Competitive strategy refers to a way of creating competitive advantage over competitors. It represents a greater value for the customer, created either by lower prices or by providing greater benefits and services that justify higher prices. Show Generally speaking, there are four possible ways to differentiate a business – to become a cost leader (meaning that you become the lowest-cost producer in the industry) and to become a differentiation leader (meaning that you compete in areas other than price valued by customers), both in a narrow or broad scope of business’ activities.
 Cost strategyCost strategy is built on no-frills. Cost leadership strives towards cutting costs to a minimum possible levels in order to provide customers with lower prices and thus boost their savings. Cost strategy prerequisites normally relate to high technical capabilities and access to capital for the company to invest in technology and assure economies of scale. In most of the cases cost strategy for first-movers lead to significant increase in market share and capacity utilization, that further drives down costs. Building a strategy on minimizing costs requires a company to achieve:
Leading cost leadership brands have obtained a major success by introducing revolutionary business models built on a single base – the lowest possible prices for a given perceived value. Differentiation strategyDifferentiation strategy is built on a belief that one needs a clear and unique positioning. Differentiation leadership focuses in providing perks that add value for consumers, while higher prices are a sort of “make up” for their higher costs. Building a strategy on a differentiation requires a company to continuously invest in and develop:
Differentiation strategy could be further divided into:
Despite the fact that these brands pointed out above achieve significant economies of scale, they do not rely on a cost leadership strategy to compete. Strong marketing capabilities enable them to sell products for a premium and at the same time persuade customers to become brand loyal. Focus OF THE strategyCost strategy as well as differentiation strategy could be narrow or broad. Small and medium sized companies are often forced to become focused, namely a niche player, since they are unable to compete against better-resourced broad market companies’ offerings. Only true understanding of the market dynamics and customers’ unique needs in combination with unique low cost or well-specified products and/or services eventually result in strong brand loyalty. How to successfully differentiate your products and/or services in the market? Are your products and/or services uniquely positioned in the market? If not – follow the steps written below: Step 1: Examine existing positioning of the company and its products and/or services in customers’ minds Step 2: Choose the competitive strategy (cost strategy vs. differentiation strategy) you think you should be following Step 3: Analyze the competition and determine the industry standard Step 4: Study market dynamics and search for market gaps Step 5: Choose your most appropriate competitive strategy and look for potential practical solutions Interested in our support? Contact us! OTHER RECOMMENDED TOPICS TO COMPETITIVE strategyYou are kindly invited to read also about:
What is a differentiation based competitive advantage?A differentiation strategy is an approach businesses develop by providing customers with something unique, different and distinct from items their competitors may offer in the marketplace. The main objective of implementing a differentiation strategy is to increase competitive advantage.
How do you achieve differentiation advantage?Here are some steps you can follow to differentiate your products or organization from competitors successfully:. Decide the organization's brand image. The first step in differentiation is deciding the message behind the organization's brand. ... . Research your target audience. ... . Select a differentiation. ... . Create a brand image.. How do you achieve competitive differentiation?The goal of competitive differentiation is to have the customer perceive an organization's offering as being superior when compared to other similar offerings. Differentiation can be achieved through packaging, marketing campaigns and after-market product support.
Which of the following is not true of a company that succeeds in differentiating its products from those of its rivals?Which of the following is NOT true of a company that succeeds in differentiating its product offering from those of its rivals? It can avoid having to compete on the basis of simply a low price. It commands a premium price for its product.
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Which of the following is not a route to achieving a differentiation-based competitive advantage
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