How to Create a Competitive Advantage in Designing a Marketing Strategy

What is a competitive advantage?

It's an advantage over a competitor, which is gained by offering customers a greater value than the competitor does. Having an edge over a competitor results in higher sales and profits.

What does it take to get a competitive advantage?

Well, let's take a look at what makes a business successful.

1. The energy and persistence of top management -- Like Babe Ruth and his strikeouts, the most successful managers have failed many times.

2. A product that is better than the competition, with a compelling and obvious reason to purchase.

3. Management and marketers must have the skills necessary to sell a product at the highest possible price. A business wants the customer to perceive value.

4. The ability use strategic marketing to create a buzz about a product. Even if a company has a small budget, a good marketer will make all resources count.

5. The experience of management – Over one half of business failures occur because of incompetent managers.

6. The ability to continually develop new and interesting products, while maintaining a strong customer base.

7. Good deal-making skills to keep supplier prices low. Keeping costs lower than the competitors is a key way to keep a business profitable.

8. Management must be able to treat employees and partners with respect. This will result in increased productivity and loyalty.

9. Having the best location possible, and the ability to keep the supply chain as short as possible.

10. A continuous source of business even in poor economic times. A successful business will have backup plans when business is slow.


Think of a favorite store.

What gives that store an advantage over other stores?

What could the other stores do to win your business?

So, we have defined what makes a business successful. Now, how does a business differentiate itself from its competitors? Let's look at some strategies.

1. Product Features and Benefits

What makes the product unique? How is it better than similar products made by competitors? Does it work better? Does it use less packaging? What sets it apart, and can that be quantified?

2. Location

How does the location of a business affect the customer? Is the location convenient? Is it accessible? This is necessary for retail establishments to be successful. Location must be decided upon with care and with the customer in mind.

3. Staff

What are the company's employees like? Are the managers responsive and helpful? Are they respectful of their charges? Are the employees well experienced and trained? Are they professional? Do they know and understand the product? These are all the questions a manager must ask.

4. Operating Procedures

What day-to-day procedures can make the business run more efficiently? Smooth operations result in a more successful business. Can the business add policies or standards to improve customer value?

5. Price

What pricing strategies are the competitor using? Most businesses in the same industry use the same pricing strategies to stay competitive.

A way to increase a cost advantage could be through lower overhead or transportation costs, less expensive labor, and cheaper raw materials.

7. Customer Incentive Programs

Does the business have any loyalty or referral programs? Does the business offer any discounts or host any giveaways or sweepstakes? The business should look for additional ways to promote the business.

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Do you belong to any customer incentive programs, such as ones offered at supermarkets?

If so, do you find yourself shopping mainly at that store?

8. Guarantees and Warranties

Does the company offer guarantees for their products? Do they warranty their products? A money-back guarantee will make customers more confident when buying from the business.

9. Brand Name Recognition

Having a well-regarded brand will always give an advantage over a business that doesn't have a brand. Brand name recognition is extremely valuable, and with it, a business will have a leg up on its competition.

10. Good Will

Is the business a part of the community? Is it well regarded in the business community? Can the business use community resources to improve its standing in the community?

11. Value-Added Products and/or Services

Does the company offer any additional services to complement the original product/service? This type of value-added service can help put a business at an advantage over another business. Just an offer of free delivery can give a business a significant advantage.

12. Customer Experience

The experience of the customer is tantamount to a successful business. A business must offer exceptional customer service, as well as experienced and trusted salespeople.

13. Quality

It seems with all the above ways to gain a competitive advantage; quality is overlooked. It shouldn't be. Successful businesses offer a quality product or service. Period. A business should understand how quality is measured, and be able to meet or exceed the quality of its competitors.

Competitive Advantage Evaluation Process

When a business wants to gain an advantage, it should perform an evaluation to determine its goals and objectives, and how they fit into the market.

Evaluate Resources

A competitive advantage can often be found in the resources that are already available to the business. A business should look at what resources are available, and determine if -- and how -- they can be used as an advantage.

Clarify Goals

The business must have a clear vision as to its goals and objectives. Businesses that have well-defined goals are more likely to reach them. Realistic goals should be set for the business to help clarify what the business wants for itself and its customers in the future. Those goals can later be used as benchmarks.

