Week 4: Clear on Resource-Based View

In order for a company to retain a competitive advantage, its exploitable resources must have these four requirements:

Value

The company must devise a way to create value in their products or service, or else consumers will not make the purchase. This can be created by strategic marketing, such as establishing a strong brand image or even paying close attention to price--too low, and products are perceived as low value, too high and you could damage your sales. The right price constitutes the proper flow of customers, while maintaining value in the product or service.

Rarity

A resource must be rare, or else it will add no value to your company. Take for example a gallon of milk, which can be purchased at drugstores, small shops, and large retailers alike. The resource itself adds no competitive advantage, and therefore retailers must rely on pricing to get the product moving. There is no such thing as customer loyalty when your product does not have some level of rarity. 

Imperfectly Imitable 

Resources must be difficult to copy. Luxury items are a perfect example of this. The prestige of owning a certain car or brand creates a niche of consumers dedicated to that particular item. A Lamborghini cannot be replicated.

Non-Substitution

As discussed in the lecture, Miracle Whip is no substitute for Mayo. For those perhaps familiar with the hazelnut, chocolaty spread Nutella, you know there is no such thing as a substitute. Since customers cannot buy a similar product, there is no such thing as competition from a rival with the exact product.

Graphic Source: Flickr user c.a.muller