Competitive advantage and
marketing
Szabó Virág Noémi
Research methods 2022-12-11
Word count: 1565
TABLE OF CONTENTS
Introduction ..................................................................................................................... 3
Literature Review: Competitive Advantage & Marketing................................................... 4
Competitive Advantage: What it is? .......................................................................................... 4
Internal and external analysis ................................................................................................... 4
Corporate and customer objectives ........................................................................................... 4
Assessing the Competition ........................................................................................................ 4
Competitive Advantage and Marketing: What is the link? ................................................. 5
Competition ............................................................................................................................. 5
Competitive Advantage and Marketing: What should a marketing manager do to increase
competitive advantage? ................................................................................................... 5
Conclusions ...................................................................................................................... 6
Bibliography ..................................................................................................................... 7
INTRODUCTION
In this essay I will attempt to give an insight on what competitive advantage means by definition. After
a literature review, a deeper analysis on competitive advantage will be carried out by looking into factors like
internal and external analysis and objectives of the companies and well as the customers will be introduced.
Further on, the relationship between competitive advantage and marketing will be introduced after which some
tools and strategies will be presented that marketing managers of companies can utilize to increase competitive
advantage.
Competitive advantage is constantly sought by every single company for – profit or non – profit.
However, to be able to exceed the competitors and their offered values, companies must constantly monitor
and analyse their competitors, as well as the market as a whole, their target market and must assess the value
offered by them accordingly. An internal analysis must be performed in order to assess and analyse the
company’s capabilities, strengths and weaknesses and the marketing manager has to work out a plan on how to
start approaching competitive advantage considering both internal and external factors.
LITERATURE REVIEW: COMPETITIVE ADVANTAGE & MARKETING
COMPETITIVE ADVANTAGE: WHAT IT IS?
Competitive advantage by definition can be anything that gives a business an advantage over its
competitors, helping it attract more customers and increase its market share. A competitive advantage can take
three main forms. Firstly, cost advantage or cost leadership, when producing a product or providing a service at
a lower cost than other competing companies. Secondly, the advantage of the offer or differentiation when
differentiating a product by adding features that are highly appreciated by customers therefore, they choose a
specific product or service over the competition because of the added benefits. Finally, niche advantage or focus
strategy, when the firm is simply able to serve a specific market segment better than anyone else. (Wen-Cheng,
Chien-Hung, & Ying-Chien, 2011) Excelling in at least one of these three categories while maintaining a
competitive position in the other two places a company in a position of strength relative to its competition. If a
company only performs averagely in all three categories, it will not stand out in the market. It then risks
underperforming and even failing.
INTERNAL AND EXTERNAL ANALYSIS
To achieve a strong fit with the environment, businesses may need to make strategic changes. A strong
firm-environment fit will enable greater performance. As a result, a company needs to be dynamically capable
of reconfiguring its internal and external skills in response to environmental changes (Teece et al., 1997). The
organization needs to be ambidextrous in order to create dynamic skills. The ability to effectively identify
changes in the external environment and act on these opportunities and risks needs managers to manage two
crucial responsibilities. Social, technological, and ecological changes have been taken advantage of by businesses
like Facebook, Tesla Motors, and Whole Foods to their own competitive advantage. According to Colby and
Dobni (2015) within an internal analysis factors like the company’s processes, its leadership, knowledge
management and resources should all be taken into consideration.
CORPORATE AND CUSTOMER OBJECTIVES
In order to be able to develop a sustainable and successful competitive strategy, it is crucial that the
strategy must meet the objectives of the company. A company needs to offer a clear benefit to its target market
that is superior to what the competitor has to offer in order to have a competitive edge. The true benefit that
the firm’s good or service offers must be clear. Customers must need it, and it must provide genuine and sensible
value for them. Business owners must also keep up with any new technologies and developments that have an
impact on their product and their market in general.
Understanding customer needs, wants and expectations as well as identifying their pains and promblems is a
crucial first step. Next the firms should develop solutions to solve the problems and pains of the customer that
are next needed to be tested by potential customers. Finally in the implementation phase processes and
deliverables should be defined.
ASSESSING THE COMPETITION
According to Kim et al. (2012) recruitment of trained and skilled staff significally improves competitive advantage
of the firm and differentiation among other industries. In other words, a well planned marketing strategy creates
a positive brand identity that will give extra value to the customer over the competition. When analysing the
competition factors like the target customer’s perception of the competition and the competition’s desired
perception by the target customer must be taken into consideration (Kahn, 2009).
COMPETITIVE ADVANTAGE AND MARKETING: WHAT IS THE LINK ?
