What is Competitive Advantage?



What is Competitive Advantage?

If your business doesn’t seem to be flourishing or can’t seem to distinguish itself from the may competitors out there, you may be suffering from a very simple problem. But to get ahead of your competitors once and for all and distinguish yourself from everyone else in your market takes understanding of a very important concept for entrepreneurs: competitive advantage!

What is Competitive Advantage?

The practice of gaining an ‘edge’ over competitors by offering consumers greater value — either through lower costing products or services or offering higher quality services or products which justify higher prices — is known as a competitive advantage.

Competitive advantages can differ greatly even among similarly-sized companies delivering the same services or producing the same products, and for small businesses and especially start-ups, they are the most crucial element of the entire marketing strategy.

Identifying and Creating Competitive Advantages

First of all, your business may have a built-in competitive advantage to promote, such as the incorporation of certain software that makes the customer’s experience easier. The location of the premises might also lend itself to being a competitive advantage for some businesses. For example fast food outlets benefit from being situated in a densely populated part of a city.

But even if there is no obvious advantage in the set-up or basic circumstances of the business, one or more can be created by surveying the competitive scene, examining the services provided by rivals and identifying an additional and unique service to enhance the benefits of the primary service being offered. For example, an online retailer promising to ship out all orders made during working hours on the same day will have a competitive advantage over similar businesses that make no such promise.

Great or unique customer service is often the easiest way to establish a competitive advantage, but others might include lower prices or bundle deals. Being a small business can be a competitive advantage by itself when competing against larger and more established companies.



How to Gain a Competitive Advantage

When a small business markets its competitive advantage, the company must ensure this advantage is specific and not too vague for customers to appreciate. For example, don’t promise customers you will ship out their orders as fast as you can. Make the advantage clear and easy to grasp. Promise to ship all orders made before 4:30 pm on the same day they were ordered and you have n advantage customers can easily understand.

Simply saying you have the best customer service isn’t going to translate into a competitive advantage. However, initiating a unique policy that directly benefits your customers will certainly count as a competitive advantage and will be the reason people choose your business over your competitors.

The key to successfully gaining a competitive advantage is to make a clear, concise and easily recognizable distinction between your business and others in your industry. To be easily recognizable, the advantage must be demonstrable and easily proven to customers.

It might be hard to believe, but a large proportion of small businesses still don’t have a website. With more and more consumers going online to find services and buy products, having an easy to use website might be another clear competitive advantage.

Keeping up with marketing trends and not being left behind competitors is a vital aspect of competitive advantage. For example, if your competitors are going mobile through apps and mobile websites, your business should also go mobile before you’re the only one who hasn’t. Failing to go mobile could make it more and more difficult for you to attract new customers, while doing so will help you give your small business a sustainable competitive advantage.



A well-run business might identify multiple competitive advantages when developing a marketing strategy, but be wary of casting too wide a net and weakening the impact of the advantages directly increasing the company’s profits. Identify the ones that will bring in the most money and focus on those.

Don’t add fluffy or subjective claims in an attempt to build on genuine advantages. For example, sandwiching a genuine competitive advantage like same day delivery in between claims of being “the best this” or “the best that” around can undo all the good work done in identifying or creating your genuine competitive advantage in the first place.

Of course, the biggest mistake companies make in this area is promising a competitive advantage that they can’t deliver. This leads to unsatisfied customers who won’t return, not to mention the loss of potential new customers due to bad reviews.

Photo via Shutterstock



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Gabrielle Pickard-Whitehead


Gabrielle Pickard-Whitehead Gabrielle Pickard-Whitehead is a professional freelance writer and journalist based in the United Kingdom. Since 2006, Gabrielle has been writing articles, blogs and news pieces for a diverse range of publications and sites. You can read Gabrielle’s blog here.

2 Reactions

  1. Your story (how your business started or why you run it) can be a competitive advantage too.

  2. Aira Bongco

    Competitive advantage is such a common term in management that you somehow get used to it. But then again, people who do business are not all management majors.

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