In business, a competitive advantage refers to an attribute that allows a company to outperform its competition. In other words, what does your business have that is valuable and hard to replicate by your competitors? What do you do better than them? Today, we will see 35 competitive advantage examples that could make you stand out from the crowd.
In 1985, Michael Porter wrote about 4 generic strategies that companies undertake when it comes to competitive advantage:
And although this model still has an important presence in Business and Marketing to this day, it is rather simplified. Nowadays, companies can build different competitive advantages based on factors that are not necessarily the mainstream ones.
Also, just a little disclaimer before we start! Some of the links on this page are affiliate. This means that I will earn a small commission in the case you end up purchasing after clicking on it.
And now, without further ado, let’s see the full list:
First on our list of competitive advantage examples is technology, in all of its senses. On one hand, it can be technology built into regular products, services and processes with the purpose of making them faster and more efficient.
For example, supermarkets such that offer self-check out terminals have a competitive advantage over those who don’t. Or fast-food restaurants like Burger King that offer the possibility to order via self service check out kiosks:
Another way that technology puts companies in front of their competitors is on the digital field. Or, in other words, digitally native businesses that have managed to develop a better technological solution than the current ones on the market.
For example, Mailchimp offers one of the most comprehensive Email Marketing services in the industry.
Companies that invest in innovation are definitely one step ahead of their competitors. Think of Amazon Go and the first grocery store without any lines or checkout. You just enter, put the products in your shopping cart, and leave the shop.
Another great example when it comes to innovation is Airbnb. They took a regular service that has been out there for a while, in this case accommodation for travellers. And developed a completely new approach to it!
And you know, when it comes to innovation, it is not about coming up with the most unique product in the market. Sometimes, it is just about making a simple, but practical twist, or taking a new approach to something that already exists.
In the end, it is all about solving a problem for your audience in the best way possible.
3. Ease of use
As I just mentioned, people want a solution to their existing problems. Many companies tend to overcomplicate their products and overcharge them with features that no one ends up using. Because that wasn’t what people needed.
For this reason, I would say one of the most underestimated competitive advantage examples is ease of use. Companies that make their product simple, intuitive, and easy to use by anyone are almost always going to be ahead of their competitors.
An example that comes to my mind is Stripe, which makes it effortless for companies to start accepting online payments. Or digital banking apps such as the one of ING, which makes it insanely easy to make transfers or consult your banking details.
One of the most powerful competitive advantage examples on this list is experience. And no, I am not talking about years of experience in a certain field or on a specific topic.
Nowadays, customers want more than just a product or a service. They want experiences. Think of Starbucks and the way it revolutionized the coffee industry. People used to visit a coffee shop to purchase their morning drink on the way to the office.
Now, people go to Starbucks to receive a coffee cup with their name on it. They will take a photo in the cozy environment that the company has provided for them. And of course, they will share it with their family and friends on social media.
Another powerful way to stand out from your competitors is having the ability to offer personalized products tailored to your audience’s needs. With today’s competition in practically every industry, generic products that are not capable of answering customers’ exact needs will be left out.
Here are a couple of examples of products with a solid competitive advantage in this area:
- Hubspot (affiliate link), one of the leading companies for Inbound Marketing, offers a free CRM that grows with your business.
- Mailchimp offers different pricing plans depending on the exact number of contacts you have in your email list;
- Instapage (affiliate link) offers more personalization features for building landing pages than any other competitor on the market.
After all, customers will always look for the solution that suits their needs the best.
6. Personal touch
This point might look similar to the previous one, and it is. However, I wanted to distinguish it because in this case, we are not talking about products that are customized to meet the needs of the audience.
In this case, the same product doesn’t necessarily change to fit. However, the company adds a personal touch to it in a way that the audience feels special and unique.
For example, remember the Marketing campaign of Coca Cola, in which they printed names on their cans? This was an absolute success for the company, and made it stand out from competitors:
People went absolutely crazy about it! And Coca Cola’s profit finally noticed an increase after a long time of being stuck in the same place.
Soon, Nutella followed with a similar campaign:
The point is, sometimes just adding a bit of personalization to your product might help you gain a competitive advantage in front of your competitors.
Next on our list of competitive advantage examples is being able to leverage economies of scale. Put simply, this means that the more you produce, the more your costs drop. Which, as a consequence, gives you the advantage to increase your profit margins while still maintaining a competitive price.
For example, think of IKEA and the huge quantities of standarized products they produce. This allows them to drop their production costs significantly in comparison to a local furniture shop.
Another competitive advantage in many sectors could be the variety of products, services or features that a company offers. Several examples pop up in my mind, such as:
- Supermarkets like Carrefour that offer a huge variety of brands in Spain;
- Again IKEA, which offers the widest variety of products for your home;
- Mr. Bricolage, a French retail chain that offers home improvement and do-it-yourself goods.
