Cost advantage refers to a situation where a company can produce goods or services at a lower cost than its competitors. This can be achieved through various means, such as economies of scale, efficient production processes, or access to cheaper raw materials. By keeping costs low, a company can offer competitive prices, attract more customers, and increase its market share. Having a cost advantage allows businesses to maintain higher profit margins even when prices are reduced. Companies like Walmart and Costco exemplify this strategy, as they leverage their size and purchasing power to minimize costs. This advantage can be crucial for long-term success in competitive markets.