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What Is a Sustainable Competitive Advantage?

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  • Written By: Jessica Ellis
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  • Last Modified Date: 31 October 2014
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A sustainable competitive advantage is a long-term strategy or process that allows a business to remain ahead of its competitors. Unlike short-term advantages, such as being the first to market a new type of product, a sustainable competitive advantage may be built into the fabric of a business, and will help maintain its dominance over years and even decades. The development of such an advantage often takes dedicated effort, the ability to consistently innovate, and even some luck.

One of the most likely sources of a sustainable competitive advantage is the ownership of a patent or trademark. Patents permit only the owner to create and license a certain product, meaning that customers can only buy it from the original source or licensed distributors. One of the keys to making a patent a sustainable advantage, however, is the inability of competitors to closely imitate the product with similar, though not infringing, versions.

The people that work at a company may be as important to creating a sustainable competitive advantage as the products the business creates. Being able to attract and retain the best minds in the field is a surefire way to create a creative and innovative environment that can benefit every part of the company. By creating a working environment that stimulates and interest workers, a company not only benefits from their best abilities, but also prevents competitors from having access to the same individuals.

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How the business treats the customer may help create a sustainable competitive advantage that widens customer loyalty and creates lifelong consumers. In addition to offering great customer service, a business can develop this advantage by considering the convenience of the customer in all decisions. For instance, locating storefronts in an easily-accessed, central area with sufficient parking can consistently draw more customers. Having a wide selection of products, offering customer incentives such as rewards cards, and making returns and exchanges easy may also help develop a strong consumer base.

To sustain an advantage, a business must be able to correctly read the market and move with the times. Many successful companies consider market research and product development to be vitally important components of business, and rely on R&D to provide the direction and innovation to propel the company's success into the next generation. Even on a small business level, understanding changing trends in fashion, technology, and social awareness can help direct future production.

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pleonasm
Post 4
One of the more creepy and incredible sustained competitive advantages that I've heard of is something that researchers discovered while looking at brain activity.

They showed people trademark logos and often, if it was a brand that the person identified with, the brain would light up as though seeing a loved one. The brand that did this most often was Coke, probably because of their extensive marketing campaign. You just can't compete with being able to re-wire a person's brain so they like a brand more.

pastanaga
Post 3

@Iluviaporos - I have a supermarket near me that's turned that into a sustainable competitive advantage though. They keep their overhead prices as low as possible by doing things like not providing plastic bags (or charging for them) and selling some things in bulk and so forth. So they can actually often keep their prices lower than their competitors and also build brand loyalty. They market themselves as being concerned with environmental sustainability, but I think it's really more about trying to get more customers.

lluviaporos
Post 2

I guess an example of an advantage that isn't sustainable is what they call a "loss leader" in stores. You see this particularly in supermarkets and department stores.

They basically pick a well known item, possibly one that's new or trendy, and they cut the price to the point where they aren't earning money off the sale, and might even be losing money.

Because they have the price so low, people will, in theory, flock to the store in order to buy the item and will buy other things at the same time.

But this is definitely a short term competitive strategy to get an advantage over other stores on big spending days of the year.

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