It is said that everything is fair in love and war. Well, business is nothing less than a war. If you want to stay ahead of your competitors, you not only have to give a good fight but also win it. Just the way a warrior sharpens his weapons before getting ready for the battle, a businessman has to design a strategy to take on the competitors.
Since the size and nature of every business are different, there can’t be a ‘one-size-fits-all’ strategy. There are three broad types of business strategies that most strategic management courses in India talk about:
Cost Differentiation Strategy
This strategy is all about pricing your product right. It should tempt customers to purchase your products instead of that of the competitors. However, at the same time, the price should not be too low or too high. If it is exorbitant, then customers would not pay for it. It is too low; they may think the quality is poor. Also, keeping prices lower may not cover the cost of production and generate expected revenues. So, price your product in such a way that it is a win-win situation for your business and customers.
Product Differentiation Strategy
In this strategy, you have the leverage to keep the prices that you deem necessary. The reason behind this strategy is that your product offers unique or additional features that your competitors do not. For example, if you are selling handmade shoes instead of machine-manufactured, you are giving customers the benefit of the customized product. The customer is ready to pay more because of the nature of the product. Similarly, let’s say you are providing professional home cleaning services. If your competitor provides only five services in the package whereas you provide seven in the same price, it is called product differentiation. This kind of strategy allows you to sell the product on the terms and conditions you want because your product delivers superior value.
This strategy comes into picture when the business is doing well yet the revenues are static. You want to grow your business – it could be either by adding new products, new product lines, improvising the existing product or selling the same product beyond the current geographical reach. You may also consider merger and acquisition strategy – you could either buy a new business or let another business acquire yours.
Now, if you are wondering which strategy is best, the answer is none. Each of these strategies can be used independently or holistically depending on your business goals and circumstances.
If you want to learn about these strategies in detail, join a strategic management certificate online.