Company X and Company Y both sell milkshakes. Company X sells standard vanilla milkshakes with the usual ingredients. Company Y allows customers to build their own milkshake using different bases, flavours, and creative toppings. Both companies sell milkshakes, but Company Y adds choice, experience, and personalisation.
The Entrepreneur Weekly will be focusing on that “little spin” — competitive advantage.
Competitive advantage is what makes your business stand out in a crowded market. It is the unique edge that allows you to deliver greater value to customers than your competitors, whether through price, quality, experience, innovation, or access.
Keera Walters, Assistant Manager at the Jamaica Business Development Corporation (JBDC) emphasises that competitive edge is not an afterthought, “Competitive advantage is what is created when strategic planning is done successfully. Every business enters the market place with one primary goal, sustainable profitability. And no matter the size of its resources, there is a limit to what those resources can do.”
She encourages leveraging the companies’ resources to strategically form the competitive advantage, “Strategic planning looks at these resources: physical assets, human talent and skills, money, relationships and these are what are leveraged to create competitive advantage. Each business uses the same resources but success hinges on how a business organises and leverages these resources to take advantage of opportunities in the market and to insulate itself from potential threats to its viability.”
Types of Competitive Advantage
There are several ways a business can create and sustain an edge. Below are five key types of competitive advantage commonly seen across industries.
1. Cost Advantage
This occurs when a business can produce goods or services at a lower cost than competitors and pass those savings on to customers. Examples include economies of scale, efficient supply chains, or streamlined operations. Customers choose these businesses because they offer affordability without sacrificing basic quality.
2. Differentiation Advantage
Differentiation is about being distinct. This can be achieved through product features, branding, design, quality, or customer experience. Company Y’s customisable milkshakes fall squarely into this category. Customers are not just buying a product; they are buying an experience.
3. Innovation Advantage
Walters draws on Amazon, “Another company like Amazon, could over time find itself with a valuable technological resource because of committed research and development strategy that at the time it began its value could not have been anticipated. And because of the time and money invested in it, it’s not easy to be recreated by a competitor.”
Some businesses stay ahead by being first. Innovation may involve new technology, new processes, or new ways of delivering value. Businesses that innovate consistently shape customer expectations and often set industry standards that others must follow.
4. Customer Service Advantage
Exceptional customer service can be a powerful differentiator. Fast response times, personalised interactions, and after-sales support can turn one-time buyers into loyal customers. In many cases, customers remain loyal not because the product is cheaper, but because they feel valued.
According to Walters, customer service is the most common advantage and the hardest the achieve, “It takes more than just pleasantly disposed employees to make it work. In fact, it takes all the operations, and internal systems to be at excellent performance for customers to experience ‘satisfying service’.”
5. Focus or Niche Advantage
Rather than serving everyone, some businesses dominate a specific niche. By understanding a clearly defined target market, these businesses tailor their offerings to meet very specific needs better than larger competitors.
How Do You Find or Define Your Competitive Advantage?
Finding your competitive advantage requires intentional reflection and market awareness. Start by asking key questions:
- What problem do we solve better than others?
- Why do customers choose us instead of competitors?
- What feedback does customers consistently give us?
- What resources, skills, or relationships do we have that others do not?
All in all, the business development expert says that competitive advantage isn’t a standalone thing. “It is marked by mastery of one or more aspects of the business model which is not easily copied. And requires constant adjustment to stave of encroachers.”
She continues, “This is the value of strategic planning and management. This continuous process of monitoring and assessment of the business’ internal and external landscape and then designing and implementing informed plans in response to the findings is what over time, creates valuable learning and knowledge that can form that sought after competitive advantage.”
The JBDC, as Jamaica’s premiere business development agency, knows the importance of doing business right. What’s your ‘edge’? Let us help you figure this out. Give us a call a 876-928-5161-5 or visit our website at www.jbdc.net and register to become a client.
