What Is a Competitive Advantage in Marketing?

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Achieving and maximizing competitive advantages are keys to long-term viability for any company. Competitive advantages allow companies to charge higher prices and to realize greater profit margins than competitors. This, in turn, gives the company more capital to invest in further growth and development of advantages. Competitive advantages develop when a company matches its strengths and core competencies to the needs of the markets it serves.

Basics

  • A competitive advantage exists when a company has something unique to offer the market that is desired by consumers or business customers. Companies establish competitive advantages in a variety of ways. Some simply design and invest in the best quality products. They use this quality factor to communicate an advantage. Others have proprietary technology or private label brands that give them exclusive opportunities. Other companies establish advantages with efficiency and economies of scale that allow them to offer lower prices. Superior customer service is another potential distinguishing trait.

Retail Strategy

  • While competitive advantages are important to any business within the distribution channel -- manufacturers, wholesalers and retailers -- they are especially critical for retailers, who must market their advantages to the end customer. Sustainable competitive advantages, along with retail format and target market identification make up the three main components of a complete retail strategy. Companies must know who their customers are, how to reach them with particular formats and what advantages they offer versus other retailers.

Sustainability

  • Sustainability is a critical element of long-term success with competitive advantages. Developing a competitive advantage sometimes seems simple. For instance, the introduction of the drive-thru window, commonly credited to McDonald's founder Ray Kroc, established a competitive advantage for the company. It offered more convenience to McDonald's customers. However, as has been proven by many companies over time, this advantage is not sustainable because it was easy to duplicate. In contrast, McDonald's has tremendously valuable brand recognition that is not easy to duplicate.

Big Picture

  • For long-term success, companies develop as many sustainable competitive advantages as possible and leverage these in establishing their position in the market. Marketing your advantages is as vital as developing them. Companies that have high-quality products must communicate this and prove it to their markets. Companies that market low costs to customers are usually able to offer those low costs because of advantages gained through efficient supply chain management or strong vendor relationships.

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