• A strategy in marketing
• What a business must do to promote it’s product to costumers.
• The brand or product must become unique in the mind of consumers
• Defines where your product stands compare to similar products.
• Positioning is all about giving an edge over competitors, to secure profits.
• In order to be effective it has to target all four areas:
Comparative Advantage – What is it?
Definition: The ability of an individual or group to carry out a particular economic activity more efficiently
than another activity.
Comparative advantage is a dynamic concept meaning that it changes over time.
A comparative advantage allows a company to sell both goods and services at a price lower than that of
Comparative advantage is usually a self-reinforcing process:
• A new comparative advantage in a product, is developed by entrepreneurs in a country because they
are able to find methods of producing the product more efficiently. This can also occur when
entrepreneurs create a genuinely new product that is increasingly demanded in both home and
• The exploitation of economies of scale is encouraged by rising demand and output meaning that as
output increases, unit costs decrease. This can help to attract skilled labour into the industry.
• The expansion of an industry leads to benefits deriving from being able to take advantage of external
economies of scale.
Some economists however, regard comparative accounting as an unrealistic concept which may deprive
some nations of the opportunity to exploit it.
Cost leadership/ differentiation
Cost leadership describes a way to establish a competitive advantage. It means the lowest cost of operation in
the industry. The cost leadership is driven by company
• Efficiency: expenses / revenue
• Scale/Size: Economies of scale
• Scope: The way the firm examines/views the market
• Cumulative experience: Learning improves with experience
Advantages of cost leadership:
1. Business becomes more competitive which leads to a higher market share as sales increase.
2. Long-term profits as prices may rise in the future while the high market share is maintained.
Disadvantages of cost leadership:
1. Low costs usually indicate low quality products.
2. Cost leadership is not always good for profit.
3. Small firms do not have the ability to be cost leaders.
Differentiation is the process of distinguishing a product or service from others, to
make it more attractive to a particular target market.
• Advantages of differentiation:
1. Can lead to more sales and to a lot of profits.
2. It gives a fighting chance to the small firms which cannot lower their prices.
3. It creates brand loyalty.
• Disadvantages of differentiation:
1. Research and development is expensive.
2. Patents of established brands may act as a barrier of entry.
Multiple choice questions
What is positioning?
a)How well a company is known
b)A way to predict customer’s behavior
c) A concept in finance
d) A marketing concept
Which of the following is not a disadvantage of cost leadership?
a) Small businesses cannot lower their costs as much as big firms do.
b) It leads to less competition.
c) Research and development is expensive.
d) Quality of products falls as costs of production fall.
Comparative advantage is a dynamic concept. What does this mean?
a) It changes with price.
b) It changes over time.
c) It doesn't change at all.
d) It changes with unit costs.
In our presentation we talked about some strategies that can be used by any company
to increase revenue and have an edge over competitors.
Those strategies can be applied in SimVenture in the section of sales and marketing .
Achieving positioning, comparative advantage and the correct marketing strategy (eg.
cost leadership and differentiation) are, to some extent, the main objectives for any
business owner. He/she should take all those aspects into consideration if he/she
wants his/her business to take off.