Competitive advantage is a set of circumstances or conditions (such as being first to take a product to market) that puts one company in a more favorable position than the other. Here are the 5 sources of competitive advantage that you can identify and build upon in your company every day.
“The distinctive capabilities of key personnel that set them apart from the personnel of competing firms”
“The benefit of superior skills is the resulting ability to perform functions more effectively than other firms” – Chadwick and Jobber
2. Superior Resources
“The tangible requirements for advantage that enable a firm to exercise its skills” Such as;
3. Core Competencies
The distinctive nature of these skills and resources make up a company’s core competencies. Capabilities that are critical to a business achieving competitive advantage. “Core competencies are the most important sources of uniqueness” 1990 Prahalad and Hamel. They are a “harmonised combination of multiple resources and skills that distinguish a firm in the market place”.
Are they Core Competencies?
1. Relevance; they must give something that strongly influences the consumer to choose the product/ service.
4. Value Chain
The value chain is a high level model developed by Porter. It is use to describe the process by which businesses receive raw materials, add value through various processes to create a finished product, ready to sell to customers. The overall goal of the value chain is to deliver maximum value for the least possible cost to create a competitive advantage.
5. Differential Advantage
Unique benefits/ selling points/ characteristics that set the product/ service apart and above its competitors in the customer’s viewpoint.
Avoid ‘me too’, syndrome otherwise price is the only thing you can be different about and the market is damaged.
e.g. TkMaxx ‘big labels small prices’
Read more: The extended marketing 3ps
Apply this model when drawing up competitive strategies for market and explore what your companies sources of competitive advantage are and how you can leverage them in marketing plans.