Competitive Advantage

WEMC FS#5-08

Strategies for Competitive Advantage

Cole Ehmke, M.S.

Extension Educator, Department of Agricultural and Applied Economics

University of Wyoming

Overview

A competitive advantage is an advantage gained over competitors by offering customers

greater value, either through lower prices or by providing additional benefits and service that

justify similar, or possibly higher, prices. For growers and producers involved in niche

marketing, finding and nurturing a competitive advantage can mean increased profit and a

venture that is sustainable and successful over the long term. This fact sheet looks at what

defines competitive advantage and discusses strategies to consider when building a competitive

advantage, as well as ways to assess the competitive advantage of a venture.

The Essence of Competitive Advantage

To begin, it may be helpful to take a more in-depth look at what it means to have a

competitive advantage: an edge over the competition. Essentially a competitive advantage

answers the question, “Why should the customer purchase from this operation rather than the

competition?” For some ventures, particularly those in markets where the products or services

are less differentiated, answering this question can be difficult. A key point to understand is that

a venture that has customers has customers for a reason. Successfully growing a business is

often dependent upon a strong competitive edge that gradually builds a core of loyal customers,

which can be expanded over time.

Producers and suppliers familiar with farming and ranching may know that successful

ventures in the agriculture industry have typically operated in a commoditized, price-driven

market, where all parties produce essentially the same product. Such conditions imply that the

ultimate “winners” are the most cost-efficient producers, meaning that agricultural producers

have historically relied on strategies that focused on lower costs and higher volumes (i.e. a...