Competitive advantage: It is an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retains more customers than its competition. There can be many types of competitive advantages including the firm’s cost structure, product offerings, distribution network, and customer support.
Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. To increase and sustain a competitive advantage, an organization must be able to show a better proportional or disparity value than its competitors and express that information to its desired target market. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.
To create a competitive advantage, you’ve got to be clear about these three determinants.
- Benefit
What is the real benefit your product provides? You must know not only your product’s features but also its advantages how they benefit your customers.
- Target market
Who are your customers? What are their needs? You’ve got to know exactly who buys from you, and how you can make their life better. That’s how you create demand, the driver of all economic growth.
- Competition
Have you identified your real competitors? That’s more than just similar companies or products. It includes anything else your customer could do to meet the need you can fulfill.
