On June 27th, 2007, two days before the launching of the first Apple iPhone, NPR - an American media organization published an article on the topic Seven Things to Consider Before Buying an iPhone. Here's what part of the introduction says:

"Apple's iPhone isn't even for sale yet, but already, consumers are lining up to purchase the gadget…"

Did you pause for a while to wonder why customers would be lining up to buy a product that wasn't even for sale yet? Well, I did. So let's look at 4 of the seven factors listed by NPR to see what the fuss was about.

The cool factor: This is the first factor in the article. According to this factor "the iPhone's biggest "I want that '' factor is its sleek styling… the touch screen interface. You use your fingertips to access all of the iPhone's features: the music player, Web browser, calendar, etc…."

The multimedia Jojo: This is the second factor. What's this about? NPR says " It's a cell phone, it's a music player, it's a camera, it's a Web-enabled device, and much more."

Internet Ease of Use: What NPR said about this factor is that "Because the touch screen essentially spans the length of the iPhone, users will get a wider viewing area than what the typical Internet-enabled phone offers. And the browser renders Web pages in full HTML — which means sites will look as they do on a regular computer"

Cell Phone Carrier: According to NPR for this factor "The iPhone can only be used with a cellular network. It has the largest number of customers. So it is a natural choice for Apple."

Now, look at the screenshot below:

From the factors listed by NPR and from the screenshot above, the first Apple iPhone seems to have had a great secret weapon: a competitive advantage in the cellphone industry of the time. This elusive quality allowed it to stand out in a crowded market and attract customers away from its competitors. 

In this article, I'll be walking you through competitive advantage. Revealing why it is so important for your business. I'll explore the factors that contribute to it. And the strategies you can use to create one for your own business.

Whether you own a startup looking to make a name for itself or an established company looking to stay ahead of the game, this article is the solution for you.

What is a competitive advantage?

In simple terms, competitive advantage refers to the unique qualities or attributes that a company/ product possesses, which gives it an edge over its competitors in the marketplace.

Essentially, it's what makes a company deliver more value to customers than others. And in turn, helps it generate higher profits and outperform the competition.

Some common examples of competitive advantage include low pricing, reputation for excellence, innovative designs, and unique services/product among others - more on this later.

Another key element of competitive advantage is differentiation. This means offering products or services that are perceived as being different or better than those of the competitors - we'll get deeper into this later.

Is having a competitive advantage important?

Without a doubt, yes! Having a competitive advantage for your business is important. Why? Recall in the introduction we listed some factors of the first Apple iPhone that got customers "lining up" to buy the device when it wasn't even for sale yet. It's what can make the difference between success and failure.

Firstly, having a competitive advantage helps your business attract and retain customers. Increase sales and profits, and establish a strong market position. Apple CEO Steve Jobs achieved all of these in 2007 when he sold 6.1 million units of the first generation Apple phone on the launch date.

In addition, having a competitive advantage helps you to build a strong brand and reputation in the marketplace. This is why after a century and many decades, Coca-Cola remains a trusted beverage brand. 

Furthermore, having a competitive advantage provides a sense of stability and security for your business. How? When you know that you have something that no other competitor has in the market, you can weather economic downturns or industry disruptions more easily. 

Lastly, competitive advantage attracts investors and the best talents to your company because of the perceived sense of value, and the ability to remain successful.

Examples of competitive advantage

Before now, I hinted at some common examples of competitive advantages for example low pricing, fastness/reliability of service, unique services, strong brand identity, and quality and longevity of products among others.

Now, let's expatiate these examples and look at some popular brands with a history of these advantages.

1. Low pricing

The first advantage this brings to a company is that it makes a company's products or services more affordable and accessible to a wider range of customers. Particularly those who are price-sensitive or have limited budgets.

This can help to attract and retain customers who might otherwise choose a competitor's offering. Among the many benefits this can bring to your company is a higher net promoter score.

McDonald's, a fast food company has been leveraging this to have an edge over other competitors in the industry for many years. By keeping prices low, McDonald's can attract a broad range of customers. Especially budget-conscious consumers and families with children. 

2. Unique services/features

It is important to note that a product’s unique feature is an exceptional competitive advantage that is quickly recognized by customers. Now, you can tell why the first Apple iPhone in 2007 shook the world with millions lining up to buy even before it was available in stores. Another company with "unique services/features" is Google.

Google is primarily in the technology industry. Specializing in Internet-related services and products. Some of its key products include the Google search engine, Google Maps, Google Drive, Google Ads, and Google Cloud Platform. 

Apart from its unique products, Google offers a unique service of a vast database of information and its ability to provide fast and accurate search results. Google's advertising platform is another unique service the company offers.

With these sophisticated analytics tools, advertisers have been able to reach their target audience more effectively. And also measure the success of their campaigns with greater precision. This makes Google a go-to platform for digital marketers and researchers alike.

3. Fast, reliable, and convenience

Speed, reliability, and convenience are all factors every buyer looks out for especially in the e-commerce niche. People want to be able to trust your services, your delivery competence, multiple choices, and all.

Hence, they're all competitive advantages in today's market. So a company's ability to differentiate itself from its competitors and attract customers who value these qualities outperforms its competitors.

Amazon in particular has benefited greatly from these advantages. The company's focus on fast delivery, reliable service, convenient online shopping, and vast product selection has helped it become one of the world's largest and most successful e-commerce platforms.

4. Strong brand identity 

A strong brand identity is a set of unique characteristics and qualities that distinguish a brand from its competitors and make it instantly recognizable to consumers. It encompasses the years of existence and all the visual, verbal, and sensory elements that contribute to a brand's image.

