What is a competitive advantage? | Benefits, Tips, Tricks & Definition

What is a competitive advantage? | Benefits, Tips, Tricks & Definition | tinobusiness.com
What is a competitive advantage? | Benefits, Tips, Tricks & Definition | tinobusiness.com

A competitive advantage is an advantage in some way that has a company to other companies in the same sector or market, and allowing you to have a better performance than the companies and thus a competitive position in the sector or market.

What is a competitive advantage? | Benefits, Tips, Tricks & Definition | tinobusinessSome areas in which a company could have a competitive advantage are the product, the brand, customer service, production process, technology, personnel, infrastructure, location, distribution, etc.

For example, a company might have a competitive advantage in the following cases:

  • To have a single innovative product and difficult to imitate by competitors, which allows you to differentiate or distinguish this.
  • To have a valuable brand that allows that any product entering the market has a good reception.
  • To have an efficient production process that enables it to produce the same products from the competition, but at a lower cost.
  • To have a technology that allows it to produce products with better performance than the competition.
  • To have highly qualified staff that allows you to have high productivity and provide excellent customer service.
  • To have a patent that allows you to exploit a particular product without worrying about competition will too.
  • To have an information system that lets you take and quickly process customer orders, and thus provide quick attention.
  • To have a modern infrastructure that allows employees to work and customers are served in a comfortable and welcoming atmosphere.
  • Having a strategic location that allows its clients to easily locate and visit them, or that their suppliers to supply them promptly.
  • To have an efficient distribution system that allows their products reach various points of sale, in good condition and in a timely manner.


A company may have different advantages in different aspects to other competitors, but for a benefit to be considered as competitive, it must meet the following requirements:

  • Allow better performance: should allow the company to perform better than the competition; for example, increased sales, higher profit margins, a greater number of loyal customers, etc.
  • Allow an increase in profitability: should allow the company to have an increase in profitability that at least reaches placed above the average profitability of the sector or market.
  • Be sustainable over time: it should be able to stay in the medium or long term; for example, a technology able to adapt to market changes and not one that will shortly become obsolete.
  • Be elusive or even: to be elusive or even by the competition; for example, a product difficult to imitate by competitors due to its unique components.

What is a competitive advantage? | Benefits, Tips, Tricks & Definition | tinobusinessThe idea of the concept of competitive advantage is that a company must constantly seek obtain, maintain that or those who already have, and make the most of, if you want to achieve a better performance than other competing companies, and thus have a position competitive in the sector or market.

There are several ways to gain a competitive advantage, but the two main ones are looking for a cost leadership (a comparative advantage or cost advantage), and seek a differentiation (a differential advantage):

  • Find a cost leadership: is to seek to have the lowest costs in the market (for example, creating more efficient processes or simplifying product design), in order to offer lower prices than the competition’s prices.
  • Seek differentiation: is looking to offer something unique, original and novel (eg, a product with improved performance and greater durability than the other) in order to differentiate or distinguish themselves from the competition.

To become and remain competitive, a company must constantly seek a competitive advantage, even when already own one or more than one; but also be aware of that or those that already have competitive advantages, strive to maintain and take full advantage.

Maintaining a competitive advantage could mean that advantage to strengthen it more lasting and meaningful; for example, if a company’s competitive advantage your sales force, keeping it could mean finding new and better ways to train them.

What is a competitive advantage? | Benefits, Tips, Tricks & Definition | tinobusiness.com

While maximize competitive advantage could mean attempt to obtain the maximum benefit from this; for example, if a company has a competitive advantage an alliance with a strategic partner, make the most could mean seeking new agreements with such partner; or if you have a competitive advantage to its distribution system, make the most of it could mean using the system to sell other complementary products already sold.

Finally, take advantage of a competitive advantage it could also mean convert that advantage into a business opportunity; for example, if a company’s competitive edge knowledge and technology needed to produce a product that already exists in the market, but with higher quality, making that advantage could mean that product to the market launch.




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