Sustainable Competitive Advantage: How to Gain It and 10 Examples

The first thing an entrepreneur wants to do is to start a business and see their idea come to fruition. This idea often comes from looking at competitors and wanting to do better than what they offer. All small businesses want to beat the competition and get the biggest share of customers in their industry.

That is why so many businesses develop the habit of keeping their eye on what other companies are doing in their niche. As such, it’s important to understand the concept of sustainable competitive advantage and what it can mean for your company.

Fortunately, many business tools like Podium have a large selection of tools to help you on your journey to maintaining a sustainable competitive advantage. Whether you need help getting more reviews, running payments, or launching text marketing campaigns, Podium can help. The platform also offers various automation features to help businesses automate their workflows and improve overall efficiency, which can help them maintain a competitive edge.

Keep reading to learn more about the concept of a sustainable competitive advantage, what makes a competitive advantage sustainable, and the important benefits of maintaining it.

What Is Sustainable Competitive Advantage?

Sustainable competitive advantage is achieved when a business consistently outperforms other businesses in the same industry or field. Businesses with this kind of advantage provide their clients with value that is better than the competition.

When this advantage is achieved, your business will stand apart from others in your industry in one or several aspects. It is one of the best ways to ensure your company’s continued growth.

Types of Sustainable Competitive Advantage

Small businesses need to do everything they can to learn about the competition and set themselves apart. From the smallest detail to getting the entire sales team away for a weekend rally, setting your brand apart from the rest in your industry is a full-time job. To help you understand it better, we have outlined the types of sustainable competitive advantage below.

1. Differentiation

Differentiation means tailoring a business strategy in several ways that make it advantageous to use that company over its competitors. These areas may be strategic assets, high-quality products, unique branding, intellectual property, or innovative marketing strategies.

One of the most sustainable examples of differentiation is customer experience. When consumers know that you will treat them well, you enjoy the benefits of improved customer loyalty. This is especially true when they know they will have a better experience with you than your competitors.

Let’s say you own a business selling and repairing appliances. You can differentiate yourself from the other appliance stores by offering unique services like pick-up and drop-off services or extended service warranties. It is one way of establishing a sustainable competitive advantage over your competition.

Another example is when a car dealership decides to expand by offering commercial vehicles. Differentiation occurs when the other local dealerships don’t offer these vehicles. It is an excellent way to make your business stand out and get more attention from potential customers.

2. Cost Leadership

When a business can lower the price for their customers by lowering their overhead or other costs, their clients have pricing power. Many customers admit freely to shopping around for the lowest price. When your business can offer this by cutting costs without affecting the quality of its products and services, you will see an advantage over the competition.

This is a comparative advantage, which means that when a company has lower supply chain costs, its sales margins increase. With this advantage, the customer and the company both win. The customer gets to save money, and the company sees its bottom line increase. The tricky part is that your business needs a strong cash flow if you want this advantage to be truly sustainable.

3. Focus

When a company has a focus advantage, it means they target services, products, or marketing in the desire to work with a smaller subset of their original target audience. They want to focus their efforts on a smaller demographic within their client base.

The focus strategy creates companies that segment their most reliable consumers into niche sub-segments to service them more directly. For instance, if you own a furniture business, you can focus on upscale furniture for vacation homes. In your product research, you might find that this area is underdeveloped and has room for new products to meet consumers’ established needs.

This strategy can create greater brand loyalty through customer satisfaction. For this to be a sustainable competitive advantage, companies must do their research and keep an eye on changing consumer demands. One excellent way to conduct this research is with surveys. This can lead you to products or services your potential clients wish were available.

6 Inspiring Examples of Sustainable Competitive Advantage

Understanding what a sustainable competitive advantage is means getting a closer look at it in action. There are many methods businesses use to establish growth and develop their brand. We’ve listed different sustainable competitive advantage examples below:

1. Continuous Innovation

Continuously innovating new technology is an excellent way of building a sustainable competitive advantage above other companies in your industry. This is when your product development initiatives are ahead of what other companies are doing. Whether you come up with a product that is cheaper or an item that lasts longer, staying ahead of the curve will help to establish your business as a leader.

