 |
There are three basic forms which have always personified the business strategy game: differentiation, low-cost, and niche focus. These are generic competitive strategies and at least one is implemented in almost every business management strategy.
The business strategy of differentiation focuses on how a business' product or service is different and therefore better than any other on the market. It may be that the quality of the product is better; that the product is the most updated or the service uses the most recent technology. The product may be marketed with extra accessories or frills that no other similar product offers. This usually comes with higher pricing per unit and requires a strong show of marketing and advertising. High end car models like Mercedes-Benz offer performance and class while Dr. Pepper and Sprite offer a change from cola. Both give the customer a choice and therefore exercise a business strategy of differentiation.
The low-cost business strategy is exactly what it sounds like: the offering of a product at a price lower than any other currently on the market. The profit margin is often lower, the product is simple with no 'extras,' and it is inexpensively manufactured and distributed. This is one of the least effective strategies in terms of longevity as there is always someone else who can come along and offer the product more cheaply. However, when used as a price point - low priced items draw the customer into the store where more reasonably priced items are showcased on the same shelves – it can be a valuable tool. Wal-Mart is perhaps the classic successful example of this business strategy.
Niche marketing is a business strategy that is highly successful – provided the right niche is chosen. The niche or specific segment of the population is analyzed for its attributes, needs, and desires and the business who offers this population a product makes sure that it answers those needs. Whether the product caters to the needs of those who live in a specific geographic location, of a particular gender, a defined age group, a particular income level, or a specific interest, niche marketing can be very successful if researched properly and quality is a focus. Word of mouth is a big component of niche marketing and combining this business strategy with one of the first two, especially at when a business is first introducing a product – or itself – onto the market, and even more important when setting itself up as a specialist.
These three business strategies create the basic building block foundation upon which 1,001 business strategies have been created over the decades of business strategy evolution. There are offensive business strategies to attack your business opponent's strengths or weaknesses and decrease your competition. There are defensive business strategies to protect your advantages on the market. There are focus business strategies that pinpoint a particular aspect of your business. There are business strategies for every business situation imaginable: new businesses, businesses in a slump, mature businesses in a dying market. There are corporate business strategies that have a wide following: single business corporation strategy, vertical integration strategy, related diversification strategy, unrelated diversification strategy, and strategies for entering new businesses.
And for every classic business strategy there are a ton of classic business strategy mistakes. Here's where investigation of the failures of those who have gone before come into play. No matter what strategy a business implements there are a few pitfalls to watch out for. Some of business strategy mistakes to avoid include:
Spending too much money on marketing in an effort to avoid problems in product or service quality.
Choosing to cut costs as opposed to improving efficiency in another area of the business, like marketing or employee production rate.
Copying successful businesses or following trends that are on the way out or are fully saturated with copycat businesses already.
Opting for multiple weak marketing positions rather than carefully researching choosing a handful of strong marketing positions.
Using a competitive offensive strategy against leaders in the industry or strong competitors without a solid plan or the finances to back it up.
Using the exact same business strategy that may have worked for you or someone else in the past on a new business without considering necessary changes needed due to even minute differences.
No matter what business strategy you choose, do the research and don't be afraid to change should it prove to be unsuccessful.
|
