What is Competitive Advantage and How Do You Use It?

What is Competitive Advantage and How Do You Use It?

“People will buy my product!”; “I know what I am doing!”; “Can you not see that it is better than what is out there in the market?” How often do we so strongly believe in our products or services and look for faults in our potential customers instead of looking for better ways to meet their needs?

What gives your product or service value? If it offers a better solution to your customers’ problems or if you offer a solution to a problem that they did not know that they had. What if you can do all this better than your competitor? Now, if that is the goal – let’s see how you can do that!

What is a Competitive Advantage?

You have a competitive advantage when you implement a strategy in your business that others cannot duplicate or find too pricey to imitate. The most important thing to remember is that no competitive advantage is permanent and that you will only have it for as long as it takes your competitor to replicate.

Take pharmaceutical companies for example when they launch a new drug. They have First Mover Advantage – they have the market all to themselves! Did you know that they spent approximately 5-10 years in research and development (R&D) before launching that to market? They spend millions of dollars developing, testing and reworking it, send it through trials only to get a limited-duration patent. They will hit the market with full force and try and capitalise on it as much as possible, for they know that from the day their competitors (especially generics) get a whiff of it, they will start making the cheaper version or a little bit of a different combination of the active ingredients. The moment the patent expires, the generic company will have all the market research, they did not have all the overhead costs of R&D and they can take the learnings from the original without paying the school fees of failed marketing campaigns. They have what we call First Follower Advantage. The first followers have it easy, they know exactly how to target, who to target, what to say to sell it – for they tell you that they can do what the original can do at a fraction of the cost. And they are not wrong.

The original creators of the drugs may have the best product, but:

  • They had to create a market that was not there.
  • Educate the customers and make them receptive to buy the new product.
  • Try certain strategies, fail, rework and try again.

So, which of these 2 have a competitive advantage? The first-mover or the first-follower? Or what about the hundreds of others that will enter the market later and be even cheaper? What if I tell you that each of them can have a competitive edge – and it just depends on what they want to achieve. Do you want to have the biggest market share? Do you want to have the best product? Do you want to make it as affordable as possible for customers? Or is your objective merely to own 2% of a multi-million-dollar industry? None of these concepts are wrong – it all depends on what you want for your business and whether your strategy supports this.

Okay, so if you know someone will bring out a generic, what can you do to compete with them? Some pharmaceutical companies have brought out their own generic version of their drugs. How clever is that? If you are your biggest competitor, you will ensure that you keep a bigger share of the market! Imagine if you can apply this type of thinking in your business!

Which areas can you explore to gain competitive advantage?


Think about being the cheapest, but is price advantage something that is sustainable? What if the cost of your raw material increases? What happens when the currency fluctuates? Or a competitor undercuts you on every product? Will the customer buy your product if it is too cheap? Many customers associate cheap with poor quality and will thus look for competitively priced products and not low-cost products.

2. Differentiation

How do you differentiate yourself from your competitors? What do you offer that is extra, new AND OF VALUE? It does not help to add bells and whistles and charging customers for it if they do not value it. Then rather offer them the product or service at a lower cost – and they will value your honesty that they do not need the extras.

3. Relationships

I always say this: “People buy from people; they don’t buy from companies”. How are your customer relationships? Have you built trust with your customers? Do they know that they can rely on you when they are in trouble?

4. Service

This is key to customer experience – do your customers have a positive experience every time they interact with your brand? If a customer picks up the phone, do they know as they know that you will help them? Customer service can set your brand apart – all it takes is effort and you caring about customer needs.

5. Niche

You can find a market that is very defined with few customers but serves their needs perfectly. These customers are willing to pay a premium as they know that they cannot get what you offer anywhere else. If this is your market, refining your services to EXACTLY what your clients want is key – this strategy is hard work and certainly not for everyone! But if you can get it right, you will reap major rewards.

How do you keep your Competitive Advantage?

1.Stick to What You Do Best – And Invest In It

Don’t waste your time trying to please everyone – you cannot make everybody happy, you are not a bottle of wine! Focus, attack what you know you are good at – and do it well. Once you have mastered it, you can look at attacking the next step, but overextending yourself will only leave you with disappointed customers and you burnt out.

2. Compete Against Yourself

Learn to do better than you did yesterday, live your life and do your job to the best of your potential and aim for continuous improvement rather than delayed perfection. You will make mistakes, the key is to learn from them and do better tomorrow.

3. Pick Your Battles Carefully

Before you enter a battle with someone, ask yourself:

  • Is it worth it?
  • What will I gain from this encounter?
  • Will it add value or subtract it?

Everyone loses in a battle, even if it is time and energy that you lose. So, before you enter it, make sure that you outsmart the person on the other side or that what you are willing to lose whatever is at stake.

4. Share Ideas and Success Stories

We live in a world where information is everywhere and accessible. If you can start sharing ideas and brainstorm with people who challenge you, you will make an even bigger success. However, if you need to keep it all to yourself, you may lose sight of the market, the opportunities and it could cost you dearly.

5. Innovate

Challenge thinking, be different, find new ways of doing things – some of the best innovations if not coming up with new ideas, but finding new ways to do the same old thing.


 He did not reinvent travelling, people had other means of transport, but he innovated the way in which it was done. Find the thing that sets you apart – an idea that can change the way you do business!


Share post:

Comments ( 2 )

Leave A Comment

Your email is safe with us.