Moving away from competitive parity

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The limitations of competitive parity: Why firms may want to move away for parity

Competitive parity is where your resources are comparable with other firms in your market. You do not have resources that are rare – rather the resources that you have a generic and widely available to others. 

The key disadvantage with being at parity with others is that you are unlikely to be able to obtain a premium price. If all of your underlying resources are the same as other firms (including such resources as brand image), then there is no specific reason for a customer to buy from your firm compared to other companies. If you were to raise your prices above the market level, customers would likely move to other firms.

Recognizing that firm resources underpin your competitive position

Underpinning a firm’s market position is the resources and capabilities that the firm has. Having resources that are distinct from other firms (i.e., rare resources) provides a basis to move away from parity – you may now be able to offer a level of service that other firms are not able to provide.

Considering ways that you can differentiate your firm

When considering how to move from competitive parity, analyze if there are ways of improving your underlying resources to set your firm apart from others. If you are able to develop unique capabilities, such as superior marketing, product features, technologies, or brand image, then this can help set your firm apart from others. 

Moving from competitive parity has many advantages, including the possibility of charging a higher price for your goods, or attracting customers to your firm who have a specific desire to obtain the unique product or features that you provide. Essentially you are no longer competing on cost, but rather on the uniqueness of your offerings. 

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