In today’s dynamic marketplace ‘sustainable competitive advantage’ is often considered a myth largely because, in this rapidly changing business landscape, it’s nearly impossible to maintain a single, long-term advantage due to factors like technological disruption, shifting consumer preferences, and competitor innovation.
Some of the key factors that contribute to this challenge include:
Market Dynamics: The market is constantly changing with new competitors emerging, technologies evolving, and customer needs shifting.
Imitation and Innovation: Competitors can often replicate successful strategies or develop new and disruptive innovations that quickly negate an existing advantage.
Focus on Short-Term Gains: The pressure to deliver immediate results can lead companies to prioritize short-term strategies over building long-lasting competitive advantages, leaving them susceptible to competitive disruption.
Fast Scalability: Disruptive innovations can introduce new solutions to your customers and scale quickly through modern marketing methods. Your market can disappear quickly if you’re not responsive. Think of taxi services and Uber/Lyft, hotels and Airbnb, and Blockbuster Video and Netflix, as examples.
The Illusion of Permanence: The term ‘sustainable’ implies a static advantage that will remain forever, which is not realistic in a dynamic business environment. Don’t rest on your current advantage, it could be neutralized quickly.
Today it seems that once an advantage is identified by one company, it is quickly recognized and duplicated by others, rendering the advantage lost and the market headed back toward commoditization. To be successful and achieve long-lasting differentiation, companies must constantly adapt and evolve to stay ahead, rather than relying on a static advantage that lasts indefinitely.
This article is part of the Sentinel Solutions local marketing newsletter. You can sign up here to get local marketing thought pieces sent to your inbox each week.
Historic examples of sustainable competitive advantage lost include Eastman Kodak failing to adapt to the digital photography revolution despite starting from a position of technological, market, and brand dominance. Blockbuster Video not keeping up with streaming services like Netflix despite significant market penetration and reach; and Toys “R” Us struggling to evolve and compete with online retail platforms like Amazon.
It was once believed that barriers to entry, obstacles such as start-up costs, economies of scale, complex regulatory hurdles, intellectual property, and switching costs, that make it difficult for new business to enter a market, would protect companies for long periods of time.
These types of market protections are generally considered easier to overcome in today’s business environment primarily due to the rapid advancements in technology which allow for lower start-up costs, easier access to information, and the ability to reach customers globally with less infrastructure investment. This, of course, depends on the industry and specific market conditions involved.
While achieving truly sustainable competitive advantage is increasingly difficult in today’s rapidly changing business landscape, it is still possible, but requires a constant focus on innovation, adaptation, and a deep understanding of customer needs with a strong emphasis on factors like brand reputation and continuous improvement to maintain a leading edge over competitors.
What can you do in your business to strive for sustainable competitive advantage?
- Focus on Innovation: Continuously develop new products, services, and business models to stay ahead of the curve.
- Build Strong Brand Reputation: Cultivate a strong brand identity and positive customer perception through consistent quality and values.
- Develop Unique Capabilities: Identify and leverage core competencies that are difficult for competitors to replicate.
- Prioritize Customer Centricity: Deeply understand customer needs and tailor offerings to meet those needs effectively.
Mostly, it’s imperative to embrace agility. Be flexible and adaptable and quickly respond to market changes and new opportunities. Today’s competitive advantage is less about sustaining long-term advantage, but rather, more about your adaptability to quickly respond to changing market conditions and competitive actions. Competitive advantage needs to constantly evolve.
A good example of a company that has successfully evolved its competitive advantage is Amazon. You may recall Amazon was initially focused on online book sales but has since expanded to become a dominant force in eCommerce, cloud computing (Amazon Web Services), entertainment, food, prescriptions, and has even developed into an online advertising platform, among other evolutions, consistently adapting to new market trends and consumer needs through innovation and disruptive strategies.
To keep your local business viable and relevant, you too can achieve sustainable competitive advantage by focusing on niche market opportunities, providing exceptional customer service, fostering product and service innovation, building a strong brand identity (including your local origin story), prioritizing quality, and actively and personally engaging with the local community. These represent a unique value proposition that is difficult for larger regional, national, and online competitors to replicate. Leverage them fully to your advantage.
If you’d like to learn more about leveraging your unique competitive advantage and building brand relevance into an effective marketing strategy, please give us a call or email us here at Sentinel Solutions.
We are experts in media and effectively incorporating these tactics into the marketing mix. We can help you build a compelling campaign that engages your audience and drives sales.
Give us a call if we can help at 603-352-5896 or e-mail to Advertising@SentinelDigitalSolutions.com. We’re here to help you succeed.
Additional Resources:
