Competitive strategies: Competitive
strategies are the method by which you achieve a competitive advantage in the
market. There are typically three types of competitive strategies that can be
implemented. They are cost leadership, differentiation and a focus strategy. A
mixture of two or more of these strategies is also possible depending on your
business' objectives and current market position.
Cost leadership: The aim of this
strategy is to be a low-cost producer relative to your competitors and is
particularly useful in markets where price is a deciding factor. Cost
leadership is often achieved by carefully selecting suppliers and production
techniques to minimize production, distribution and marketing costs. However
you need to be aware of any serious loss in quality that may render low cost
ineffective.
Differentiation: A differentiation
strategy seeks to develop a competitive advantage through supplying and
marketing a product that is in some way different to what the competition is
doing. If developed successfully this strategy can potentially reduce price
sensitivity and improve brand loyalty from customers.
Focus strategy: This strategy
recognizes that marketing to a homogenous customer group may not be that
effective a strategy for the product the business is selling. Instead the
business focuses its marketing efforts on a different selected market segments.
That is, identify the needs, wants and interests of the particular market
segments and customize marketing techniques to reflect those characteristics.