Competitive Strategy
Competitive strategy is a business strategy that focuses on successfully out-performing competing firms in order to gain market share and earn a larger profit. Different businesses have a variety of competitive strategies that can be implemented to gain a competitive advantage such as cutting costs, product differentiation, or aggressive marketing campaigns. Competitors that use these strategies typically focus on offering products or services that are unique and better than their competition. A successful competitive strategy requires the ability to identify competitors, determining competitive advantages, and effectively leveraging those advantages.
Identifying Competitors
One of the most important elements in developing a competitive strategy is to know who the competition is. While some firms have obvious competitors, others may have off-screen competitors. Its important to research a firms immediate competitors as well as potential outside firms that could enter the market. Identifying competitors is the first step in creating an effective competitive strategy.
Determining Competitive Advantages
The next step in developing a competitive strategy is to identify the competitive advantages that the firm has over its competitors. A competitive advantage is something that sets the firm apart from its competitors, typically in regard to services, price, or product features. Once the firms competitive advantages are determined, it is important to emphasize those advantages in its marketing and promotional efforts.
Leveraging Advantages
Once the firm has identified its competitors and determined its competitive advantages, it must effectively leverage those advantages to out-perform its competition. This can involve implementing new business strategies, such as introducing new products and services, entering new markets, or expanding existing markets. Leveraging advantages also involves increasingly aggressive marketing efforts to emphasize the firms advantages to potential customers.
Competitive strategy is an important element in any business plan – its the strategy in which companies can out-perform the competition. By understanding competitors, determining competitive advantages, and leveraging those advantages, businesses can craft an effective competitive strategy that gives them a competitive edge. It is important to continually monitor the competitive environment and adjust the strategy accordingly. By keeping an eye on competitors and reviewing the competitive strategy regularly, firms can ensure that their competitive strategies remain effective and successful.
