Differences of Competitive Strategies Between Companies
When researching various businesses it can appear as though there are an infinite number of strategies that can be employed to achieve success. However, in reality there are four generic strategies that firms employ. Any business strategy can be categorized according to these four generic strategies. Understanding these strategies makes it possible to understand the strategies employed by all businesses.
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Differentiation Strategy
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A differentiation strategy offers a particular feature to attract customers. For example, Apple is successful at using a differentiation strategy by portraying its computers as more user-friendly than the competition. Having a differentiating characteristic allows a business to charge a premium to customers for this added value.
Cost Leadership Strategy
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A cost leadership strategy is an alternative to differentiation. Instead of offering differentiating features, business can simply offer low prices to attract customers. Walmart is an example of a firm that has successfully implemented a cost leadership strategy by positioning itself as the lowest cost provider for many consumer goods.
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Focused Differentiation
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The focused differentiation strategy is the same as differentiation strategy except that is applies to a particular niche market. Firms that use this strategy offer products to a particular market and then differentiate themselves with features such as high quality, greater service or better design. An example of a company that uses this strategy is Whole Foods Market, which sells organic food to a niche market.
Focused Low-Cost
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The focused low-cost strategy, like the focused differentiation strategy, is aimed at a specific niche market. Instead of competing on the basis of differentiating characteristics, the business competes on the basis of low prices. Southwest Airlines utilizes this strategy, focusing on the niche market of people looking for short-haul flights and offering the lowest possible prices.
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