There’s a reason that starting a business isn’t for everyone: entrepreneurship can be rewarding in more ways than one, but it’s also challenging. More often than not, you will face plenty of competition from other businesses offering similar products or services.
Consumers are also savvier than ever, and they can easily search online to find out about your competitors’ offerings, pricing, and a host of other factors that will impact their buying decisions. All of this means that it’s increasingly important for businesses to develop a competitive advantage that sets them apart from others in their industry.
What is competitive advantage?
A competitive advantage, simply put, is an attribute that gives your business an advantage over its competitors. There are many different aspects of a business that can make up a competitive advantage, and we’ll look at a few examples in this article.
A competitive advantage doesn’t necessarily have to make your business more competitive in the eyes of all consumers, only in the eyes of the specific target market segments your business is competing for. This means that in each industry, many businesses can have competitive advantages over each other, it just depends on which advantages a consumer prioritizes when making a buying decision.
Examples of competitive advantage
Some commonly cited types of competitive advantage for product-based businesses are lower cost of materials through economies of scale, lower shipping costs, access to unique raw materials, favorable geographic location, unique technology, and high barriers to entry for new competitors.