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Competitive Advantage vs. Positioning – What’s the Difference?

In the business world, we toss around so many buzzwords and vocabulary terms that it can be hard to keep track of their true meaning. After a while, definitions of specific business terms become hazy and words are used interchangeably – even if they do not mean the same thing. These vocabulary terms diffuse into other industries, and the definitions become muddled once and for all.

I’ll be the first to admit that I am a marketing nerd. In true nerd status, I tend to cringe when I hear individuals in the marketing field and small business owners confuse the terms competitive advantage and positioning. Although they may sound like they mean the same thing with reference to marketing and business practices, they do not. Once you learn what these two terms actually mean, you’ll never confuse them again.

Competitive Advantage

As a small business owner, you may have been asked, “What’s your competitive advantage?”

How do you answer that? Well, first you need to fully understand what a competitive advantage is. As defined by investopedia.com, a competitive advantage is an advantage that a firm has over its competitors, allowing it to generate greater sales or margins, and/or retain more customers than it’s competition.

After reading that definition, what’s your competitive advantage? Is it your product offerings? Perhaps it’s the price of your service. Your competitive advantage is a distinct advantage that you have over your competitor, whether tangible such as a product or intangible such as a pricing structure.

There are two types of competitive advantage: comparative advantage and differential advantage. Comparative advantage deals with the ability of a company to create a product or service at a lower cost than their competitors. This then enables the business to either sell their product at a lower price point, or gain a larger sales margin. In comparison, differential advantage is considered to be when the products and services of a business are seen as better than the competition by customers. Individuals tend to confuse differential advantage with positioning.

Positioning

After learning about competitive advantage, you are probably wondering how it differs from positioning.

Well, let’s start with answering what is positioning? Positioning can be defined in a multitude of ways. A man by the name of Jack Trout first made the idea of positioning popular with his book, Positioning – The Battle for Your Mind, in 1981. In this book, he describes positioning as “an organized system for finding a window in the mind. It is based on the concept that communication can only take place at the right time and under the right circumstances”.

In short, positioning is how consumers perceive your brand, product, service or business. When you think of Coca-Cola, you may think of a classic brand with timeless qualities. When Apple comes to mind, perhaps you think of constant innovation. You perceive each brand differently, based on their positioning statement and strategy.

Brands leverage their positioning based on a variety of factors:

  • Features of the brand
  • Creating a distinct image for the company
  • Benefits received from the products or service
  • History of the business
  • And more

Now that you know what each marketing vocabulary term means, you can use this knowledge in your small business marketing strategy. Find your company’s competitive advantage, create a solid positioning statement, and conquer your industry.

To learn more about online marketing and advertising, contact the creative marketing team at Titan Web Marketing Solutions by calling 877-935-3796.



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