What constitutes a competitive advantage?

A competitive advantage is defined by the unique attributes or features of a business's products or services that are perceived to be superior by its target market. This perception can stem from superior quality, innovative technology, exceptional customer service, brand reputation, or other factors that distinguish a company from its competitors. When customers believe that a company's offerings meet their needs better than the alternatives, this creates a strong competitive position in the marketplace.

In contrast, while promotions can enhance visibility and sales, they do not inherently create a sustainable competitive advantage. Similarly, holding a large market share in a declining industry does not guarantee profitability or future success, as market conditions may quickly erode that share. Lastly, focusing solely on pricing can lead to a commoditization of products, where differentiation becomes negligible, and customer loyalty is difficult to establish. Competitive advantage is more about the unique value proposition offered to the target audience rather than just competing on price or temporary measures like promotions.