4.1.1 What is meant by competitive advantage?

A firm´s success is largely determined by the attractiveness of the industry in which it operates. But is also significant its position within that industry. Although an industry may have scanty effectiveness, a firm that is optimally positioned still can create important profits.

A firm is said to have a competitive advantage over its competitors, when maintaining returns that surpass the average in its industry. This advantage is derived from the characteristics of a product that make it superior to competitive products.

In some situations, a competitive advantage can be obtained through technological developments, but is often difficult to maintain it because competitors rapidly copy new or improved technology. For such an advantage to be sustained, it often must derive from something other than technology or product modifications, such as the product symbolism - what the product means to consumers (brand images) and what consumers experience in purchasing and using it. Marketing researchers recognize that products possess symbolic features and that consumption of some goods may depend more on their social meaning than on their functional utility.

There is actually a tendency to consumers require "personal meaning" in products and services. To innovate is essential to answer to the emotions that drive consumer decisions. Consumers are becoming less impressed with a new technology and opting for products that "work for me." As a result words like "emotion" and "personal meaning" are finding their way into corporate strategies being important to understand the intangible factors associated with the perceived value of the product, and overall positive or negative perceptions. New descriptions as -- "easy," "accessible," "affordable," "empowering" and "personal" -- reflect on the person rather than the object. To uncovers feelings and attitudes towards products and to gather information on why people prefer one product over the other became key strategic elements.