This can be seen at work with the well-known company Apple. As one of the biggest tech brands in the world, the company continuously aims to make faster smartphones with advanced cameras, more powerful computers, and high-tech watches. The company has built its brand around the fact they are known for having the most up-to-date technology. People feel they can trust the brand and are confident that the Apple products they buy are the most sought-after and most advanced in the market.

2. Exceptional Customer Service

One great way for a company to set itself apart is through superior customer service. This is done by consistently providing your clients with the best experience each time they interact with your business. You should be able to answer their questions and meet their requests whenever possible. If there’s something you don’t currently have an answer for, simply let the customer know you will find out.

Prompt answers lead to problems solved and, therefore, customer loyalty. Listen to any concerns about your products and services and implement changes so your customers are more satisfied with your business. When companies address customer needs right away, they start to gain the trust and loyalty of their customers.

Make sure to offer training programs for all team members who interact with customers. Emphasize being pleasant and encourage a “the customer is always right” mentality. Train your team to look at themselves as the solution to a customer’s issue instead of seeking someone else to resolve it. This will significantly improve the customer service levels your business provides.

You can also improve your customer service processes by automating some customer interactions with chatbots and other AI services. The more easily you can be reached through online chat, phone, or email, the better customer relations you will have. The quicker customers get a response, the more satisfied they will be. This will go a long way to building your brand and establishing it as one that offers excellent customer service.

3. Talent Development and Expertise

One great way a company can help develop a sustainable competitive advantage is to develop the skills and expertise of its team members. Make sure to provide educational opportunities for everyone on your team. Cultivate an atmosphere of team spirit and the desire to gain better skills. You can offer in-house training sessions and integrate gamification to motivate your employees and make the experience more engaging.

It’s also useful to look into third-party certifications your employees can get. The money you spend on continued education will return to your business in droves. As each team member grows and develops, so will your company.

4. Economies of Scale

When companies start to scale, they gain a production capacity capable of manufacturing products for a significantly lower cost than the competition. One excellent example of a company that benefits from economies of scale is Walmart.

Walmart has leveraged economies of scale to differentiate itself and become a leader in its industry. It started as a small grocery store and has expanded to a business that is responsible for employing thousands of people and finding new ways to introduce low-cost products to the market.

5. Proprietary Technology

Creating technology that is copyrighted to your company is a fantastic way of creating a sustainable competitive advantage. Leverage AI and other assistants to understand what problems your industry has that a new product or service can assist with.

Once you’ve developed such products or services, make sure you get them patented and licensed so they are proprietary to your business. This is another opportunity for your company to set itself apart from others and see increased profit margins.

6. Supply Chain Efficiency

When a business has solid partnerships with its suppliers, it can get better prices and source raw materials faster. This gives them an advantage over other companies. This can be seen in the auto industry, where automakers with solid connections get supplies quicker and at a better price point.

In any area where you can develop relationships with your suppliers, you can gain an advantage over your competitors. The benefits can be as simple as your orders getting placed faster or getting credit extended to you in a moment of need.

Benefits of Sustainable Competitive Advantage

When running a company, you need to be detail-oriented and ready to do your research. There may be times when you feel overwhelmed on the path to making your company stand out. This is why we have gathered some crucial benefits of having a sustainable competitive advantage.

1. Long-term Profitability

One of the benefits of maintaining a sustainable competitive advantage is that it allows ample opportunity for more profitability in the long run. You are focusing your efforts on growth, which will be more evident as your business sees higher profits.

When you establish your brand to be separate from the rest through differentiation, it is easier to charge higher prices. Gourmet or organic products are a great example of this. Building your brand in this direction will take effort, but the profits will pay off in the end.

