A Guide To Understanding Sustainable Advantage (With Examples)

We all know how competitive and repetitive the market is, from thousands of similar candles posted on craft sites to dozens of off-brand chip clones in the grocery store.

No wonder companies struggle to stay ahead.

However, there are ways that businesses can stand out from the crowd. It’s all about having the right strategy, so they can maintain a sustainable advantage. In fact, a sustainable advantage is one of the major keys to business success.

But, why? Well, to answer that, this article will address what exactly a sustainable advantage is, why it’s important, and how you can take steps to create one in your business.

What Is Sustainable Advantage?

For businesses, a sustainable advantage is a competitive strategy used to maintain a competitive advantage. At a base level, a competitive advantage allows a business to beat out the competition by having access to natural resources, highly skilled labor, an ideal location, and access to new technology.

However, these things aren’t always available or achievable, and when they are, they might not last forever. That’s where sustainability comes in.

To sustain these advantages, businesses need to consider three more potential advantages:

• Their current size in the desired market

• The amount of access they have to resources or customers

• Their ability to restrict a competitor’s options

Keep in mind that these advantages aren’t mutually exclusive. Even a business with a monopoly can struggle with finding resources, just as a small company with abundant resources can struggle to deal with massive competitors.

Overall, businesses need to find ways to take whatever advantages they have and stretch them out over time. And, because resources and market trends are usually finite, having a sustainable advantage requires businesses to mix and match strategies.

Strategies for Maintaining a Sustainable Advantage

To maintain a sustainable competitive advantage, businesses have to get clever. This can come in the form of a few different strategies:

• Having brand loyalty. What do big companies like Apple and Amazon have in common? They have a lot of brand loyalty. This means that customers keep coming back for more because they trust and buy into the brand the company provides.

• Consistent product innovation. Consider Apple’s ability to completely change the landscape of computer and phone use in the late 90s and early 2000s. Innovation can propel a company forward. However, it is still tricky to maintain innovation, as well as deal with all of the copycats that follow.

• Claiming intellectual property. One of the main ways to combat copycatting, intellectual property, is the term for a company’s ability to patent and possess certain rights over the products they create. That way, they can prevent other companies from legally duplicating their formulas, products, designs, or processes.

• Marketing. You probably remember the Budweiser Super Bowl Commercials. Businesses have to use eye-catching marketing tactics to pull eyes away from the competition and onto them.

• Using proprietary information. This entails a company’s ability to gather knowledge that will aid in generating value. For example, many online businesses rely on cookies that collect information from buyers, which can help them target products and ads.

• Creating a network effect. Also related to marketing and proprietary information, the networking effect dictates that the value of products will increase when more consumers buy them. This is because there is a higher demand for that product.

• Being a low-cost provider. Though this isn’t very easy to achieve, companies like Walmart are so successful because their massive scale gives them access to resources. This, in turn, allows them to have prices lower than all of the competition.

Real-Life Examples of Sustainable Advantages

To further understand the concept of successful sustainable advantages, here are some real-world examples of companies that have them:

1. Walmart consistently maintains a sustainable advantage due to the size and scale it already has. This allows the company to have access to a plethora of resources like cheap labor, manufacturing supplies, and more.

   Maintaining that, Walmart can produce or purchase its products at an extremely low cost. Thus, Walmart’s prices are lower than all of its competitors and attract more customers.

2. In the beginning, Apple’s sustainable advantage was gained through innovation. The company basically invented the idea of the personal computer with the Macintosh and then re-invented the phone with the iPhone.

   However, over time the company has relied less on innovation and more on brand recognition and loyalty. Today, people associate the iPhone with being a consistent, popular product that needs to be regularly updated. With that, Apple is still able to maintain a sustainable advantage, even if its strategy has shifted over time.

How to Develop a Sustainable Advantage

While all of the methods mentioned will help foster a sustainable advantage, that doesn’t mean they’re easy or foolproof. As a small business, you might feel completely overwhelmed or outdone by your competition. However, there are steps you can take to develop a Sustainable Advantage.

These include:

1. Research your market. Before you create a product or even a business plan, look for niches that aren’t well serviced by your potential competitors. If you can find an area of the market that’s lacking, you can target your products in that direction.

2. Analyze your customers. If you know that customers are interested in sustainable packaging, you can gain a positive reputation and increase the value of your product by implementing that. Actions like these can give you a competitive edge.

3. Create a brand. Now that you understand what customers want, you can work toward creating a brand. Consider the graphic design of your product or service, as well as quality and pricing. Your research and customer knowledge should play a big role in this step.

4. Know your strengths. Always understand what your business excels at and what you can do better than the competition. Don’t sell yourself short! If you know you have an innovative, quality product, value it accordingly.

5. Carry out a business plan. With all of these steps in mind, you can devise and carry out a business plan that covers who you’re selling to, why they should buy from you, and what you excel at. Knowing the cause and effect of these factors will enable you to jumpstart your sustainable competitive advantage.

Example of Developing a Sustainable Advantage

To outline the steps above in a more concrete way, consider the following example:

Charlie wants to create a candle business, but he doesn’t know how to compete in such a saturated market. However, he follows the steps above.

First, he researches the market. There are several scents that are already extremely common, such as lavender or sage citrus. He determines that he needs to create his own custom scents in order to stand out.

Additionally, customers seem to indicate that they want eco-friendly soy wax candles instead of chemically made paraffin ones. There’s also current interest in cottages and forests. Charlie determines that it would be best to lean into the customer’s desires.

With this information, Charlie is able to create a brand: English Garden. It’s a mix of lilacs, lavenders, thyme, and other scents. This scent applies what is popular in the market and adheres to customer interest while still being new and original.

Charlie also knows that his connection to a local fragrance producer can give him an edge, as he’s able to buy fragrances for a lower price. In turn, this will allow him to charge lower prices than his competitors.

With all of this information, Charlie is able to jumpstart his business with a competitive advantage, which can develop into a sustainable advantage.

The Limitations of Sustainable Advantage

Of course, the catch-22 of sustainable advantage is that any advantage is never sustainable forever. What’s popular today may fall into obscurity tomorrow, and vice versa. Or, the resources you have today may run dry a year from now.

Every advantage has its limitations.

That’s why it’s especially important to diversify your business’ advantages and change them over time. Even if Apple isn’t as innovative as it once was, it still maintains a competitive advantage through brand loyalty.

Therefore, the key to making any advantage “sustainable” is by accepting that it won’t be forever and having a few backups.

Final Thoughts

Having a sustainable competitive advantage is an important part of any successful business. However, a sustainable advantage isn’t gained from any one source.

Instead, businesses have to constantly evaluate their market in order to strategize how they can stay ahead. It can come from brand loyalty, innovation, market knowledge, and more.

In the end, only a combination of several factors implemented correctly can sustain an edge over the competition over time.

Author

Jack Flynn

Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.