Do you have a strong strategic competitive advantage?

Competition walking businessman

What is a competitive advantage?

An advantage that a firm has over its comeptitors. In other words, what does your firm have that is unique, sustainable and hard to copy.


How do you define your strategic competitive advantage?

A strategy should establish and tell us how to sustain a competitive advantage over our competitors. There are 2 types of competitive advantage and the most successful strategies have either chosen one or the other, not both!


If you choose to be a cost leader that means that your product or service is the lowest priced item in its market. In order to offer the lowest price, it means that your strategy has to focus on minimizing costs and trying to achieve economies of scale. This means keeping features simple and leaving out the frills.

Walmart and .99 stores are examples of companies with a cost competitive advantage


If you choose the differentiation approach, then your strategy should focus on your products uniqueness such as superior quality or innovative features. Complexity and frills would suite you.

Harley Davidson, Whole Foods, and Starbuck are examples of companies with a differentiation strategy.

“The best goods at the cheapest price, that sounds great! But is it feasible?”

Can you do both strategies?

If Walmart started creating their own brand of products and promoted how their products were premium quality and met the unique needs of specific niches, then Walmart’s everyday shopper’s needs wouldn’t be met. On top of that, no one would believe them that they offered the best quality at their low prices.

If Harley Davidson offered their motorcycles as the lowest market price, then 2 things would happen. One, they wouldn’t be as coveted because anyone could have one and they wouldn’t be exclusive. And second they would go bankrupt because the lowest market price wouldn’t cover their high costs.

As you can see, opting for a strategy that drives down the middle between differentiation being a cost leader is not a good idea. Best to stick to one lane when sitting in the driver’s seat.

One thought on “Do you have a strong strategic competitive advantage?

  1. Pingback: Pricey Price-Setting Mistakes To Watch Out For | LAUNCH!

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