2. Higher Barrier to Entry

Sustainable competitive advantage gives you the chance to raise the barriers to entry into your industry. With higher barriers to entry, entrepreneurs will find it more difficult or even impossible to penetrate the market. This helps reduce competition in your industry and helps protect your market share and profit margins.

3. Resilience During Economic Fluctuations

When you build a solid company that has developed a sustainable competitive advantage, you increase your company’s profitability. This is often done over several revenue streams. Once you start making more money and saving this money for a rainy day, your business becomes more resilient during economic fluctuations.

4. Investor and Stakeholder Confidence

When you create a sustainable competitive advantage, your stakeholders and investors can feel more confident in your company. This means you can continue to count on stakeholders’ support for different business-growing ventures, like opening a car dealership in a new location or a new branch of your furniture store.

How to Achieve Sustainable Competitive Advantage

Learning what sustainable competitive advantage means and getting it implemented are two different concepts. We’ve gathered some useful tips to help you grow your business and stay ahead of the competition.

1. Understand your market and competitors.

One of the best ways of achieving a sustainable competitive advantage is to make sure you research your target market and your competition thoroughly. Collecting data on your target clients is one of the best tools in a small business’ toolbox. It can help you gain a deeper understanding of your customer’s pain points and how you can solve them.

Doing competitor research also reveals successful strategies your competitors use to maintain their share of the market. It might even give you an idea of what their next move will be.

More importantly, you may be able to leverage being the first company to access new markets because of your in-depth market research.

2. Leverage core competencies.

Is your company succeeding at taking care of customers? Do you deliver on your promises to leads and clients? What areas does your business succeed in?

These are the areas you need to focus on and build from. Once you focus on the core areas you’re confident in, you can get a better idea of where you can build a sustainable competitive advantage.

3. Innovate and differentiate.

When you are told to keep an eye on the competition and do research on them, you don’t want to start looking like your competitors. You need to innovate new products and lines of services to set your business apart from the rest of the industry.

You don’t want to follow their lead, but you want to lead the way in terms of product innovation.

4. Ensure continuous improvement and adaptation.

Investing in new products and developing technology will help in keeping your business ahead of your competitors. You need a steady cash flow to be able to do this for your business.

When new products become available, you can expect the market to be flooded with similar products from your competitors. To maintain your competitive advantage, you need to be able to push product development and innovation regularly.

Stand Out from Competitors with Podium

Whatever strategy you choose for establishing a sustainable competitive advantage, Podium can help by automating business processes and workflows, improving productivity, and ultimately helping you convert more leads into money.

For instance, you can use Podium to reach out to more leads and customers and send one text that drives thousands in revenue. Connect with leads in seconds using AI and send personalized messages so you win against the competition. And use Podium’s Inbox and CRM to gather customer information in one location so you can improve the customer experience.

Hundreds of thousands of businesses use Podium daily to attract more leads, improve lead engagement, get more reviews, and, as a result, make more money.

Sustainable Competitive Advantage FAQs

We have gathered some of the more popular Q&As about the concept of sustainable competitive advantage to help you get started.

Q: What are the four factors of sustainable competitive advantage?

A: Sustainable competitive advantage can be divided into four factors such as product differentiation and innovation, effective supply chain management, organizational responsiveness, and cost leadership.

Q: What are the 8 sources of sustainable competitive advantage?

A: There are 8 main sources of a sustainable competitive advantage. These are scale, location, intellectual property, brand loyalty, proprietary information, innovation, lock-up supply, network effects, and innovation.

Q: What is an example of a sustainable competitive advantage strategy?

A: The fact that customers select Nike, Coca-Cola, and Apple because these are perceived as quality brands that everyone enjoys is an example of sustainable competitive advantage. Filing copyrights, patents, and trademarks is another example of businesses establishing a sustainable competitive advantage.