Competitive advantage” seems to be one of those concepts that does not need much explanation. However, it contains a wealth of information that is important for you to know if you want to maximize your business. Therefore, we will explore the main characteristics of competitive advantage, how to detect and enhance them, and how to integrate them into your business strategy.

What is a Competitive Advantage of Digital Marketing?

A competitive advantage is a feature that makes a product or service superior to its competitors in some respect. It is a concept created in the 80s by Michael Porter, one of the excellent references in marketing. In line with what Porter expressed, competitive advantages are closely related to innovation broadly. That is, not only in applying technological advances in production but also in finding more efficient ways to perform tasks where technology is not necessarily involved.

To be considered as such, competitive advantage must be:

Sustainable over time: As we will see later, this does not mean that competitive advantage is eternal, but rather that a person or organization can maintain it in a  consistent and lasting manner.

Relative and unique: By definition, since the same concept involves competition, it implies a difference about it. In other words, it is not only a positive feature that a product or service, or a brand, has, but it is also something that its direct competition cannot offer.

Difficult to copy: This point is directly related to the previous one. A competitive advantage in critical aspects that the competition lacks will take a considerable investment of resources to access in the best cases.

In addition, we can talk about two types of competitive advantage: internal and external. We say that it is internal when it arises from characteristics inherent to the company. Which lead to it optimizing its productivity and managing to offer its consumers a lower price than the competition. It is external when it focuses on what the consumer perceives about the product or service and gives it such a value that it justifies his choice over other alternatives.


Sources of Competitive Advantages

Different variables can give rise to competitive advantages within each industry sector and type of business. So next, we are working on doing some of the main ones.

Barriers to entry: This situation occurs when a business operates within an area in which obstacles —for example, legal, economic or technical— are challenging to overcome. Therefore, said business will enjoy a privileged position in the market.

Cost: This item can be associated with the internal advantages whose definition we saw earlier since it benefits businesses that, for some reason, can offer a product or service of similar quality to that of their competition but at a lower price.

Switching costs:  This type of cost is related to the consumer. It refers to the losses—whether of time, money, or other resources—that a customer must incur when changing providers of a product or service. As a result, these providers maintain a “captive” clientele despite equal or superior alternatives.

Network effect: This effect occurs when the number and profile of users of a specific business are a factor in attracting new users. Who add value both to the company itself and to the experience of all those who participate in it.

Experience: Accumulated knowledge, or skilled labor, allows us to do specific tasks better than the competition and stand out in something difficult to imitate. At least in the short term.

Types of Competitive Strategies

Competitive strategies involve the actions necessary to promote and consolidate a competitive advantage. To talk about them, we will resort again to Porter and the theory elaborated by him. Although today, strictly speaking, they are not the only ones. We can consider that other strategies are a new way of putting the traditional model into practice. This model comprises the following types of competitive strategy:

Cost leadership: It aims to reduce production costs and to be able to offer a lower selling price than the competition while maintaining a similar level of quality. This leadership strategy can be due to different causes. It is typical of economies of scale whose operation volume, among other benefits, grants greater possibilities for negotiating with suppliers.

Differentiation: Here, the protagonist is the product or service and, even more so, the relationship that its consumers establish with it. Therefore, it finds its origin in the target audience’s characteristics in which direction. As its name indicates, the accent places on what makes a product or service different and, in turn, makes its consumers feel different —or unique—who are willing to pay a higher price than the one offered by the company.

Porter expressed that the two previous strategies were mutually exclusive when he developed these concepts. But today, with many resources available to a growing number of startups, it is more debatable that they are incompatible.

Finally, we find the market segmentation or focus strategy. Which is always not considered a system but rather a complement to one of the previous two. It consists of focusing on a particular segment of the target audience and designing a product or service that meets specific needs.

How to Develop a Competitive Advantage?

First, developing a competitive advantage doesn’t mean you strive to outperform your competition in every way. Instead, the main is to focus your energy and resources on those most challenging for your competitors to imitate. And, at the same time, be relevant to the consumers you are targeting.

Your competitive advantage may be that you need to analyze your competition and target audience. And that in addition, you have a realistic vision of the resources you have. This formula, which applies to so many other digital and offline marketing actions, is crucial in this case. Let’s see what steps each of the stages of the process involves:

Competition Analysis

Here, it would help if you precisely detected the strengths and weaknesses of other players. Who compete with you within the same market sector. That way, you will be able to know how to provide value to your consumers in a way that they are not.

Target Audience Analysis

In short, tremendous competitive advantage is attractive from the point of view of your consumer. But, as a result, the ideal competitive advantage will depend mainly on what is most valued by him. It is true that, as consumers, we tend to want a brand to offer us many advantages. But, it is also true that we prioritize some over others.

Analysis of your situation

Once you have established your competitive advantage. It is essential to assess whether you have the necessary resources to sustain it over time based on the information previously collected. And, if not, you can, at minimum, get them in a relatively short time if you stick to it.


Finally, a competitive advantage does not arise spontaneously but results from deliberate work with a very defined objective. The elements that can allow you to generate a competitive advantage are already present in your business. But, if you don’t work on them, no remarkable results will happen. For example, we can have the ingredients to make a cake. Still, suppose we don’t combine and cook it. In that case, it’s the same as not having them—competitive advantage results from our intervention in those elements that can differentiate us from our competition.