The cantankerous former CEO of GE, Jack Welch, once said, “If you don’t have a competitive advantage, don’t compete!” This might seem obvious, but you’d be surprised how many companies would be hard pressed to tell you exactly what their competitive advantage was if you put them on the spot.

In fact, a better way to think about Welch’s fiery admonition is if you can’t articulate your competitive advantage, you don’t stand a chance of competing. Clearly communicating your competitive advantage to your customers is critical. To do this, of course, you first have to know what you’re trying to say.

So, what do we mean by competitive advantage? What’s the best way to define one for your own business? In what follows, we’ll dive deeper into the nature and importance of competitive advantages, including the ultimate competitive advantage: your brand.

What is a Competitive Advantage?

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Philip Kotler, who some call the father of modern marketing, defines competitive advantage as “a company’s ability to perform in one or more ways that competitors cannot or will not match.” Your competitive advantage, then, is the thing you do better than any of your competitors. It is the key differentiator that defines your brand against all others.

There are a range of value propositions that businesses often cite as competitive advantages. These include:

  • Price
  • Speed of delivery
  • Speed to market
  • Technology
  • Design
  • Scale
  • Customer service
  • Personalization
  • Experience

The problem is few individual value propositions are defensible as a competitive advantage. And even if they’re tenable at the moment, they are rarely sustainable over time. Are any of the above value propositions sustainable for the long run, in and of themselves? Let’s look at a couple, starting at the top: price.

Even if you claim to offer the lowest cost products or services in your vertical, can this claim withstand the entry of new competitors to the market? What’s the strategy for a brand that has hung its hat on price when a competitor comes along and offers the same product or service at a lower cost? Lower prices? Price as a competitive advantage quickly becomes a race to the bottom and as such is not a sustainable competitive advantage.

What about speed of delivery? Amazon is currently investing billions of dollars to offer free one-day shipping for all Prime members. Can any business not selling through Amazon defensibly claim to offer faster free delivery than the largest delivery company in the world?

It isn’t just price and delivery. The problem with choosing any individual value proposition as your competitive advantage is that there will always be the possibility of another brand with a superior claim. Singular value propositions are rarely sustainable competitive advantages.

Warren Buffet once said, “The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.”

A competitive advantage must be sustainable, or in Buffet’s words “durable,” if it is to be of any advantage at all. And the best way to create a sustainable competitive advantage is to develop a multifaceted framework of differentiators.

The Competitive Advantage Framework


By developing a multifaceted framework that incorporates more than one differentiator, you’re more likely to hit upon a competitive advantage that is ownable and sustainable.

We often ask our clients to look at three factors when it comes to defining their competitive advantage:

1. Value – What is the real value you provide?
Your products or services might offer your customer dozens of features or benefits, but what, ultimately, is the problem they solve? If you offer an analytics platform, for example, the bells and whistles that make your product unique do not constitute the real value it provides. Its real value lies in the confidence it offers your customers to make informed business decisions.

2. Customers – What do your customers truly need?
There are a lot of things your customers like. When the economy is going well and abundance is widespread, customers will pay for all sorts of cool features that are nice to have. But what will they still need when the next recession inevitably rears its ugly head? What do you provide that is indispensable to your customer’s business?

3. Competition – What do you do better than any other company in the world?
It’s rare for someone to be truly exceptional at more than one thing. Athletes, musicians, artists—those who reach expert professional status generally have a singular discipline at which they are better than 99.9 percent of the population. What’s your business’s one thing?

competitive advantage framework value customer competition chart ignyte

What is the real value you provide, that your customers truly need, and that no one else does as good as you? Answering these questions is a surefire way to develop a sustainable competitive advantage. You could offer the most valuable product in the world, but if your customers don’t truly need it, it isn’t a competitive advantage. Or you could offer a service that meets an urgent need of your ideal customer, but if a competitor can fill the same need with a superior service, it isn’t much of an advantage at all.

At the end of the day, there might be nine things your company does exceptionally well. Your customers might desperately need three of them. But only one of these you do better than anyone else. This is your competitive advantage. That’s the framework that meets what business author Brian Tracy says are the ultimate criteria for any competitive advantage: a proposition that is “perceivable, promotable, and something the market will pay for.”

Brand is the Ultimate Competitive Advantage

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Defining your competitive advantage is a critical step for any brand. But it’s only one step of many. In fact, the only way to get the most out of a well-defined competitive advantage is by building an equally strong brand around it. At the end of the day, a strong brand is the ultimate competitive advantage.

What’s a strong brand? Multinational market research firm Kantar Millward Brown, defines a strong brand as one that is:

  1. Meaningful: It appeals more, generates greater love, and meets customers’ expectations and needs.
  2. Different: It is unique in a positive way and stays ahead of the curve for the benefit of the consumer.
  3. Salient: It comes to mind spontaneously as the brand of choice for key needs.

As we’ve pointed out before, customers are willing to drive a little farther, wait a little bit longer, and pay a little more for a brand they love.

In his report “Why Aren’t We Doing This?” legendary global marketing consultant Peter Field sums up the unparalleled advantage of a strong brand this way: “Brand building delivers sustainable competitive advantage in a world where there are few other sources. By creating and reinforcing desirable associations for their brands, companies can create demand for their products even if they enjoy no tangible advantage over those of their competitors.”

In many industries these days, the tangible differences between competing companies are slim. What is the tangible difference between Coke and Pepsi, for example? A minor variation on the same flavor whose relative superiority is entirely subjective. What’s the tangible difference between Apple and Samsung? Increasingly, very little. The difference between the quality and functionality of each brand’s product line is all but negligible these days.

The one thing Apple has always had over its competitors is brand. Apple has spent decades masterfully crafting an identity and brand experience that are second to none. The sleek, minimalist Apple identity is one that a generation of customers now identify with. The forward-thinking, seamless experience of the Apple brand feels like home to a legion of devoted followers. You literally couldn’t pay them to use anything else.

What is Apple’s ultimate competitive advantage? Its brand. Its brand has given Apple increased pricing power, enabling it to dictate prices without the risk of losing brand-loyal customers. The decades of methodical brand-building into which Apple has invested have paid off exponentially. Apple is proof positive that brand-building drives long-term profitability far more effectively than short-term, data-driven marketing initiatives. That’s why the ultimate competitive advantage is your brand.

Conclusion

Defining a sustainable competitive advantage is critical for any business looking to differentiate itself from its competitors. Just as critical is clearly articulating your competitive advantage to your target audience. For most businesses, however, a singular value proposition like price or speed of delivery will never be sustainable as a competitive advantage. Developing a framework that takes into consideration your business’s unique value, the customers you serve, and the competition you’re up against is the best approach to defining your competitive advantage.

At the end of the day, however, no competitive advantage is as powerful or sustainable as a strong brand. A strong brand enables you to compete whether or not you have a tangible advantage over your competitors or not. Is Starbucks really the world’s best cup of coffee? Not by a long shot. Will millions of people go out of their way to pay $6 for a cup of Starbucks coffee tomorrow morning? Without a doubt. What are they really driving a little farther and paying a little more for? The answer is simple: brand.

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A prolific blogger, speaker, and columnist, Brian has more than a decade of experience in design and branding. He’s written for publications including Forbes, Huffington Post, and Brand Quarterly.