Competitive Advantage: 10 Smart Ways A Business Can Stay Ahead of Others in the Market

Think about this: There are 5 fruit sellers on your street and you want to buy some fruit. What are some of the reasons why you may choose to buy fruits from a particular seller and not the other four?

Perhaps you may choose a seller because of how close the person’s stand is to your house; or because she sells at a lower price; or because her fruits are always fresh and clean; or because she’s the most friendly and always interactive; or because she has a wider range of fruits than others, etc. It could as well be because she is someone you know (there is some sort of connection). Now this gives us a simple scenario of how competitive advantage plays out.

So, in simple terms, competitive advantage is that factor (or group of factors) that puts your business ahead of others in the same industry/market and makes customers choose you over your competition.

There are many ways a business can try to stand out. This is true because industries operate differently and different things matter to these different industries. Also, there are a host of factors that may appeal to customers or affect their decision. In this post, we will be examining different types of competitive advantage.

1. Price Leadership

This is amongst the most common ones. It means setting your price to be lower than everyone else. Price is a factor mostly in markets where customers consider the products to be of similar quality irrespective of the producer/seller. However, this is not such a good/sustainable competitive advantage as low prices are offered at the expense of margins.

2. Cost Advantage

Cost advantage is when a business is able to produce its product at a lower cost than competitors. Several things may be responsible for this, like cheaper labour, inexpensive raw materials, technology, efficient processes, high-level productivity, etc. However, quality must not be lower than the obtainable standard.

3. Differential Advantage

This is when a business offers products/services that are remarkably different from those of competitors. Such products could have more features, higher quality, more benefits, etc. This advantage is driven mostly by innovation. Other areas of differentiation include product design, style, usability, convenience, safety, efficiency, durability, compatibility, etc.

4. Customer Service/Satisfaction

A business can beat the competition through its customer service. Offering customers personalised and really exciting customer service and always ensuring their satisfaction can make customers prefer to do business with you even when your price is higher.

5. Brand

A business can stand out by creating a unique identity for itself, and this incorporates everything that brings about an overall experience customers have with that company; these include visual elements, your outlets, customer experience, reputation, values, etc. A typical example of a company that has this advantage is Apple.

6. Location and Business Cluster

The decision about location is one of the most important decisions a retailer has to make. Your location can give you an advantage over competitors. For instance, we would expect a retailer that is located in a central, densely populated, and easily accessible area to have more customers than the one that is located in an obscure area. The other aspect is business cluster; it is when an industry thrives more in a certain geographical location. Hence, setting up a business there could give you a competitive advantage over others located outside that region. For instance, fashion (Paris, New York, Tokyo), IT (Silicon Valley), Champagne (Champagne region of France), etc.

7. Technology

Being the first to embrace and adopt a particular technology can give a business advantage over competitors. Such technology could allow the business to do more for customers, become more efficient, improve the quality of product/service, improve customer experience, serve more customers in a shorter time, etc.

8. Customer relationships

In a time when competitors can study and copy your products and service standards, customer relationships have become one of the most powerful competitive advantages a small business can have. Customer relationships birth loyalty, and loyal customers are difficult to be bought over.

9. Market Position

The popularity of a brand can be an advantage it has over competitors. People will more readily buy products/brands they recognise.

10. Trade Secret

A trade secret is an information about something that sets a business apart from competitors, which is (and must remain) unknown to the competition. It is guarded jealously. Examples of a trade secret are formula/recipe for products, a process that produces a unique taste/flavour, tools, automated systems, etc.

It is important to note that to successfully gain a competitive advantage, the distinction between your business and others in your industry must be clear, easily recognizable, demonstrable and easily proven to customers.

Every business is tasked with the responsibility of finding and creating a sustainable competitive advantage. It is what will determine your ability to survive and thrive, especially in a crowded market.

Ideally, your competitive advantage should be a combination of more than one factor.

Do you know what your competitive advantage is? Do you know why your customers choose you over your competition?

If you are looking to identify, design and improve your competitive advantage in order to increase sales and compete strategically, you can reach out to us at Owens & Xley Consults today at

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