Competitive advantage : its sources and the search for value

Abstract

The concept of competitive advantage highlights the close interlink between marketing and strategy. Strategy seeks to relate a company to its environment and to determine where the manager wants the business to go. To get there managers need to identify an activity or activities that can collectively offer value to customers. In the book Competitive Advantage, Michael E. Porter (1985, p. 3) makes this point clear and states that ‘‘Competitive advantage grows out of the value a firm is able to create for its buyers that exceeds the firm’s cost of creating it.’’ Value lies at the core of marketing. This is what customers look for and are willing to pay for. The pivotal role of value has long been recognized in marketing and is reflected in the more recent definition of marketing, which the American Marketing Association (2007) declares as ‘‘the activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.’’ Value is not an absolute but a relative concept recognizing that new competitive offerings may erode any value offering that the firm may have in the market.