Competitive advantage
Competitive advantage helps to attract more customers and grow its market share. A competitive advantage is anything that gives a company an edge over its competitors, helping it attract more customers and grow its market share.
A competitive advantage can take three primary forms:
- Cost advantage–producing a product or providing a service at a lower cost than competitors
- Offer advantage–differentiating a product by adding features that are highly valued by customers
- Niche advantage–serving a specific segment of the market better than anyone else
Excelling in at least one of these three categories while remaining competitive in the other two puts a company in a strong position compared with competitors. If a company achieves only average performance in all three categories, however, it will not stand out in the marketplace—which may cause it to underperform and ultimately fail.
Companies can use the insights from a SWOT analysis to determine how to improve their competitive advantage.
More about competitive advantage
Competitive advantages are becoming increasingly short-lived: Digital technology is giving customers more power and choice than ever before, while advanced data-driven decision-making makes it easy for companies to conduct extensive research on their competition. Today’s companies must make themselves more flexible so they can adapt quickly to competitive forces. Some of these changes include:
- Empowering employees
- Encouraging teamwork and collaboration
- Increasing external partnerships
- Improving innovation
- Incorporating agile processes
Learn more by reading this article: How to identify a competitive advantage?