Companies can create core competencies or competitive advantages by adopting the marketing strategies. It can result in creating profitable relationship with customers, differentiation themselves to gain superior customer value than others. This study emphasizes on investigating how small tourism firms create their competitive advantage by investigating business environment of PEST analysis, and Porter's Five Forces Analysis and by using marketing analytic tools such as

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... sitioning (STP), service marketing of 7Ps. This research is conducted in qualitative study applying an in-depth interview with seven small business owners in tourism industry in Laos. The results show that motivation arises from being involving or experiencing in the business at young age, customer's satisfaction can be captured by differentiation and the well uses of 7Ps, supportive external environment enhance the competitive advantage.