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What Is The Difference Between Competitive Advantage And Sustainable Competitive Advantage? Our Guide Here

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In the business world, knowing how to stand out against the crowd and reach more loyal customers is important for long-term success, if you’ve been researching your competitors, you might have come across the terms competitive advantage and sustainable competitive advantage and wonder what the difference is.

Competitive advantage is when you have short fleeting kinds of advantages over your competitors and sustainable competitive advantage is when you have a long-term advantage over competitors which is longer lasting.

In our short informative guide, we will take you through the definitions of competitive advantage and sustainable competitive advantage, features which show differences as well as the pros and cons when it comes to excellence in business.

What Is Competitive Advantage? 

Competitive advantage is where a business has a direct comparative advantage over their direct competition, this could be by offering a clear cost advantage to their products for customers by having the lowest prices in the industry. 

In order to have a comparative advantage not only does the customer service of the business have to be strong but they have to be very tuned in to their target audience updating their innovative products all the time in order to stay on top.

Reinforcing the message is what breeds excellence in business with a competitive advantage. 

We’ve listed the types of competitive advantages down below. 

Differentiation 

Differentiation in a business means the company is offering better benefits than any other. They can either do this in three ways, innovation, customer service, speed of delivery or even customer service.

Focus

The focus strategy gives a differential advantage since the business will focus on a smaller niche of customers and therefore attract more customers who are willing to pay more since the company feels more personable. 

National 

Competitive advantage can also be used short term in countries, for example, China exports low costing products at a fairly good standard, they can do this because their country pays workers less since it is developing. 

Individual

Individual competitive advantage can be used for people too, for example, if you are an employee you can have a competitive advantage over your other employees by being consistent in showing your advantages to your employer and climbing the ladder.

Cost Leadership 

This means the business is providing high-value products at a lower price, many companies can do this by paying their employees less or buying inventory in bulk in order to get fairer prices.

What Is Sustainable Competitive Advantage? 

Sustainable competitive advantage is more than temporary popularity, this is where the business has a long-term competitive advantage over the other business, this could be due to many factors like low prices, good value product features or customer service. 

Sustainable competitive advantage can be achieved with the same types of competitive advantage above when delivered consistently but also leans on these three ways down below. 

  • Customer experience – Brand loyalty is important for sustainable competitive advantage, you need a long-term strategy to keep meeting the demands of your customers in the long run and keep them happy. 
  • Market rivals research – In order to keep growing profit margins and have an edge over your competitors, market analysis in business is essential to keep on top in the long run. It gives a first-mover advantage when entering a new market. 
  • Developing new products – Consistent product development advantage is super important, product innovation keeps customers engaged and gives a long-term advantage over other brands.

Differences Between Competitive Advantage & Sustainable Competitive Advantage

Sustainable advantage and competitive advantage are very similar but do have a lot of differences which makes sustainable competitive advantage often more desirable than a standard comparative advantage. 

Explicit Knowledge Vs Tactic Knowledge 

Explicit knowledge is great for an immediate competitive advantage over other businesses, tactic knowledge is more desirable in the long run however, this could be design knowledge or skills which are hard to replicate from other businesses.  

Tactics Vs Long-Term Strategies

Tactics are very visible to competitors and can be easily copied, they give a direct advantage over other businesses, long term strategies give a sustainable advantage which is much harder to copy therefore giving a differential advantage.  

Innovation Culture Vs Resistance Culture 

A highly political business where the mission is more concrete will have less advantage over an innovation culture which consistently changes and adapts overtime. 

How To Identify Your Competitive Advantage

In order to have contestable advantages over your competitors, you need to know how to run a market analysis so that you can adjust your strategy and goals. 

There are two ways you can perform an analysis down below. 

  • USP analysis – This stands for your unique selling proposition, it makes you stand out from your competitors.
  • Core competence analysis – This analysis means being relevant, not something you can copy and be broad. It focuses on what the customer does well and what others do not do well.

Finding The Advantage 

  • Identify competitors – First, find which competitors are offering the same products or services as you, this will normally be around five competitors, it’s normally the effect.
  • Rank yourself – Using a five or ten list, rank yourself and your competitors.
  • Find what you do well – List what you do well compared to these competitors and what you do better than everyone else then list what you need to improve on.
  • Make improvements and market yourself – Following this last step make improvements accordingly, if you have to raise the quality of your products you might have to raise the price too.

Tips To Achieving A Sustainable Competitive Advantage

Since a sustainable advantage is more desirable in your business than a competitive advantage you might be wondering the best way to achieve it without falling back into a competitive advantage. 

You Are Not The Target 

Stay close to your target and do your research, know that what your target expects is not always what you expect, therefore try to put yourself in the buyer’s position to make the right services.

Find Your Niche 

Emotional connections only happen when you can connect with your target audience, trying to target everyone will not work and make it much harder to compete with lots of businesses.

Understand The Needs Of The Buyer 

Understand how your target audience views the world, what motivates them and their personality. This allows you to adjust your products accordingly. Build emotional connections not functional connections to help them last longer.

Frequently Asked Questions About Competitive Advantage & Sustainable Competitive Advantages

What are contestable advantages in businesses?

Contestable advantages in a business could be lower prices, increased incentive to meet customer’s demands or for firms to cut costs.

Does product innovation give a sustainable competitive advantage? 

Product innovation is typically seen the most in competitive advantage not a sustainable advantage unless built into a long-term strategy meeting customer’s needs.

What gives a cost advantage in business?

This could be paying workers less with a higher profit margin or selling products at a higher price with better quality products in order to get a cost advantage. The more loyal your customers feel and the better the emotional connection you have then the higher you can raise your prices.

Final Words

To conclude, competitive advantage is when your business has an advantage over others which is more fleeting, this could be by releasing new products, sustainable advantage means the company is consistently beating its competitors over a long time by responding to the needs of the target audience and having a more loyal emotional connection.


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