Define Customers

The business must determine which products customer wants, and which products they cannot get from competitors. This is a primary way to gain competitive advantage. Once a business has identified the wants and needs of the customer, it can further investigate those customers in an attempt to find any common characteristics.

The business should decide what the customer wants, and ideally speak to the customers to better understand their needs. This will help the business better understand what the customer wants, and this can be used to gain competitive advantage.

Examine Competitors

Once a business understands what the customer wants, and determines how this can be accomplished, it is important that the business looks at competitors and figure out if they are targeting the same market.

The business should look at their competition, and compare their strengths and weaknesses with their own. This will lead to valuable insight, and help ascertain where the competitive advantage is.

Making Sense of it All

To build a competitive advantage, a business will need to understand the needs of their customer, and formulate a strategy that will use all resources available to set the company apart from its competitors.

The strategy must account for the target market, the strengths of the business and its weaknesses, as well as its goals. It also must account for its product and its competition, and consider the possible strategies of the competitor.

To get an advantage over a competitor, the business must ask itself:

  • Is the business and its target market clearly defined?

  • Who are the businesses main competitors?

  • What is the businesses primary strategy for success?

  • Does the business routinely track the competition?

  • Does the business take advantage of the competition's weaknesses and threats?

  • What can be learned from the competition's mistakes?

  • How does the businesses' pricing strategy compare with the rest of the market?

  • Who are the consumers? What segment do they belong to? Does the business have a loyal and devoted base?

  • Are the employees experienced and well trained?

Competitive advantages won't stay competitive unless the business uses significant effort. The business must stay on top of this advantage, as competitors will be trying to form their own advantages. Maintaining a competitive edge is just as difficult as establishing one. To stay current, the marketer and management must continue to analyze the market, and see where the company can take advantage.

Maintaining a Competitive Edge

Now that we have discussed how to gain a competitive edge, it is time to discuss how to maintain one. This is often just as difficult as gaining an advantage, if not more difficult. Staying ahead of your competitors can be very tiring, as you always must keep up with the market and its changes.

To maintain a competitive edge, a business must monitor what the competitor is capable of. To help understand what a competitor is capable of, a business should ask the following questions:

  • What is the competitor's customer base?

  • Are they able to keep up with demand?

  • What kind of financial shape are they in?

  • Are they expanding or do they plan to?

  • Are they determined to conquer the market?

  • Is it possible for them to become number one in the market?

A business tracking this information will be able to see what the competitor might do in the future. To maintain the competitive advantage, the business must be able to see what the competitor is planning to do down the line.

Keeping Up With Changes

Trends come and go, but it is essential to keep up with them. As trends change, so do markets. Being able to forecast a trend will help maintain a competitive advantage. Forecasting trends sounds difficult, but it doesn't have to be. Discuss the market with industry experts or leaders. Outside of that, keep up with the following trends that could affect the business negatively, and cause you to lose the competitive advantage:

Lifestyle Trends

Lifestyle trends seem to change very quickly. Think about the different decades, and just how different they were. Trends also come and go. It is often difficult to predict trends -- if one could, they would be incredibly rich! But one could make deductions from current trends and the trends that could follow.

Technological Trends

Technology moves incredibly fast. Once you have caught up with it there is something new. If a business relies on technology, make sure your business uses the newest, as your competitor surely will. You don't want to be left behind. If a business has the chance to jump in on a new technology before others, it should take that advantage.

A good way to stay on top of technology is to attend trade shows for your industry.

Economic Trends

Economic trends can be difficult, as there isn't much one can do to change them. Understand that some years will be successful, some won't be. Use this information to cater your business to the economic trends when they happen. Use a financial planner to save money during good years, so it can be used during bad years. The key is to be prepared.

Government Trends

Believe it or not, government trends do affect businesses. Therefore, it is important to stay on top of news and what politicians are doing. A good example is car seats. Studies showed that forward-facing seats were dangerous, and the CPSB issued a report stating children should be in rear facing seats as long as possible. If your business made forward-facing seats, it would be in trouble.