A company's value proposition is the promise of value it delivers to customers, which is crucial for establishing a competitive advantage. The value proposition must be compelling and distinct, aligning with the company's market positioning—the strategic process of defining how a brand is perceived in the marketplace. Effective market positioning ensures that the company's competitive advantage is clear and attractive to the target audience.

Two primary strategies for achieving a competitive advantage are cost leadership and differentiation. Cost leadership involves becoming the lowest-cost producer in an industry, which allows the company to offer lower prices or achieve higher margins. Differentiation, on the other hand, focuses on offering unique products or services that stand out from competitors, justifying a premium price. Both strategies require a deep understanding of the company's core competencies—the unique strengths and resources that provide a competitive edge.

Barriers to entry are obstacles that make it difficult for new competitors to enter an industry. High barriers to entry protect the competitive advantage of established companies by reducing the threat of new entrants. Brand equity, the value derived from consumer perception of the brand, also plays a significant role in maintaining a competitive advantage. Strong brand equity can lead to customer loyalty and a willingness to pay higher prices, further solidifying the company's market position.

Competitive benchmarking involves comparing a company's performance, products, or processes against those of its competitors to identify areas of improvement. This practice helps companies understand their competitive position and develop strategies to enhance their competitive advantage. SWOT analysis—assessing strengths, weaknesses, opportunities, and threats—is another crucial tool for identifying and leveraging competitive advantages. It provides a comprehensive view of the internal and external factors that can impact the company's market position.

Market dynamics such as growth rates, competitive saturation, and shifts in consumer preferences can influence a company's competitive advantage. Companies must continuously monitor these dynamics to adapt their strategies accordingly. Competitive positioning refers to the strategic placement of a company's offerings in the market to maximize its competitive advantage. This involves understanding market power, developing a strong positioning statement, and, if possible, leveraging proprietary technology to create a unique market presence.