Business is competitive. If you are not one of the top dogs in your sector, plenty of companies will take your customers and leave you bankrupt. The good news is that while some businesses might be competing with you on price or quality, they can’t do both. That means if you want to compete on quality but don’t have the budget for it, all you need to do is undercut them on price. It also means if they undercut us on price, we don’t need to try and match them at their game because they can only go so low before no one buys their product anymore! That leaves us free to focus our efforts elsewhere where we excel, like advertising or customer service, instead of competing with them on price.

What is Business Strategy and Its Basic Types?

A business strategy is a way in which a business organizes its resources to achieve its goals. A business can use a range of strategies to generate income, develop and grow the organization and meet the needs of customers and stakeholders. There are four basic types of strategy: cost leadership, differentiation, focus and niche.

Cost Leadership

One of the most common tactics is to compete on cost. If you are cheaper, people will buy from you. This sounds easy enough but can be challenging because many businesses have slashed prices to survive, so they don’t bother to undercut their competitors anymore. What is more likely then is that companies will focus on differentiators instead of undercutting their competition on price. A good example of this is Target’s “Expect More” slogan. The company has resolved not to go head-to-head with Walmart on price but instead expects its customers to shop for style and variety. Іt’s easier said than done, however – іf уоu саn’t beat уоur competition оn cost, іt саn bе difficult tо make a profit.

Differentiation

Differentiating yourself can be more effective than matching or undercutting your competitors because it’s easier to stand out when you aren’t trying to be the same as everyone else. Differentiation is achieved by offering something that your competitors do not. It can be related to quality, attributes or target market.

A business strategy example of differentiation might be to offer better customer service than your competitors. If you are successful in creating a reputation for great customer service, then customers will want to deal with you rather than passing the business onto a competitor because of price or convenience. In that instance, you will have a sustainable competitive advantage over your competitors as they won’t be able to lower their prices because if they do, no one will buy from them!

Focus

Focus is achieved by narrowing the range of products and services a business offers to serve a particular segment or market best. This can help ensure that the goals of the business are within reach.

A business strategy example of focus might be setting up a local retail store to serve just one neighbourhood. If you do that, you know exactly who your customers are and what they want, so there is no risk that someone will walk in expecting to find the low-cost end of season dresses and walk out with expensive summer sunhats.

Niche

A niche business specializes in selling to a particular market segment. This can help ensure that the goals of the business are within reach.

A business strategy example of niche might be opening an online store specializing in vintage wedding dresses for older women. If you do that, your customers will already know who you are when they think to look for the products you sell. This is an advantage over starting with a general retail outlet because it means that people can find you without spending too much energy looking in the right places.

When selecting a business strategy, consider what competitors are doing and choose something different. Of course, this can be easier said than done. Still, if you really do different, your customers will be your biggest supporters because they want to purchase from you rather than any other business offering similar products or services.

Business Strategy Examples

Business Example 1: The bar owner wants to attract the best possible clientele, so she advertises extensively to lure an affluent crowd. This means that she won’t need to compete with her competitors on customer service because being exclusive will mean her patrons are already satisfied. Therefore, she can focus all her efforts on creating a luxurious atmosphere and providing the best possible customer service to her existing customers.

Business Example 2: Let’s say there are two companies in the same industry with different business strategies; Company A is competing on price while company B is competing on quality. Competitor A might be willing to offer you discounts for bulk purchases or other incentives to win your business. If you are selling on price, you mustn’t come across as desperate for new customers, so be careful not to accept their offers automatically. Alternatively, competitor B might allow you to try out the product before buying or give discounts for loyal customers. It’s up to you whether or not you want to lower prices or offer discounts to stay competitive. Keep in mind that you need to decide on a business strategy before making any promises to customers. If your company is competing on price, offering free trials is not good for your bottom line.

Business Example 3: Company A has developed an innovative cleaning technology that will revolutionize their industry. Instead of spending money on advertising, they funnel it into research and development to ensure the product is perfect before it goes to market. Company B can’t compete with this strategy because it is difficult to innovate without adequate funding. So they decide instead to focus on customer service by promising better customer support or faster deliveries than Company A.

Business Example 4: Let’s say you have a cosmetic company focusing on natural ingredients and using eco-friendly packaging with minimal waste. You are hoping to attract customers who want to be environmentally conscious with their purchases. Still, your competitor offers the same product for half the price because they don’t follow the same business strategy. In this situation, you can either lower your prices to be more competitive or work harder to justify the higher price tag with quality customer service by offering a guarantee on all your products or being more involved in environmental initiatives.

Business Example 5: Company A doesn’t really have a business strategy because it is a franchise sold to investors who run it how they like with little support from the company itself. Company B has a different business strategy; they sell franchises to investors who follow their model after doing thorough due diligence to ensure they can succeed. As an investor, this means you will know exactly what you are getting into before joining and that there is support available if needed.

Business Example 6: Company A has decided to go after the high-end market. They are only looking to attract wealthy customers, so they have chosen a business strategy that will focus on product quality and customer service instead of competing with the other price brands.

Business Example 7: You can think of your company’s core competencies as its business strategy. A strong core competency is something that your company does better than any of its competitors, and it helps you identify what makes your company special and worth buying.

Business Example 8: If you want to grow your company quickly, you need a growth strategy. These are the steps you take to achieve this goal. They can be short-term or long-term, depending on how quickly you want to grow your company. Short-term growth strategies focus on increasing revenue, while long-term ones are more concerned with improving the company overall. Still, both have different goals to succeed at growing your business.