A competitive advantage is the recognition that a company either delivers quality products at a lower cost than the competition or offers support and services at a greater value than the competition, according to the Quick MBA website. Establishing a competitive advantage takes planning and coordination among your departments. The importance of a competitive advantage is what makes it worth the investment of your organization's time and resources.
Developing a competitive advantage means that your brand name becomes recognized in the marketplace as being the best. The advantage of that is the potency that your brand name adds to your marketing effort. Consumers will be interested in hearing about your new product because they recognize your company as an industry leader. In some cases, the consumer does not know why you are an industry leader but is familiar with your reputation. This adds efficiency to your marketing efforts.
As a company's reputation grows as an industry leader, other companies will express an interest in creating valuable partnerships that can improve both companies' standing in the marketplace. The competitive advantage causes developers and vendors to come to your company and express an interest in doing business with you. It increases the options you have to select quality vendors that can help you improve your standing in the marketplace.
When you establish a competitive advantage for your service or support, you can dictate your own pricing. Developing the reputation of offering the best service or support in the industry allows your company to charge more for your offering. If you sell product along with your service, then you can ask for higher prices than the competition because your reputation as an industry leader creates the feeling among consumers that whatever you have to offer is worth the price.
A reputation for being an industry leader creates demand in the markets where you are currently not offering products or services. It is important to plan your company's growth and monitor the marketplace to make sure that you are not expanding too quickly. But it can be a great help to your company's growth efforts when your competitive advantage creates a customer base for you in areas where you are not currently involved.