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Differentiation: is an extremely effective strategy when executed the right way, even though it is a less tangible and easily defined one. One of the strongest competitive advantages is the network effect which I explained earlier. One of the most famous differentiations of competitive advantage is the one done by Michael Porter. This will make them more inclined to continue paying the premium membership. Network effect: this is a strategy that when more people use a certain product it becomes more valuable to the people. This gives them power over their competitors and imposes some barriers to entry for smaller companies. They are not protected by law, but they are kept a secret. Businesses can capitalize big time on their brand. This means that they can sell the same products as competitors for a lower price. They created a brand that connects intimately with the customers forming emotional attachment so customers want to have it no matter the cost. As a result of that, the prices for the products are low compared to the competitors due to the relatively low production costs. Read next: What is Green marketing and how you can do it Types of Competitive Advantage Different kinds of literature give a different number of types of competitive advantage. This favorable position eventually results in more customers, and with that higher profits. As a company, it experiences very strong loyalty from its customers and the way they created that can be considered of their competitive advantages. They should be clearly defined and understandable to customers. This is one of the highest forms of competitive advantage and can bring obviously a very big profit to the company. Relevant: Read about some of the top competitors of Amazon here 2. Money: money always means power. With this offering, Amazon did two things. The product that offers top speed is their Amazon Prime membership which guarantees people two-day shipping on all the products that are eligible for the Prime membership. They have an enormous amount of shipments per day which makes them one of the top valuable companies in the world. Know-how: some special knowledge or abilities of the people that work with one company can also be a great competitive advantage for that company Operational processes: effective operational processes that a certain company has can make it more effective and in the end produce more cost-effective products compared to the competitors Risk Management: a competitive advantage can be also the ability to do great risk management which means identifying and eliminating the potential risks better than the competitors. Competitive Advantage Examples All of this so far has been theoretical with few small examples here and there. Besides these ones, there are a lot of different strategies that a company can use to create a competitive advantage. Firstly, they condition the customers in a way in which even if they intend to try the Prime membership only once after receiving their products in two days they will not be willing to wait again five to seven days for standard shipping. What they offer to their customers is a high efficiency, accuracy, and the biggest perk of all- speed. Unique Selling Propositions: these are usually the base for competitive advantage as I previously mentioned. That is how paying attention to the customers and the design to affect the user experience and construct loyal relationships is playing out for Apple. That is exactly the competitive advantage that Amazon has and that made the company one of the richest ones in the world. To create this type of a competitive advantage you need: Deep knowledge of your target market: you need to know how your target customers think of, feel about, and need from your brand. Your strategy can consist of one competitive advantage, or it can consist of multiple mixed strategies. Market segmentation: is basically a combination or a cross between these two previous strategies. Next, check out these other posts:.{/INSERTKEYS}{/PARAGRAPH} Additionally, the constant innovations, personalized content , advertisement model , and many other smaller things are just adding new dimensions to their competitive advantage strategy. Anyhow, you have to think deeply about why your offering is special and why would the customers choose your product over the others on the market. Brand: one of the biggest competitive advantage strategies out there can be said to be the brand. Then, analyze their products, prices, strategies, etc. Also, potential customers that would start buying if you offered them a good competitive advantage. Put yourself in their shoes and try to look at this from their perspective. In order to connect the theoretical knowledge with a real understanding of what competitive advantage is and how powerful it can be for a company, I will dig into some examples next. That is how you can define your points of differentiation and start creating a successful competitive advantage strategy. Everything about the apple products is a unique experience, a sensory pleasure. Did you learn some new things about competitive advantages? Also, offering a variety of products can be a competitive advantage by itself. It refers to the ability of a business to create a good or service, that is very difficult to replicate and fulfills needs. That is why many people still have a profile because they are afraid of missing out. As such, it enjoys a strong competitive advantage over the competitors. Intellectual property: these are the trademarks, patents, industrial designs that your company has and are protected by law and that stops other companies from using them giving you the ultimate competitive advantage Business connection: sometimes the connections and collaborations that a company has make that company unique compared to the competition and that can be a competitive advantage too. Barriers to entry: there are many barriers to entry that are imposed to the entering businesses by the old businesses like access to suppliers, trademarks and patents, etc. It basically targets specific segments of the market that are not yet tapped by other larger firms. According to him, there are three types of competitive advantage strategies and those are: Cost leadership : this means that a firm creates competitive advantage by creating economies of scale with very efficient operations, and producing large quantities of product. Effective brand strategies lead to customer loyalty which means that they are ready to pay more than needed to purchase the branded product. For example, a non-disclosure agreement for the employees to not disclose the franchisee recipe. Facebook Facebook is the largest and most used social media platform in the world. Reputation and Quality : if the customers, partners, the general public has a high opinion of your products and perceives them as high-quality products than that is also a competitive advantage Customer satisfaction: if your customers are all the time satisfied and pleased by how they are treated by your company then they will always prefer you over your competitors. Secondly, in this way more purchases are encouraged since the shipping time is actually one of the main reasons why people decide not to purchase something online. Variety of products: if a certain company offers a wide variety of products then they can achieve efficiencies like reduced costs. Trade secrets: these are secrets that only your company knows and the competitors have no idea of them. {PARAGRAPH}{INSERTKEYS}Competitive advantage is a certain attribute of a company that gives the company a favorable position on the market in comparison to the competitors. Apple Apple is also one of the richest companies in the world and one of the most famous brands. From the weights of the products to the boxes they come in. Deep knowledge of the competition: you have to know who is your present competition and who is an upcoming competition in the future. Another big competitive advantage is the deep pockets of the company which I also explained previously.