Competitive advantage is a company’s ability to create and sell a product at a lower cost or higher quality than its competitors. It is synonymous with the business’ unique selling proposition. Businesses leverage the competitive advantage to draw in new customers, increase revenues, expand profit margins and grow market share. It is simple, clear, unique, leverages your business’s strengths and highlights compelling benefits.
The advantage could take different forms such as:
- Personalized customer service.
- Economies of scale.
- Low price.
- Unique product features.
- Exclusive access to production-critical resources and proprietary technologies.
- Specialized and highly skilled employees.
- Distribution network.
- Exceptional marketing campaigns.
- Innovation and first mover…
The more competitive advantages a business has, the better position it is to grow faster and more sustainably than its rivals. To find your business’ competitive advantage:
- Review the market and study the competition
- Identify market gaps.
- Determine your business strengths that could fill these gaps at a lower cost and more effectively than your rivals.
- Engage existing repeat customers for feedback on the reasons for choosing their product. This could unearth a unique capability the business may not have spotted. .
- Highlight customer benefits.
- Implement strategies that lean into and extract value from this advantage.
- Monitor performance. Innovate and change to maintain market relevance.
Competitive advantages are not permanent and are increasingly short-lived thanks to the information access and decision-making power digital technologies have provided to customers and companies.. So businesses have to adapt in line with changes in market dynamics, competitor action, consumer tastes, technology and laws/regulations.