"For a producer to enjoy a competitive advantage in a product/market segment, the difference or differences between him and his competitors must be felt in the market place, that is, they must be reflected in. some product/delivery attribute that is a key buying criterion for the market."16 A capability gap is the difference between a firm's position and that of it strongest competitor for 4 buying criterion.

Competitive advantage occurs when an organization's capability exceeds that of the strongest competitor for a factor (e.g., Intuit's user-friendly QUICKEN software) that is important to buyers. Competitive advantage is gained by finding a product/service attribute that the targeted customers will perceive as a superior value and that cannot be easily duplicated by the competition.

Competitors are always trying to reduce (or eliminate) an organization's competitive advantage, so it is essential to be striving for continuous improvement in the value offered to buyers and/or reducing the costs of providing the product or service. New products that meet buyers' needs better than existing products create advantage.

Hewlett-Packard's continuous stream of new products is illustrative.