Competitive advantage is what makes a customer choose your business over another one. By understanding, and promoting, a competitive advantage, companies can win a greater amount of market share.
A competitive advantage may stem from the user experience — that is, a better, more affordable or more enjoyable product — or it may be another tangible or intangible asset, such as the Intellectual Property or the customer service team.
Competitive advantage separates a surviving business with a thriving one, but the source of competitive advantage can change from sector to sector and company to company.
Some common examples of competitive advantage include:
The team
Unique access to technology or production methods
A product that no-one else can offer (protected by IP law or patents, etc.)
Ability to produce and sell at a lower cost (known as cost leadership)
Brand and reputation
Whilst you may launch into the market with a totally novel idea, it may not be long until rivals catch up. That’s when you may need to revisit what your competitive advantage can be.
In the case of sectors with many copycat brands, such as soft drinks, brand and reputation may be the most powerful competitive advantage to harness.
What can you offer to your audience, that none of your rivals can claim to?
To identify your competitive advantage, you must map out:
How you deliver value or benefits to customers
Who your target market is
Who else is operating in the same, or similar, space to you
Your competitive advantage lies in unlocking the most engaging benefit, for your target audience, and delivering it in a way that no other business can.
It’s possible you’ll have several possible competitive advantages, the one you choose to promote in your marketing and brand communication should be the one with the greatest differentiation and potential to engage.