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What is a competitive advantage?


A competitive advantage empowers an organisation to perform better than the other players in the market. It takes a lot of time to avail of this advantage as it generates profit and builds a reputed position in the market. Every organisation has its eye on the competitive advantage, but employees need to spend blood and sweat to earn this. The benefit comes with a brand status, superior margins, quality of products, affordable price to the consumers, revenues to stakeholders, etc. The advantage is for the company’s years of experience and ethical performance by keeping healthy competition. 

The expertise every employee caters to in the business helps them profitably use the competitive advantage. You have to make sure you are using your understanding of business to grow your abilities. Covid-19 has affected businesses, and businesses are still fighting in the market to cover up their sales. The global pandemic has been challenging for entrepreneurs, but some have used the competitive advantage in their growth. It is the nature of the business to fluctuate, but people with strong convictions and competitive advantages can take risks. 

How does competitive advantage work?

  • The companies with a competitive advantage have the potential to increase their market shares which will produce higher incentives for the company and its shareholders. 
  • The company should be aware of the target markets and other prevailing services. Conducting market research and surveys could help companies get an insight into the selling trends and needs of the customers. The focus of companies must lay on the quality of services with a minimal price range, making them closer to competitive advantage. 
  • The structural process of activities going on in the business outperforms its competitors. A systemic approach in designing and implementing strategies so that employees can perform efficiently pulls the advantage to the company’s side. 
  • Keep a close view of the company’s performance so that you can use the competitive advantage in a useful way. Focus on resources that are being effectively utilised. Try to use the edge so that areas that are not performing well get the key to unlocking their locks in the market with the advantage.

What is the purpose of competitive advantage?

  • Companies get the upper hand with the competitive advantage on a product similar to their rival.
  • It benefits the company’s products as more people get inclined toward its profile.
  • A superior value develops in the market for that company, which helps bring new customers, increasing revenues.
  • Competitive advantage aims to create individual attention to the product’s Unique Selling Proposition (USP).
  • The challenges and risks associated with it make you a true entrepreneur.
  • Competitive advantage empowers the organisation, and using it without strategies can destroy the reputation and divert attention from objectives.
  • It enables smaller goals to lead the super-objective of the firm by earning a significant position in the market.
  • Adapting to changes is a must for business. You will have different competitive advantages; it depends on you to decide how to differentiate the potential of the advantage to promote the brand to the target audience so that your competitors need to revise their plans and decisions.

The benefits of competitive advantage are not just limited to the business; rather, customers enjoy updated products and services. Whenever customers purchase your goods or services, they also buy the advantage that comes with it. Your product focuses on making the customers’ lives better, and competitive advantage makes it easier for the organisation. 

Why is competitive advantage important?

  • The organisation remains loyal to its customers and thus reveals something new in its product which generates sales. 
  • Competitive advantage enables the entry of new customers, which also maintains the brand reputation. 
  • It assures the company members that they are meeting their objectives on time.
  • The company’s growth does not stagnate; the graph will always increase with the competitive advantage. 
  • The most important benefit of having a competitive advantage is that investors look forward to investing. 
  • It opens a way for collaboration with the influencers and develops brand alliances. 
  • An organisation can change and fix the price of their products to the company’s needs and not just rely on the customer’s demands. It gives the company freedom to decide its worth with the quality offered. 

What are the five types of competitive advantages?

1. Cost-based advantage

This is the clearest approach to accomplishing competitive advantage. Customers need quality but also cannot compromise with the price. So, in this case, the primary focus is the target market’s needs. The minimal cost attracts the customers, and they want more for less.

2. Innovation-based advantage

New technology drives people’s attention. They are ready to spend on products and services which make their work/ life easier. Innovation-based benefits can be beneficial to companies. The rapid change in technology captures the business eye to adapt its products. 

3. Differentiation advantage

When the businesses offer different benefits from the product obtainable to the market, the differentiation advantage promotes the development. You can get this power to show your USP of the product. The product can be unique in many ways like more features, better quality, add-ons, etc. 

4. First mover advantage

The one who produces first will get the first-mover advantage. Introducing something novel or something which has never been in the market before caters to higher chances of sales and margins. The need to change the products might get you to develop new things, and if the demands boost up, you are the segment leader by default. Most of the companies try to make similar products or add some of their ideas to the existing product, and still, they have managed to get the advantage to sustain in the market. 

5. Time-based advantage 

Time can be the key source of competitive advantage. Customers expect services with a click. Just like a cost-based advantage, managing time for your services is essential. Some products have short lives, but the demand increases due to their usage and satisfaction. People want fast product delivery; they do not want to wait. They use technologies to compact the time of their services and goods. 

Competitive advantage examples in the marketplace

It isn’t easy to survive in the business world if you don’t have a competitive advantage. The more access to new technologies, the more marketing your product will have. The operation of a business goes through a long process. Many discussions, meetings, and debates occur before launching something, considering the business’s risks. If an organisation has a competitive advantage, it can take risks in increasing the product features and including more products in its bucket. Here are some examples of competitive advantages:


The only major search engine in the market right now is Google. It takes the advantages of being effective in this area. There is no one near Google to have this power over the internet. The company offers its services to everyone, and almost everyone uses it; it has reached great heights. The technology, size, and networking of Google have enabled it to earn this status. 


LinkedIn has become popular in a few years. Its primary goal is to provide information to working professionals and learn about recent industry developments. It is not a typical social networking site, and because of being niche in the market, it enjoys competitive advantages.  

Instagram and Facebook

These social media platforms entertain, educate, and help people earn and make a way to get fame. Be it a day or night, people nowadays talk about their networks, which is why they have a competitive advantage over their rivals. The brand alliances, free advertisement, collaboration, and much more benefits have made people vocal. The new inventions in Instagram and Facebook capture the competitive advantage. 

Learn MBA from Online Manipal

Channelise your skills to get a competitive advantage in business with the help of an online MBA degree course from Manipal University Jaipur. A Master of Business Administration degree (MBA) is a two-year programme that ensures that you learn all the aspects of a business. You might be innovative, but the course helps the students to get used to the technical business environment. After completing the programme, the certificate from Manipal University Jaipur opens doors for various opportunities in top organisations. 

READ MORE: MBA course guide: All you need to know


The business needs advantages to outshine in the market, but it requires effort to achieve a competitive advantage. Your idea and innovation have to be different from your competitors. Once you have the edge, you can access more opportunities for product development. It gives various product features and delivery features available to people.


Information related to companies and external organizations is based on secondary research or the opinion of individual authors and must not be interpreted as the official information shared by the concerned organization.

Additionally, information like fee, eligibility, scholarships, finance options etc. on offerings and programs listed on Online Manipal may change as per the discretion of respective universities so please refer to the respective program page for latest information. Any information provided in blogs is not binding and cannot be taken as final.

  • TAGS
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  • Master of Business Administration
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  • online education in India

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