The aim of this research is to explain the influence of promotional strategy on improving the competitive advantage of the Tenun Ikat industry in Bali Indonesia and its impact on the marketing performance. To achieve this purpose, 100 people, who are the owners or managers of the Tenun Ikat SME in Bali Indonesia, were selected as sample and analyzed using the structural equation modelling (SEM). The results show that promotional strategy had a positive and significant influence on competitive advantage and promotional strategy was greatly capable of improving the competitive advantage. Furthermore, competitive advantage has a positive and significant influence on marketing performance achievement. This means that with a higher competitive advantage, there is a greater marketing performance and competitive advantage was able to significantly mediate the effect of promotional strategy on marketing performance. The research implications contribute to the owners / managers of the SME by advising so that they implement promotional strategies. This includes advertisement activities, sales promotion, and well-performed promotion through social media to improve the competitive advantage and increase in marketing performance.