Part 5. Product Innovation and Management
Published Online: 15 DEC 2010
Copyright © 2011 John Wiley & Sons, Ltd. All rights reserved.
Wiley International Encyclopedia of Marketing
How to Cite
Sarin, S. 2010. Competitive Advantage. Wiley International Encyclopedia of Marketing. 5.
- Published Online: 15 DEC 2010
Competitive advantage is the relative advantage one business has over another that is sustainable and translates into a benefit that is important to target customers. There are two basic types of competitive advantages: cost leadership and differentiation. When combined with the scope of a firm's activities, they give rise to three generic business strategies: (i) cost leadership – where the firm seeks to become the low-cost producer in an industry; (ii) differentiation – where the firm seeks to position itself uniquely along one or two dimensions that the customer values; and (iii) focus – where a firm tries to optimize its strategy by selecting a segment or a group of segments in the industry, and seeks to achieve competitive advantage in the target segment(s). Suggestions for sustaining these competitive advantages are explored.
- competitive advantage;
- sustainable advantage;
- generic business strategies;
- cost leadership;