What is a competitive advantage in business?

competitive advantage in business
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In the industrial field there is a natural competition to occupy the first places in sales, growth and brand positioning.

Therefore, it is useful to know what a company’s competitive advantage is and other aspects of interest in this regard.

We will talk about What is competitive advantage and why is it important for companies?

It is very useful to help certain companies that have problems to see their products, due to competition problems.

Knowing the pros and cons of other companies, helps us a lot when we start as novices in this business world; and thus avoid bad business strategy in the future.

Knowing the experiences of other companies, decisions, positive and negative features of the same, will allow us to know the characteristics of the competition.

What is competitive advantage?

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Competitive advantage is any particular characteristic of a company that makes it stand out from the rest.

It can also refer to products or services that by their essence have superiority over others, allowing them to enjoy an advantage in business competition.

Competitive advantage is a term that is applied with respect to a benchmark in the industry, that is, it is used as a comparative measure to the best company in the sector.

Based on the above, it is possible to assure that a company has a competitive advantage when some particularity of it places it ahead of its competitors.

Competitive advantage refers to those virtues that make a company unique, which differentiate your brand with other competing companies.

This type of competitive advantage helps to make your company recognizable, stimulates the entry of new customers and the rapid trade of your products.

There are great benefits to create a competitive advantage for your company, as it makes it unique and different from the competition, even by being known for offering low-cost solutions.

If your brand is recognizable, it will allow you to attract many customers interested in your products, leading to future business and short-term growth of the company.

Why is competitive advantage important?

The importance lies simply in making your intangible assets, which is your company’s image, known; since the key business objective of competitive advantage is to make your company recognizable to others.

It is important to achieve competitive advantage over competitors since you will create a strategy that will set your value proposition to the market, and you will be recognized according to it.

If you are aiming for a long-term growth and entering the market in a way that you can quickly have a competitive position, then this brings importance of developing well your business’s strategy and leave behind any generic strategy that won’t push you forward towards reaching your business goals and having healthy profit margins.

Types of competitive advantages


Competitive advantage is an important factor for a business to succeed.

Examples of competitive advantage types can be either cost-based or non-cost based.

Cost-based or Cost Leadership strategy is achieved when a company produces goods at a lower cost advantage than its competitors, allowing it to sell them at a lower price, reach economies of scale and gain market share.

Non-cost based, or differentiation advantage comes from having unique products, services or processes focus strategy that give the company an edge over its competitors.

Examples of non-cost based competitive advantages include superior customer service, innovative products with the use of new technology or process in the value chain and exclusive access to resources which allows to attract those consumers are willing to pay a premium price.

Having any type of strong competitive advantage can help businesses stand out in the market and increase their profitability.

Another is to achieve a sustainable competitive advantage.

Many companies must have sales strategic planning to target markets that allow them, in some way, stability in the short and long term.

This will all depend on the decisions you make and the sales planning you have for your products or services.

Many companies seek to highlight their products, so that they sell and produce profits in the future, here several factors come into play, and one of them is the action plan, advertising and marketing strategies.

What is Porter's competitive advantage framework?

Source: Research Gate

Michael Porter, from Harvard Business School, competitive advantage is nothing more than a model of action, where a series of counterattack ideas will be used against the competition, making your brand look superior to others.

The strategies will not only be offensive, it will also have its defensive part in the implementation of ideas that guarantee the improvement and production of the company, preserving the originality of the products against the rival company.

Why should companies know their competitive advantage?

Today, offering certain benefits to the public can make a company stand out from the crowd.
Knowing a company’s competitive advantage is in itself an advantage, since it allows the industry to exploit it and take advantage of it to lead the competition in the labor market.
In this sense, it is possible to mention some competitive situations that merit that the company knows its advantage:

What are the characteristics of a competitive strategy?

Competitive advantage strategies play a determining role, helping companies to undertake with their business and exploit their brand loyalty all over the digital and business world.

It focuses on the authenticity of your products when it comes to marketing, many customers enter websites finding variety in products.

When implementing these competitive advantage strategies, and you are successful in marketing your products, you will notice the presence of other companies that will try to imitate your products.

Another factor that gives these competitive advantages are financial stability and security when selling your goods or services.

How to develop a competitive advantage?

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Depending on the type of competitive advantage a company has, it can develop it in different ways:

Finally, the company can develop its competitive advantage by focusing its marketing strategies on taking advantage of the benefits of this particularity that makes it stand out from others.

However, in order to do so, it is essential to carry out market studies and research to identify this competitive advantage, based on a comparison of the company itself with others in the sector.

Without a doubt, the big giants of the industry have specialized departments in which these studies are carried out and the guidelines to be applied to devise the marketing strategies that will take advantage of this competitive advantage are determined, so it is an element that deserves the attention of every entrepreneur or businessman.

Difference between competitive and comparative advantages

The main difference that lies between these two terms, is that in the comparative advantage is related to the variety of price and quality of certain products that certain companies have, on the contrary, we have the competitive one that manages the efficiency of certain items and quality.

What would be the benefits of implementing comparative advantage?

As you gain a competitive advantage and by implementing very well your business strategies, you will have a significant increase in your sales by modifying the price according to the needs of customers.

It helps in a certain way to the economy of your company.

If you have a group of products that sell very little, but still there are other companies that offer the same item but with a low price, you can calibrate the value of the products, according to the customer’s pocket and the profits you can earn.

You will not have to work hard to implement this type of strategy; you will only focus on a reasonable price for your products and for the consumer.

If I implement competitive advantages in my company, what benefits would I get?

Competitive advantages help to obtain great profits in the short term, on the other hand, you can get to obtain more profits in a long period.

It gives you originality in the products you are going to sell, by making decisions and in the implementation of business positioning strategies, this being very helpful when it comes to putting your brand above others.

You will have a broad knowledge of the pros and cons of several competing companies, whose information will be very useful when selling a product that has almost the same qualities of other franchises but with a different price

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