GROUP 5 – HANDOUT  A unique position in the market could build a

loyal customer base not easily swayed by the

LESSON 5: CREATING market competitors. Competitive Advantage
enables companies to sustain their growth over
COMPETITIVE ADVANTAGE time. Thus, it adds constancy to your company's
revenue streams and predictability to the
I. COMPETITIVE ADVANTAGE
success of your business.
 the ability of a company to outperform its
competitors in the marketplace. 4. Better Bargaining Power:
 “Competitive advantage is the lifeblood of every  Once a brand or a company is known for its
company” (George Kenyon, The Perception of advantage over others, bargaining and talking
Quality) terms with suppliers, distributors, and other
stakeholders would become easier. It puts the
II. COMPONENTS OF COMPETITIVE company in a stronger position to negotiate. It
ADVANTAGE helps attract more brand alliances, talent, and
potential investors. This could also lead to better
1. Value Proposition pricing terms.
 a clear message to the target audience
is necessary to bring out the company's
brand in the market 5. Brand Loyalty:
2. Target Market  Competitive Advantage needs to be maintained.
 Knowing your target market entails Continuous innovation or development of the
understanding your ideal customers' product or service is significant to retain the
needs, preferences, and behaviors. customers’ loyalty to your brand.
3. Competitors
 Understanding your competition is
critical for strategic decision-making, V. SOURCES OF COMPETITIVE ADVANTAGES
differentiation, market positioning, risk
 Better customer service
management, and customer acquisition.
 More Variety
 Faster or cheaper shipping
III. GOALS WHEN AIMING FOR COMPETITIVE
 Location
ADVANTAGE
 Color and aesthetics
 Brand identity
 Attracting customers
 Source of goods
 Withstanding market pressure
 Bundled Pricing
 Strengthening market position
 Human Capital
IV. IMPORTANCE OF COMPETITIVE
ADVANTAGE IN TECHNOPRENEURSHIP VI. HOW TO BUILD A COMPETITIVE
ADVANTAGE
1. Customer Attraction:
 The Comparative Advantage of a company To build a competitive advantage, a company can use
makes it stand out to potential one of three main methods:
buyers/consumers. A combination of cheaper
prices with better quality product offerings than 1. COST: Provide offerings at the lowest price
the other store always gets the public’s attention.
These are some of the areas in which companies may
adjust spending to improve their cost advantage:
2. Higher Profit Margin:
 Competitive Advantage entails selling the  Material cost
company’s products and or services at an  Processes
attractiveness by offering cheaper and better  Distribution
quality products or services; therefore a higher  Management
profit margin.  Automation
 Patents
3. Market Positioning:
ADVANTAGES
 Understand competitive advantage: Cost
advantage is one component within a larger
profile of competitive advantage, and by
increasing it, you may reveal other areas that
require improvement.
 Gain more long-term customers: When reducing
prices to increase cost advantage, businesses
may gain more long-term, loyal customers. This
can increase profits over the lifetime of the
company.
 Ability to evolve and expand: When a company
has a healthy cost advantage, leaders within the
organization may not need to spend as much
time focusing on improving it. This means there
may be more space within operations to focus
on innovation and original ideas.
2. DIFFERENTIATION: Provide offerings that are
superior in quality, service, or features
WHAT ARE TYPES OF PRODUCT
DIFFERENTIATION?
 Horizontal differentiation refers to any
differentiation that is not associated with the
product’s quality or price point.
Examples of Horizontal Differentiation: Pepsi vs. Coca-
Cola, bottled water brands, types of dish soap.
 In contrast to horizontal differentiation, vertically
differentiated products are extremely dependent
on price.
Examples of Vertical Differentiation: Branded products
vs. generics, A basic black shirt from Hanes vs. a basic
black shirt from a top designer, the vehicle makes.
 Mixed differentiation refers to differentiation
based on a combination of factors. Often, this
type of differentiation gets lumped in with
horizontal differentiation.
Examples of Mixed Differentiation: Vehicles of the same
class and similar price points from two different
manufacturers.
3. SPECIALIZATION: Provide offerings narrowly tailored
to a focused market
WHAT ARE THE BENEFITS OF PRODUCT
SPECIALIZATION?
 Market concentration
 Competition reduction
 After-sale product sales
 Increased focus on product-specific ads
VII. WAYS TO GAIN COMPETITIVE
ADVANTAGES
1. Foster a Positive Corporate Culture:
 Create a work environment where employees
feel valued and supported.
 Boosts employee morale, productivity, and
customer service.
 Examples: Google (autonomy), Jollibee
(teamwork)
2. Identify Untapped Niches:
 Capitalize on underserved market segments
for innovation.
 Tailor offerings to meet specific needs and
preferences.
 Examples: Uniqlo (quality/minimalist designs),
Potato Corner (diverse flavors).
3. Understand Your Ideal Customer:
 Deep understanding of target audience
demographics and behaviors.
 Tailor products, services, and marketing to
address customer needs.
 Examples: Apple (premium brand image),
Mercury Drug (healthcare needs).
4. Highlight Your Strengths:
 Leverage unique capabilities to differentiate
from competitors.
 Build trust and loyalty among consumers.
 Examples: Coca-Cola (Iconic Marketing),
Goldilocks (Rich Heritage), Greenwich Pizza
(Thin crust)
5. Craft a Unique Value Proposition:
 Communicate unique benefits and value to
customers.
 Resonate with customer needs and preferences.
 Examples: Mang Inasal (Unli-Rice), Starbucks
(Customized Drinks).
6. Reward Behavior Aligned with Your Mission:
 Incentivize behaviors that align with brand
values.
 Foster customer loyalty and engagement.
 Examples: Amazon (Prime Membership), SM
Supermall (Reward Points), Shopee (Coins).
VIII. PROBLEM OF SUSTAINABILITY OF
COMPETITIVE ADVANTAGE

COMPETITIVE DILEMMA

 “Competition in a given market increases, the

profits in that market will decrease.”
 Customer Expectation

- If the features of the new product or benefits

of the new service are not sufficiently better,
customers will perceive the deceit.
- If the features of the new product or benefits
of the new service are sufficiently better,
customers will expect even more.
IX. COMPETITIVE ADVANTAGE VS.
COMPARATIVE ADVANTAGE

COMPETITIVE ADVANTAGE

 factors that differentiate the products and

services of a company which they use to
surpass their competitors.

COMPARATIVE ADVANTAGE

 firm's ability to produce a good or service more

efficiently than its competitors which leads to
greater profit margins
 products that can be produced more cheaply or
easily than other companies