The subject of this paper was to understand the differentiation strategy in the function of building a sustainable competitive advantage. Achieving a quality differentiation strategy is essential if the company wants to survive in the long term. The purpose of the paper was to explore and analyze all the features of competitive advantage in the spirit of sustainability. Differentiation is possible in all types of industries, especially in those where there are many ways of differentiating products or services and where those differences are particularly valued by customers. The paper presents the sources of the competitive advantage of differentiation and the benefits that a company can gain from it. It is suitable in activities where there are not too many competitors who follow similar differentiation approaches and strategies. The aim of the paper was to show how companies in the industry (for example, the automotive industry and the water production) have a competitive advantage by using Porter's generic business strategies. However, in conditions of dynamic changes, the environment of innovation becomes a key factor of the company's differentiation and positioning strategy. Innovative companies are more competitive in the market as they create a unique value that incorporates elements created on the basis of clearly defined needs and consumer desires.