A competitive advantage is based on what a company does better than its competitors. It involves the characteristics that allow a company to outperform its rivals. A competitive advantage can be derived from a variety of sources. It may involve intellectual property that is owned by a company that disallows rivals from making the same product or making the product in the same way. It may involve specials skills or resources that a company possesses that are not held by competitors. Lowering production costs below those of your rivals is a competitive advantage or it may arise in a number of other ways.
The paper Emerging Forms of Competitive Advantage: Implications for Agricultural Producers provides a literature review for identifying alternative approaches to creating competitive advantage that can be used even under conditions in which no differences in actual quality exists across products.