What is Competitive Advantage and How Do You Gain It?

What is Competitive Advantage?

If your business doesn’t seem to be flourishing or can’t seem to distinguish itself from the many 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 an 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 that 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.

What is Competitive Advantage?

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.

What is 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.

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.

What is Competitive Advantage?


The Pitfalls to Avoid in Pursuit of Competitive Advantage

In the quest to establish a competitive advantage, it’s crucial to navigate the journey with caution, avoiding common pitfalls that can hinder progress and credibility. While the concept of competitive advantage is enticing, its misinterpretation or mismanagement can lead to detrimental outcomes for businesses.

What is Competitive Advantage?

Avoiding Fluff and Subjectivity

A common misstep in marketing strategies is the temptation to embellish advantages with fluffy or subjective claims. Inserting vague superlatives like “the best” without substantiating them with concrete evidence can dilute the impact of genuine competitive advantages. Sandwiching legitimate advantages between vague claims can undermine the authenticity of the unique proposition and erode consumer trust. Ensuring that advantages are clear, demonstrable, and backed by tangible proof is paramount to maintaining credibility and customer satisfaction.

The Trap of Overextending Advantages

While identifying multiple competitive advantages might be enticing, it’s important not to overextend and dilute the effectiveness of each advantage. Casting too wide a net in an attempt to cover various aspects can lead to diffused messaging and weakened impact. It’s imperative to focus on the advantages that directly contribute to increased profits and customer satisfaction. A well-orchestrated marketing strategy should prioritize advantages that resonate most with the target audience and yield tangible outcomes.

The Promise Paradox: Deliver What You Pledge

One of the most detrimental pitfalls in pursuit of competitive advantage is making promises that cannot be fulfilled. Overpromising and underdelivering can tarnish a business’s reputation and erode customer loyalty. Unsatisfied customers who experience disparities between what was promised and what was received are likely to share negative feedback, deterring potential new customers. Building trust through genuine commitments and consistent follow-through is essential for creating a sustainable competitive advantage. It’s better to underpromise and overdeliver than the reverse.

The Digital Imperative: Embrace Online Presence

In today’s digital landscape, having an online presence is no longer optional; it’s an integral component of competitive advantage. Failing to have an easily navigable website or neglecting mobile optimization can undermine efforts to reach a digitally savvy audience. As consumers increasingly turn to the internet to find services and products, an accessible website can provide a distinct edge. Embracing digital trends and staying up-to-date with technological advancements is vital for staying competitive and relevant in a rapidly evolving business environment.

The Momentum of Adaptation: Stay Ahead of Trends

Remaining stagnant while competitors evolve can erode any competitive advantage gained. To maintain relevance and capitalize on advantages, staying attuned to marketing trends and industry shifts is imperative. Failing to adapt to emerging trends, such as mobile apps and mobile-friendly websites, can hinder customer attraction and retention. Keeping pace with innovation ensures that a business’s competitive advantage remains viable and impactful, allowing it to consistently deliver value to its target audience.

The Roadmap to Sustainable Advantage

In summary, harnessing competitive advantage is a strategic journey that can elevate a business from obscurity to distinction. To navigate this path successfully, keep these key takeaways in mind:

  • Authenticity is Key: Build competitive advantages on genuine attributes that resonate with your brand’s identity and value proposition.
  • Clarity in Messaging: Clearly articulate your advantages to customers, avoiding vague claims that can dilute your impact.
  • Manage Expectations: Deliver on promises to foster trust and maintain customer satisfaction, preventing negative feedback.
  • Adapt or Perish: Embrace digital trends and industry shifts to remain relevant and ahead of competitors.
  • Focus on Impact: Prioritize advantages that directly contribute to profits and customer loyalty, avoiding overextension.
  • Consistency Matters: Ensure consistent branding and messaging to reinforce the uniqueness of your offerings.
Key Takeaways
Authenticity is KeyBuild on genuine attributes that resonate with brand identity and value proposition.
Clarity in MessagingClearly articulate advantages to avoid diluting impact with vague claims.
Manage ExpectationsDeliver on promises for trust and customer satisfaction, preventing negative feedback.
Adapt or PerishEmbrace digital trends and industry shifts to stay ahead of competitors.
Focus on ImpactPrioritize advantages contributing to profits and loyalty, avoiding overextension.
Consistency MattersEnsure consistent branding and messaging to reinforce uniqueness of offerings.

By following these principles, businesses can craft a compelling narrative that sets them apart, resonates with their target audience, and propels them toward enduring success.

Competitive Advantage: The Takeaways

In achieving a sustainable competitive advantage, businesses must employ a blend of strategic insight, genuine engagement, and adaptability. The following points embody these essential aspects, guiding businesses toward a successful and distinct market position:

  • Strategic Acumen in Defining Advantages: Understand and articulate the unique edge that sets your business apart, be it through value, quality, or innovation.
  • Careful Execution and Authenticity: Focus on delivering on your promises with authenticity. Avoid vague or exaggerated claims that can diminish credibility.
  • Unwavering Commitment to Value: Ensure that every competitive advantage offered truly adds value to the customer experience.
  • Navigating Pitfalls with Caution: Be mindful of common pitfalls like overpromising, underdelivering, or diluting your message with non-specific claims.
  • Focus on Resonance and Relevance: Tailor your competitive advantages to resonate with your target audience and remain relevant in an evolving market.
  • Sustaining and Maintaining Advantages: Regularly revisit and adjust your competitive advantages to ensure they continue to differentiate your brand effectively.
  • Competitive Advantage as a Cornerstone: Recognize that a well-defined and demonstrable competitive advantage is more than a marketing tool; it’s central to your brand’s identity and success.

This strategic approach ensures that businesses not only understand the importance of competitive advantage but also effectively implement and sustain it, leading to long-term success and distinction in the marketplace.

Photo via Shutterstock

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Gabrielle Pickard-Whitehead Gabrielle Pickard-Whitehead is a staff writer for Small Business Trends and has been a member of the team for 7 years. She is based in the United Kingdom and 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.".