The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.
There are three competitive advantages discussed in class: 1. Cost 2. Product/Service Differentiation 3. Niche Strategy
Explain what competitive advantage your company will use (from the 3 listed above), and what will make consumers want to buy your product/service instead of the competition. Use the examples below, and on the attached document.
Competitive Advantage Examples
In the simplest terms possible for example purposes, a competitive advantage is what you have…that another business doesn’t have. For example, why can I not just go out there and do exactly what you’re doing? What’s stopping me from stealing your sunshine?
1. Skill Advantage
Skill advantage, while it may not protect your company 5-10 years down the road, is definetly a competitive advantage example in startup or new business situations
2. Intellectual Property
Intellectual property is probably one of the best competitive advantage examples out there, mostly because it’s enforceable. It’s legal protection over the things that give you an edge. Here are a few examples:
Keep in mind, with this example of a competitive advantage….yes, it’s great. But having a patent doesn’t do you any good, if the market won’t buy what you’re selling. For example, I have trademarks for companies that aren’t even operating. Competitive advantage? By textbook, yes, but not in reality because the company isn’t operating. A competitive advantage is more like “icing” on your cake.
3. Strategic Partnerships
Another great competitive advantage examples (and perhaps one that isn’t widely considered by Entrepreneurs) is strategic partnerships. For example, let’s say I go out there and form a strategic partnership with a big industry player, that in itself will raise my business’s valuation (value) significantly.
Like American Express. That one is a good example because they target the same market I do. Now, if you are my competitor, you are now toast because my strategic partnership just blew your existence out of the water. I have gained the ultimate example of a competitive advantage.
4. First Mover Position
The first mover position as a competitive advantage is an example used more widely by disruptive technologies, and the two examples usually go hand in hand. So what is a first mover position? Well it’s pretty self-explanatory huh? It means you’re the first mover in that market share or industry with that product.
First mover positions are also often high growth startups; since they’ll grow quickly it’s important they come out the door with a “bang”. For example, the TV. The IPhone. No-one saw those coming.
5. Added Value, Less Costs
Added value, less costs is a competitive advantage and is almost necessary for a business to survive unless you’re a disruptive technology. Basically, you take an existing product and add value to the customer and reduce the costs.
6. Know How Competitive Advantage
I actually had someone argue with me with an hour over whether or not a founder’s know how competitive advantage exists. I say “yes, it does”…and here is an example why: the most successful founders & business owners we have seen were previously working in their industry or with their customers before they founded their companies. This often gives founders unique insight into problems that exist, and bam…their idea is formed (this is what happens when founders are bored at a 9-5, their creative juices start churning). Or, they have have a natural skill or talent that gives them a competitive advantage (going back to the first example in this article).
7. Location as a Competitive Advantage
I didn’t even think of this as an example of a competitive advantage, so thank you to whoever left this in the comments. Location is a big competitive advantage for retail spaces, such as stores, gas stations, restaurants, etc. To really get the most use out of this, consider the type of business you are, and who your customers are. More expensive does not always mean better. For example, let’s pretend I am a boutique selling bath products.