An industry's weaknesses can be ascertained by using Porter's Five Forces, a model that identifies and examines
five competitive forces that affect every business. Using This marketing tool the link between competitive
advantage and marketing will be presented using Porter's Five Forces to Create Competitive Advantage. Porter
names five competitive forces that pose a challenge to any company. They make it feasible to gauge how intense
competition is and, more importantly, to defend against it. These key traits may serve as motivation for the
company as it develops its differentiating strategy. They create a framework for analysis of the ecosystem of the
business that can aid in making decisions to get a clear competitive advantage. Porter identified five basic forces,
which are as follows:

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New competitors (or potential competitors) - Depending on the entry barriers to the market, this is a
threat (technology, regulations, investments, etc.) The threat of new competitors is lessened by niche
placement.
Products that can be substituted - They prevent price hikes. They are what? What types of brands and
traits? They enable one to consider adjustments.
Customers or buyers’ bargaining power - The more they purchase, the more able they get to negotiate
product specifications and costs.
How many suppliers are there, and what is their purchasing power? their importance? Optimizing the
control of costs, delivery schedules, packing requirements, etc. is at issue here.
Rivalry and the ferocity of direct rivalry - Competitive forces are influenced by the size of the business,
its industry, the expansion of the market, and the uniqueness of its offering. This intensity is quantified
by the penetration or saturation rate. Strong product growth and market expansion both diminish
competition differentiation. (Porter, 2008)
COMPETITION
Examining competitive positioning is a method that can be used to to identify attributes that are important to
the consumer of the product or the user of the service. It is then a question of determining the best of its
competitors on each item and evaluating its performance between 0 and 10, 10 being the maximum score. The
company can then proceed in the same way with your own brand and compare the scores, that of the best
competitor on each item and yours. This simple method makes it possible to very quickly identify its competitive
advantages, as well as its weaknesses.
COMPETITIVE ADVANTAGE AND MARKETING: WHAT SHOULD A MARKETING
MANAGER DO TO INCREASE COMPETITIVE ADVANTAGE?
Marketing and competitive advantage are closely intertwined; as a result, a marketing strategy should
be developed by following a series of logical processes. A marketing manager should constantly evaluate internal
operations and client goals. There are certain things that Marketing managers can do to create competitive
advantage.
capturing a new market segment. If all of the competitors are offering a low-end product at a good price, then
chances are that certain customer segments in your target market are unhappy. Among them are those who
want a luxury product. Offering them such a product and benefit from this competitive advantage. Tesla was
the first manufacturer to offer premium electric cars. It also works the other way around. We can take the
example of the car manufacturer Dacia, which was one of the first to offer very low-end cars.
Creating a strong online presence: A good and active online presence is a must in 2022. There are certain
industries in which actors are, in general, quite bad at mastering digital tools. For example, social media activity,
an up to date, easy to use website and landing page can make a difference, as they make a business look legit
and trustworthy. For example, some businesses often have very basic websites or do not have one at all and do
not work at all on their organic referencing with search engines. If there is a new business in the market, the
marketing manager can easily take advantage of this gap to build a competitive advantage.
Coming up with an innovation: In all industries, the companies with the current innovations are always the ones
driving the entire market as everyone else in going to eventually copy them one way or another. Coming up with
an innovative solution to the target market’s wants and needs is an excellent and effective way to create
competitive advantage. New and innovative products can be marketed for more, and are generally more
desirable by the customers if positioned correctly.
CONCLUSIONS
Due to the everchanging environment businesses are operating in, it is essential for a company’s
survival to create competitive advantage and differentiate itself from the competition. This is especially
important in todays rapidly changing, digital world where everything is accessible to billions of people non – stop
thanks to the internet. There are several strategies to drive competitive advantage, some of which, like Porter’s
five forces, internal and external analisys and differentiation were discussed in this essay.
BIBLIOGRAPHY
Colby, E., & Dobni, C. B. (2015). Innovation – the Next Level of Sustainable Competitive Advantage for Your
Organization , and YOU ! Workforce Solutions Review, 6(5), 22–26.
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Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic
management journal, 18(7), 509-533.
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Management Awareness, 12(1), 21–39.
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competitive advantage, marketing strategy, and corporate image, Journal of Business Research, 65: 1612-1617.
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Porter, M. E. "From Competitive Advantage to Corporate Strategy." Harvard Business Review 65, no. 3 (May–
June 1987).
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Porter, Michael E. "The Five Competitive Forces That Shape Strategy." Special Issue on HBS
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Wen-Cheng, W., Chien-Hung, L., & Ying-Chien, C. (2011). Types of competitive advantage and
analysis. International Journal of Business and Management, 6(5). doi:10.5539/ijbm.v6n5p100
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