A differentiation strategy develops when a company decides to diversify the number of features or characteristics of a product to provide more choices to the consumer. Once you’ve analyzed your competition, you can develop a powerful competitive strategy for your business that you can sustain over the long term. Summary: This blog gives you the meaning of competitive strategies and examples of a case study and the Advantages of competitive marketing strategies. A low-cost provider strategy – striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers, usually by under pricing rivals. 'The Five Competitive Forces That Shape Strategy,' Harvard Business Review [online]. Firstly, competitive strategy is the first of the kinds of strategies in strategic management. Porter's 5 Forces is a model that identifies and analyzes the competitive forces that shape every industry and helps determine an industry's weaknesses and strengths. It refers to a plan that combines the clout of the external situation. The students identified the best competitive strategy for the product and company is to focus on a single market segment (Fig. It is necessary for businesses to understand the core principles of this concept that will help them to make a well-informed business decisions in the course of action. An organization needs to understand other competitors in the competitive market. If your organization can differentiate its products or services in the minds of the customer, it can hold the market share of the market and higher sales volume in the market, which your organization offers, but your competitors do not. Identifying attribute of a product which are unique from competitors in the industry is the driving factor in the differentiation leadership strategy. It is every strategist’s job to evaluate company’s competitive position in the industry and to identify what strengths or weakness can be exploited to strengthen that position. The Michael Porter's Five Generic Strategies has a focus on creating strategies that helps to gain competitive advantages from three different bases: Cost leadership, Differentiation and focus. There are 4 Competitive Strategies Cost Leadership Strategy Cost leadership is a tough strategy for small businesses to implement, because it requires a long-term commitment to selling your products and services at a cheap price. Through lean production, Aldi aims to reduce the number of resources that are used in the provision of goods and services to consumers. Apple has a consistent practice of developing new products and its ability to make product complement with each other and strengthens customer loyalty and helps in creating a barrier for competitors in the market. The company also sets premium prices for its products. This may apply to internal communications, marketing communications and public relations. Some companies examine the profit and risk associated with their market share may conclude that they had extended themselves in the market or certain sub-markets. Since its publication in 1979, it has become one of the most popular and highly regarded business strategy tools.Porter recognized that organizations likely keep a close watch on their rivals, but he encouraged them to look beyond the actions of their competitors and examine what other factors could impact the business environment. But unfortunately, there’s no one-size-fits-all strategy that you can implement, because every business faces different challenges within different markets. Strategy can be viewed as building defenses against the competitive forces or as finding a position in an industry where the forces are weaker. Your Views Provide Your Feedback. