No business is exactly the same, no Entrepreneur is exactly the same. So it’s up to you to choose the best competitive advantage specific to…your business. Here is the basics on competitive advantages, the good, the bad, and some examples of each competitive advantage.
What is a Competitive Advantage (skip this part if you already know)?
Simply put, it’s the advantage you have over your competition. But for investors, a generic response with a competitive advantage of “I’m just better than my competition” doesn’t work.
To us Entrepreneurs, it’s pretty obvious what our competitive advantage is, but when asked to give our competitive advantage examples…it’s not easily defined.
So let’s take a look at some very general terms and competitive advantage examples for you to tell your investors:
First to Market
I consider first to market competitive advantages stronger than any other example. It’s something new, something innovative. The first player is always hard to knock out of the game.
Problem is proving that your business will be accepted by your market. Or that your market even exists. It’s frustrating, you’ll go to investors and they’ll say: how do we know this will work? We don’t of course, but the returns on this type of disruptive company is much higher.
First to Market Competitive Advantage Examples:
- Disruptive Technologies. Like the first computer.
- Disruptive Business Methods. Like taking software and doing very untraditional things with it (making developers shiver at what you’re doing with their baby).
- Introducing an old product to a new market. Weight Watchers recently introduced Weight Watchers for men. Realizing a group of men won’t gather in a traditional setting to socialize about loosing weight like women, they introduced the men’s program online. Men want to loose wait secretly, and certainly don’t want to socialize with other men about it.
Intellectual property is probably one of the most used competitive advantage examples out there. It’s protection over the things that make you different, or protection over your original work.
Intellectual property is intangible, and is often a major asset for the company.
This example of competitive advantage is a favorite among inventor types, who in turn a lot of times will not even build the product after acquiring the patent. This makes a lot of potential customers and investors weary of funding someone to obtain a patent, or who only has a patent.
Intellectual Property Competitive Advantage Examples:
- Trade secrets (a good example would be the Coca Cola recipe)
- Trademarks (pretty general for most companies. You don’t want someone stealing your name, especially after you’ve established the brand)
- Patents (mostly used by technology & engineering companies)
- Copyrights (mostly used by publishing industries, artists, designers, and even for technology).
Strategic Relationships & Partnerships
Two heads are always better than one they say. Anytime a strong strategic partner or relationship is built, significant value is brought into the company.
A bad partnership or relationship can bring you down just as fast as it brought you up. Choose carefully.
Strategic Partnership Competitive Advantage Examples:
- Businesses that share customers, resources, etc.
- Joint Ventures
Added Value, Less Costs
Added value, less costs is a really good competitive advantage example; and is almost necessary for a business to survive unless you’re a disruptive technology. Basically, you take an existing product and add value to the customer and reduce the costs.
Now if only you can present a better brand, and ease the pain of switching. Yes, even if your product saves time and gives more value…does that outweigh the pain of switching and change?
You have to understand most businesses (and consumers) have processes set up with regular products or systems they use, and already have those in place. It’s hard to readapt, and people resist change.
Added Value, Less Cost Competitive Advantage Examples:
- When MailChimp out did Constant Contact with it’s 1000 free campaign. Wow, the system was much better, costs less, and they eased the pain of switching.
Got some questions on the best competitive advantage examples or more examples? Just leave ‘em below.