And of course, many more!
9. Human resources
Of course, one of the most important competitive advantages that a company can have is its employees.
Having highly efficient teams with the know-how not only within their field of expertise, but also of the specific sector in which the business operates, is key to gaining a significant advantage over your competitors.
10. Customer service
Our list of competitive advantage examples continues with customer support & service. No matter how good your product is, if you are not capable of providing proper support in case it’s needed, you risk having your customers switch to another company in the blink of an eye.
For this reason, having an amazing customer service can definitely give you a competitive advantage in the market. This is especially important if you offer a complex product that requires assistance so that people can start using it. For example, many SaaS companies.
Some companies that are famous for providing exceptional service include:
You can check the full list here.
Being a company with impeccable reputation can definitely help you stand out from your competitors. Of course, building it requires a lot of time and huge efforts behind the scenes.
However, you can also take it to your advantage by:
- Asking your happy customers for testimonials to put on your website;
- Asking customers to fill out surveys and reviews on reputable pages;
- And of course, involving your own employees in activities for brand awareness.
A company that does a great job using its reputation to its advantage is Hubspot:
12. Geographic location
Another possible competitive advantage, although not so obvious, is the geographic location of your business. For example, having factories close to your selling points might decrease your logistic processes, and deliver product faster than the competition.
Another example could be a rooftop restaurant on the last floor of the highest building in the city.
In this case, offering a unique view that your competitors can’t replicate gives you a good competitive advantage.
13. Supply Chain and Logistics
Having incredibly efficient supply chain and logistics processes can give you a solid advantage in front of your competitors. For example, having more control over the different phases of production, or meeting demand faster and better.
One of the best examples that come to my mind is Zara, a clothing company of Inditex. They have an amazing supply chain management, and are capable of manufacturing and delivering products to thousands of stores worldwide in the matter of weeks. You can read more about their case here.
14. Trade Secrets
Another possible advantage is tapping into trade secrets that your competitors do not know. This term implies that these knowledge advantages are not explicitly protected by property law, but rather kept secret internally.
An example that comes to my mind is the secret recipe behind Coca Cola. I don’t know if there is any patent on it, but legend says that there is not a single person that knows the whole recipe. Instead, multiple people know a part of the recipe. Although I can’t confirm if this is true!
15. Patents / Intellectual property
Speaking of trade secrets and intellectual property laws, here comes our next point. And that is, products protected by law including:
- Copyrights, for example in sectors such as music, art, and literature;
- Patents on products and technological advances;
- Industrial design rights that protect the visual design of objects;
For example, Disney holds numerous designs and trademarks on the names and images of this characters. Having the exclusive rights to a product or technology can give you a significant advantage in front of your competitors.
Next on our list of competitive advantage examples is contacts. Depending on the industry, having the right business connections can significantly increase your negotiation power with both customers and providers.
And, consequently, put you in advantage on the market.
17. Brand history
By far, you have probably seen thousands of logos saying “Since XXXX”, or something similar, under the brand name:
Implying the long history of the brand and how much experienced they’ve had over the years. Of course, in the majority of the cases it is not enough to give you a competitive advantage. However, in some cases it is possible.
For example, the Spanish restaurant Sobrino de Botín, which is the oldest in the world according to many sources. And the age of the place is their unique selling proposition.
18. Experience in the sector
Of course, it is not only about the age of the company, but also its experience in a specific industry. It is possible that an organization itself is new, but its employees are highly-experienced and skilled in the sector with similar products.
Having a lot of experience in a particular sector is highly valued by customers. It not only allows you to develop better as a company, but also makes you prepared for multiple situations that young businesses aren’t ready, or don’t know how to handle.
A company with a sense of purpose and values can truly stand out from the crowd. Having your core values effectively communicated and expressed throughout all the actions of your employees will reflect in the way customers perceive you as well.
20. Brand recognition
Another competitive advantage is brand recognition, or how easy it is for customers to recognize your logo, products, or specific brand colours. People tend to have more trust in brands that they can acknowledge over those they can’t.
In fact, just recently Coca Cola made this campaign:
It only consisted of their logo and the phrase “Feel it”. But they were twisted in such a way that you could immediately think of the famous Coca Cola bottle.
21. Local partners
Another competitive advantage is having the right local partners to help you penetrate a new market. Or simply operate and grow faster in it if you are already present there.
For example, I heard that if a foreign company wants to operate in China, 50% of the company must belong to Chinese stakeholders. I couldn’t find an exact source to cite, so excuse me if this is not true. But if it is, it only goes to show that local partnerships can be a crucial importance to the growth of a company.
The main reason why is because they already know the local market and the local target audience. So they know how to reach them faster and better.
