There is an undisputed consensus in the business world that competitive strategies are an essential feature of every successful business. A competitive strategy can best be defined as a company’s efforts to create and maintain competitive advantage over its rivals by developing and executing on plans that make the most of the company’s strengths, minimizes its weaknesses and taps into opportunities for growth. Developing and executing a competitive strategy requires careful planning, analysis and vision.
The first step in developing a competitive strategy is to assess the competitive landscape in the marketplace. This will involve looking at the competition in terms of their product offerings, pricing, marketing and distribution, and customer service. It is important to also consider the strengths and weaknesses of the competition, so that a plan can be formulated to gain an advantage over them. Once a competitive landscape analysis has been completed, a company must then choose its competitive strategy.
One of the most common competitive strategies is cost leadership. Cost leadership is a strategy where a company seeks to reduce the cost of its products or services so that they can become the lowest cost provider in the market. This strategy will typically involve looking for ways to reduce overhead, streamline production processes or find suppliers that are willing to provide materials at lower costs. That will help the company to become the leader in terms of cost-effectiveness, and thereby capture a larger market share.
Another common competitive strategy is differentiation. Differentiation is a strategy where a company seeks to make its product or service stand out from the competition. This is typically done by providing additional features that make their offerings more attractive to consumers. For example, an e-commerce company may provide complimentary shipping and a search tool to make it easier for shoppers to find what they are looking for. These types of features will help the company to differentiate itself from the competition and thereby gain a competitive advantage.
Product differentiation is also a popular competitive strategy. This is where a company seeks to introduce new and innovative products to the market that are different or better than what is currently available. This can be done through research and development or by looking for innovative ways to create products that are unique or provide additional value over the existing offerings. Product differentiation will help a company gain a competitive advantage in a crowded market as customers will be willing to pay more for a product that meets their specific needs.
Finally, another common competitive strategy is market segmentation. This strategy involves looking for underserved or untapped markets within a larger market and designing products or services that meet the needs of those segments. By focusing on these underserved segments, a company can create a unique offering that will have a competitive edge over the competition.
In summary, there are several different competitive strategies that can be implemented. It is important to understand the competitive landscape in the marketplace and then choose the strategy that best fits the company’s circumstances and goals. Cost leadership, differentiation, product differentiation and market segmentation are all examples of competitive strategies that can be utilized to create and maintain a competitive advantage.