Including its name, logo, color scheme, typography, packaging, advertising, and other marketing materials.

Coca-Cola is a prime example of a company that has benefited greatly from a strong brand identity as a competitive advantage. The brand is instantly recognizable and has become synonymous with the soft drink category.

The company has been able to achieve this through consistent branding, advertising, and marketing efforts. They also have a secret recipe that gives them a unique taste that can't be replicated by their competitors. 

5. Reputation for excellence

This is another significant example of Competitive advantage. What this does to your company is creates a positive image in the minds of consumers, potential customers, investors, and other stakeholders. 

Apple and Nike share these qualities in their different niches. Nike for instance is known for its high-quality athletic apparel and footwear. They also sponsor top athletes and teams. This gives them a reputation for excellence and a celebrity endorsement advantage.

6. Longevity and reliable

These are competitive advantages that sell as much as low pricing in any niche. Because customers value when the quality and life span of the product they buy equals the cost. Toyota is a well-known car brand that is known for reliability and longevity.

They also have a strong global supply chain and manufacturing capabilities, giving them a cost advantage.

7. High-quality and innovative designs

High-quality and innovative designs are a competitive advantage in several ways. First, they help a company differentiate itself from competitors with poor-quality products.

Second, they help increase customer loyalty by providing products that are reliable, visually appealing, and enjoyable to use. Third, they help a company command higher prices for its products based on quality, leading to increased profitability.

Samsung is one of many companies that built a reputation for producing products that are both visually appealing and technically advanced. This is evident across all of its product lines. From smartphones and tablets to televisions and home appliances.

Its line of smartphones is known for its sleek and modern appearance. The company was one of the first to introduce edge-to-edge displays and curved screens.

Samsung has also introduced new features such as iris scanners and wireless charging. Which has helped make its smartphones even more innovative and appealing to customers. The innovative designs have equally helped the company to compete with Apple in the smartphone and tablet markets.

8. Reputation for luxury

This is another example of a Competitive advantage that appeals to consumers who love style, performance, exclusivity, and prestige. In the automotive industry, BMW is known for its reputation for luxury and performance. These advantages allow the company to charge premium prices and appeal to a discerning customer base.

Three strategies for creating a sustainable competitive advantage - based on Porter’s framework. 

So far, I have discussed the meaning of Competitive advantage, and why having a competitive advantage is important for your business. I have also discussed some popular examples of Competitive advantage.

Now the question is, how do you create a sustainable competitive advantage for your business? I'll be answering this with reference to Michael Porter's competitive advantage framework.

Michael Porter is a famous economist, author, researcher, teacher, and professor at Harvard Business School. In 1985 Porter developed a framework for creating a sustainable competitive advantage.

He argues that for a business to be successful in the long term, it needs to have a unique advantage over its competitors that is difficult for them to replicate.

This framework is divided into three namely: cost leadership, differentiation, and focus referred to as Porter’s Generic Strategies.

1. Cost leadership 

This strategy according to Porter emphasizes becoming the low-cost producer in your industry. By keeping your costs low, you can offer lower prices to your customers while still maintaining profitability.

You can achieve this through economies of scale, efficient supply chain management, and cost-effective production processes. The idea around this strategy is that offering lower prices than your competitors, lets you attract price-sensitive customers and gain market share.

2. Differentiation 

This strategy suggests creating a unique product or service that sets you apart from your competitors. What you do here is emphasize features that are important to your target market in your product or service.

For example quality, convenience, or price. If you're able to do this, you can create a differentiated product or service that is difficult for others to replicate. As Porter suggests, the result of doing this would be higher prices and greater customer loyalty.

Because customers are often more likely to stick with a product or service that they perceive as satisfying and valuable.

3. Focus

The last strategy involves narrowing your focus to a specific market segment. Such as a particular geographic area, product line, or customer group.

By tailoring your product or service to the needs of a specific segment, you can become the preferred provider in that market and enjoy greater customer loyalty.

This can be particularly effective in industries where there are many different customer needs and preferences. As it allows you to specialize in one area and build a strong reputation as a provider of high-quality products or services.

Differences between competitive advantage and comparative advantage

Comparative advantage refers to the ability of a country or company to produce a particular good or service at a lower opportunity cost than another country or company.

In other words, it's about efficiency and the ability to produce a product or service with the fewest resources possible. For example, if country/company A can produce cars more efficiently and at a lower cost than Country B, country/company A has a comparative advantage in car production.

On the other hand, competitive advantage refers to the unique advantage that a company has over its competitors. This can be due to a variety of factors. Such as a strong brand, unique products, cost efficiency, or a strong brand identity.

A company with a competitive advantage can differentiate itself from its competitors and attract more customers, talent, and even investors.

So, the main difference between these two concepts is that comparative advantage is focused on efficiency and production. While the competitive advantage is focused on differentiation and attracting customers.

Summing it up

In today's business landscape, competitive advantage is a component your business ought to possess. The benefits are numerous ranging from attracting and retaining customers, increased profits, large market share, and customer loyalty among others.

As discussed, there are various examples of competitive advantages such as low pricing, unique services, product quality, reputation for excellence, and so on. 

Moreover, Michael Porter's Generis Strategies provides a useful guide for creating a sustainable competitive advantage through strategies. Such as cost leadership, differentiation, and focus.

Carefully following these strategies and leveraging unique opportunities in the market will help any company gain a significant edge in its niche in today's market.

Also Read: A Startup’s Guide To Being Competitive: How Entrepreneurs Can Stack The Odds In Their Favor

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