22. Brand ambassadors
Next on our list of competitive advantage examples is having a good brand ambassador strategy. Brand ambassadors are people who are hired by your company to represent it with the purpose of increasing sales and brand awareness.
For example, a company that is doing a good job in this field is Lululemon, a company for athletic apparel:
23. Negotiation power
A company can have a solid advantage in front of its competitors if it has more negotiation power. In the B2B sector, it could be both with providers to lower the prices, and with customers to purchase more product or extend a contract.
Negotiation power can come from having more resources, or a strong business partner who knows how to “move” in the industry. Or a combination of both. It can also come from from your own employees.
24. Natural resources
In some industries, having superior access to natural resources will give you a competitive advantage in terms of quality, reputation, and faster production. An example of this is the mineral water brand Evian, which comes from several sources near Évian-les-Bains, on the south shore of Lake Geneva:
In many cases, especially when it comes to agencies or businesses in the B2B sector, having worked with important customers can give you a significant advantage over your competitors.
Not only because key customers endorse the quality of your services, but also because you have managed to win the project. And, consequently, the trust of a big and important client.
In fact, you have probably seen many companies displaying the logos of their key clients:
Which is a great way to show future clients that it was your project or product that important companies choose for their business.
26. Labor costs
In a lot of sectors, especially in the B2C commerce, low labour costs can give you a significant advantage on the market. Not only because you can increase your profit margins, but also because competitors who operate in high cost countries will be in obvious disadvantage.
In fact, cost leadership is one of the main strategies proposed by Porter, as we saw in the beginning of the post.
In other cases, having a more visually appearing product will increase your value among customers. And will make you stand out from your competitors. Even if you are in a similar price range. This is the case for many luxury brands.
Another good example of how aesthetics can give you an advantage in front of your competitors is Apple. When they first introduced their products, the minimalist design got people crazy even if other companies offered a similarly priced product.
28. Barriers to entry
Barriers to entry is an economic term that describes the existence of obstacles, such as high starting costs or specific know-how, in order enter a new market. For example, a company for the destruction of biomedical waste will usually have higher barriers to entry than a local shop that sells food.
In some industries, the biggest competitive advantage for companies with natural monopoly is precisely barriers to entry. For example, the only organization that provides railway or subway services in a country or a city, such as Metro Madrid:
Next on our list of competitive advantage examples is sustainability. As the industrialization and globalization are causing irreversible damage to our planet, many people are starting to value companies that follow sustainable practices in front of those that don´t.
- PepsiCo, which promotes human, talent, and environmental sustainability;
- Brown-Forman, a wine producer that uses climate-sensitive ingredients;
- Ford Motor Company, which is constantly increasing the use of renewable materials.
30. Switching barrier strategy
Switching barriers are the obstacles that users face when trying to switch from one competitor to another. The higher the barriers, the more likely users are to stay with their current company.
A good example I can think of is are mobile internet providers. When my current provider, Vodafone, discovered that I wanted to switch to another one, they immediately offered me improved conditions to match the competitors’ offer. Which made me stay.
The point is, having a good plan and strategy when customers want to switch can definitely be a competitive advantage. Of course, sometimes it is not possible. Especially if the reason for leaving is a bad product or service.
31. Network effect
The network effect is a phenomenon in which the increased number of people that consume a service improves its value. The biggest examples of this phenomenon include powerful social networks such as Facebook, Instagram, and Twitter.
It is difficult to compete against that, putting social networks in advantage compared to other possible competitors. Or simply new companies that want to enter the market.
Of course, we cannot forget mentioning one of the biggest competitive advantage strategies proposed by Porter: differentiation. These are companies that take the approach to develop a unique product or service that customers will find better, or at least different, than the one offered by competitors.
One example is the handmade cosmetics company Lush:
Their differentiatior is providing an authentic alternative to traditional beauty products.
33. Long-term strategy
Having a solid long-term strategy, as well as the ability and resources to execute it, can definitely give you a significant competitive advantage in front of your competitors.
34. Financial liquidity
Another important factor that can put you in advantage is having a good financial liquidity. Financial liquidity refers to how easily assets can be converted into cash, which can be a life-saver for many small companies. Especially in times of crisis!
For example, the coronavirus situation which put many of us in quarantine, and a lot of companies in risk of going bankrupt.
35. Corporate Social Responsibility
Just as we saw with the case of Sustainability, more and more customers are willing to support companies that participate in Corporate Social Responsibility (CSR) projects.
In fact, according to the Digital Marketing Institute, socially responsible companies are even more important for millenials and generation Z than ever. Some good examples Johnson & Johnson, Netflix and Spotify.
And that was all from me, folks! I hope you enjoyed this article, and I hope to see you in the next one!