Competitive Advantage

Topics: Marketing, Mass customization, Product differentiation Pages: 4 (1168 words) Published: June 11, 2013

Companies all seek a competitive advantage, as that will give them the opportunity to sustain profits that exceeds the average in their industry. The three major competitive advantages are differentiation, cost and response. Companies can therefore either gain a competitive advantage by offering a unique product differentiation, by offering similar products at a lower cost or by offering products at a time and place where the customer are in need of the product.

Companies seeking differentiation as a competitive advantage will aim to offer unique products compared to the current market. Atrill & Mclaney (2011). Customers will be willing to pay more for products or services they cannot find anywhere else. I am currently traveling abroad for business and was booked into a lodge that recently opened. One of the first things the owners asked me was to tell them if I have any suggestions, as they are new to the business and would like to offer something the other lodges don’t. There market strategy is therefore differentiation, which they combine with cost. Another example of competitive advantage are companies that are developing manufacturing equipment for other manufacturing companies that meets their individual needs. Airplanes like the Boeing and Airbus are also good examples of having differentiation as a competitive advantage.

The biggest advantage of differentiation is the marketing advantage. It is much easier to market a unique product because the marketing team will have the ability to state exactly what makes the product better and why it is a value proposition. Once the product proved itself in the market, there will be many brand-loyal customers. Another advantage is that the product will have better revenue margins because unique and better quality products are usually sold at a larger profit. One disadvantage of differentiation is the costs concern. Makadok & Ross (2013). By offering a unique product,...

Bibliography: Atrill, P & Mclaney, E. (2011) Accounting and finance for non-specialists. 7th ed. Harlow, England: Pearson Education.
Makadok, R & Ross, D (2013), Taking industry structuring seriously: A strategic perspective on product differentiation [Online], Available at: (Accessed: 02 June 2013).
Muşetescu, A (2010), Value creation and preserving competitive advantage [Online], Available at: (Accessed: 02 June 2013).
Cohen, J (2010), No, that is not a competitive advantage [Online], Available at: (Accessed: 02 June 2013).
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