to enviable time-based delivery, thereby making online shopping a hassle-free experience, giving traditional brick-mortar setups a hard time. This quality has proven to be a huge competitive advantage for the company and is not easy to duplicate. The very advantage is the main basis on which Amazon has been able to expand and sustain its operations in the overseas market (Garner 2018).
According to Twin (2019), competitive advantage means having something that makes your firm more desirable than other rivals. Competitive advantages can further be deconstructed into Comparable Advantages and Differential Advantages (Twin 2019). The aforesaid case studies for our analysis help us in explaining these further.
Having a comparative advantage allows a company decreases the prices of its product or service to gain leverage on sales (J. Martin. n.d.). Amazon is a fine example that can help us in understanding this concept. Amazon, over 25 years has been able to establish a platform that offers a level of scale and efficiency that is not easy to replicate by its competitors, a factor which has led to its emergence of being a market leader in its segment and busting the price barrier (Twin 2019).
The company has been able to create a significantly important relationship with its vendors, distribution centres and other service agents that play an instrumental role in making Amazon’s shopping and delivery experience of high quality, thereby enabling the company to dominate the price segment. Not only do these factors invariably give the company a vital edge, but they also go ahead to strengthen Amazon’s customer base that spans beyond United States (home ground) and reaches an array of marketplaces (Garner 2018).
A differential advantage means when a company has a product or service which is deemed to be of superior quality as against its competitors by the target customers who are even willing to pay a high price to buy the product or avail the services (AGW Marketing 2018). The example of Netflix Inc can be cited to substantiate this further. Netflix Inc provides users to view a wide variety of content of their choice online and charges a subscription which is higher compared to its competitors like Amazon Prime, Hulu, Disney + Hotstar, HBO etc (St Leger and Roberts 2020). Still, viewers prefer Netflix Inc over other streaming platforms and much of it has to do with the personalized related content that the company auto-generates through its high-end AI algorithms. Also, Netflix Inc is extensively providing its viewers with highly acclaimed original content (Movies, Series and Documentaries) that can only be viewed on its platform thereby giving the company strong leverage over its rivals (Morgan 2019).
The success and sustenance of both Netflix Inc and Amazon Inc can be inferred from their formidable and sound marketing strategies.
For Amazon, it is not the price but volumes of sales that is a profit driver. Hence, it can play on lower pricing coupled with exceptional delivery service and customer experience which overall adds to its Unique Selling Proposition (USP) and makes it different from its competitor companies (Dudovskiy 2018). The analysis of the Segmentation Target and Positioning aspect for Amazon tells us that the company targets all kind of consumers and is selling an uncountable range of products that anyone can put their finger at. Amazon has positioned itself to be a customer-driven organization and hence follows responsive positioning that is, producing products or services as per customer needs and expectations (Baldwin 2020). The company has been able to build on its business process in a sound and steady manner and has been extremely adaptive towards changing external environment. This is validated from the current year’s second quarterly results where contrary to analyst expectations, the company was able to deliver staggering profit figures of 88.9 Billion Dollars which is 40 per cent above its previous quarter (Vanian 2020).
Netflix Inc has in recent years emerged to be a company that is backed by strong brand recognition and brand recall (Spangler 2019). Although the competition amongst online content streaming companies is increasing day by day, yet Netflix Inc as a company has been able to carve a differentiation for itself on account of the high-quality originality in content that it streams on its platform besides third-party content. The USP for Netflix Inc is that it makes viewership personalized and convenient saving time besides, providing control to its viewer to watch the content without advertisement as per his convenience anytime, anywhere. The company takes pride in its AI Algorithms that have an incredible accuracy of determining what a viewer wants to watch (Morgan 2019). Netflix Inc positions itself as a brand that makes “TV viewing easy” a factor that plays a vital role in making it a popular choice amongst its viewers. The company’s second-quarter report for the current year reflects how strongly it has been able to capture the market. According to Vecchio (2020), Netflix Inc posted a revenue figure of nearly 6.15 Billion Dollars that beat the market expectation (6.15 Billion Dollars) and reached a Global subscriber base of 193 million, which was again under anticipated by the analysts at Wall Street. The analysts have revised their figures and expect that if it continues then Netflix Inc will be able to touch 200 million subscriber’s base from across the world by the end of the year (Vecchio 2020).
While researching the discussed companies (Netflix and Amazon), one factor that was common to both came to the forefront. Both Netflix and Amazon did not achieve success overnight. The companies are customer-driven and established themselves based on understanding and following core marketing concepts that helped them identify, encash and sustain their competitive advantage which reflects prosperously on their respective bottom-lines. To conclude, business firms need to identify and focus on the competitive advantage that cut them above the rest and give them a firm ground to root. As inferred from the above case studies, it is clearly understood that having a competitive advantage is a game-changer for any ambitious company who seeks to create a difference in the global perspective. The analysis on both Amazon Inc and Netflix Inc leads us to understand that if a company has a stronghold over consumer preference and is mindful of even the minutest of details that can be easily ignored, it can have a significant impact on the overall growth and prospects of a business.
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