Competitive Parity

Competitive Parity (Major tips you need to know)5 min read

In society today, companies use different strategies to determine their promotional and marketing activities. One of such strategies is known as “competitive parity”.

An organization’s success does not only depend on the fact that it can build a legacy, its ability to sustain that legacy is also crucial. The success of any organization depends on it’s ability to challenge it’s competitors and win. 

In this article, we will study about competitive parity and it’s effect to companies.

Definition of Competitive Parity

Competitive Parity is a strategy where a company decides to spend its budget on marketing activities with other competitors.

This means that the funds allocated for promotional and advertising activities will be similar to that of the competitors.

Competitive Parity can be called defensive budgeting because it is normally done to defend and protect the reputation of the company during times like this.

Competitive Parity Budget

Here, the budget to be used is determined by doing the analysis of the money spent by competitors on advertisement.

The difference between Competitive parity and Competitive advantage.

Competitive Parity

Competitive Parity can be defined as when an organization spends at par or spends money of equal value with their competitors.

If the economic value created by a said organization is equal to that of its rival, then it has competitive parity. One thing about the goods produced during competitive parity is the goods are always alike in so many ways.

READ MORE:  How to prepare for an Exam in One Week(Wow!)

Advantages of Competitive Parity

The funds used for the advertisement are always at par or almost equal with that of their competitors, which means spending less funds. It is very possible for the customer outreach to be similar to that of the competitor.

Competitive Parity is a very affordable method, most companies use the method we call the “demand forecasting method” and “sales forecasting method” to predict the rate of their sales which is very expensive.

It is easier to be at price advantage which happens when the competitors have their prices increased.

Read this: Interpersonal Learner (Everything you need to know)

Disadvantages of Competitive Parity

One of the disadvantages here is that a company’s objective may be quite different from that of its competitors. This might make wrong estimations in terms of funds.

Competitive advantage:

Competitive advantage is where an organization spends more in order to perform better than the other organization. 

This can also be perceived as a situation where an organization has products or goods that is said to be better than that of its rival. 

If an economic value created by a said organization is greater than that of its rival then it is said to have a competitive advantage.

In a situation whereby the economic value created is a disadvantage then it is said to have a competitive disadvantage.

To beat competition, you must be in a niche. This niche is all about being in a sector where there aren’t so many competitors. The market may not be large but the profit margin would be so high, you would be glad you are there.

READ MORE:  Ferpa Waiver - Major tips and tricks

To be at advantage you must possess these criteria.

  • You must offer products of greater value.
  • Your products or goods must have greater benefits and services that justify higher prices if found to be costly.
  • When your organization uses a strategy that is difficult for other companies to implement or copy, you will be at an advantage if your rivals have tried to copy your strategies or methods but failed woefully.

Read on: Competitive Parity vs Competitive advantage

Generic strategies that can help one achieve a competitive advantage

Leadership Strategies:

This is dependent on the ability of the organization to produce products that cost less than that of its rival. So the company earns more money by selling their goods at normal market prices than they would have if they sold it costlier.

Differentiation strategies:

This is based on the fact that a company or an organization is capable of producing a product that is very unique to society.

A superior value will be created because the product has higher quality. This makes the customers very loyal and insensitive to the price so they become indifferent towards looking for an alternative product because they are satisfied.

Focus strategies:

This strategy helps to find a particular niche to be involved in. The niche being talked about could be a particular line of product, or a particular group of people to reach out to.

Read this: What is College Readiness? (Major tip and boosts)

Competitive Parity vs Competitive advantage

How to maintain your customers:

  • For a company to remain at the highest level of competitive advantage then it must provide the customers with value always.
  • They should engage in mass customization.: This helps to provide the customers with goods while making the prices of goods very affordable.
  • Introduction of the use of machines in the manufacturing of goods: This has shown that more goods will be produced using less time and goods produced by machines have shown to have more quality.
  • An organization ought to possess the ability to produce a product with variations. 
  • The use of internet services: This will make it easier to reach your customers anywhere and anytime. The use of the internet also ensures a very quick response.
READ MORE:  USC vs UCLA - Which College is BETTER? (Full Ultimate details)

Final tips:

Competitive advantage plays a major role in helping business boom their products to a large audience while still maintaining the rule of not over spending.

Awesome one, I hope this article answered your question.

Share this Information.

Leave a Comment

Your email address will not be published. Required fields are marked *