Your competitive advantage

Your competitive advantage is what sets your business apart from your competition. It highlights the benefits a customer receives when they do business with you. It could be your products, service, reputation, or even your location. For example, do you offer home delivery, a money back guarantee, a 2-hour call-out service or childcare facilities?

How to identify your competitive advantage

To identify your competitive advantage, you need to understand your competitors and your customers. Ask yourself:

  • Why do customers buy from us?
  • Why do customers buy from our competitors and not us?
  • Why do some potential customers not buy at all?
  • What do we need to do to be successful in the future?

Market research will help you to answer these questions. Good market research will reveal how your business is different from your competitors, and what you have to offer that appeals to your customers. In-depth customer research will help you identify your customers' needs and increase your competitive edge.

Use our market research kit to find key economic, demographic and statistical information about your industry.

Customers buy benefits

When customers buy your product or service, they are buying the benefit that it gives them. It may be that your product makes their life simpler, or your service helps them to feel better about themselves. Think about how your competitive advantage benefits your customers.

For example, the competitive advantage for a sandwich shop may be: We use fresh, local ingredients to make-to-order the highest quality gourmet sandwiches in the local area.

Different customers may see different benefits:

  • customers with allergies or particular dislikes will enjoy the convenience of ordering a sandwich with their preferred ingredients
  • customers who want to treat themselves will be attracted by the fresh, high-quality ingredients, and the fact that the sandwiches are gourmet
  • customers who want to support local businesses will appreciate that you use only local ingredients.

Thinking about how your business can benefit your customers will help you to pinpoint your competitive advantage. A strong competitive advantage:

  • reflects the competitive strength of your business (e.g. quality of service)
  • is preferably, but not necessarily, unique
  • is clear and simple
  • may change over time as competitors try to cash in on your idea
  • must be supported by honest and ongoing market research
  • must highlight the benefits to customers rather than boast of your business itself.

After you have highlighted your competitive advantage, the best way to tell your customers about it is to create your unique selling proposition.

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Last reviewed
July 12, 2016


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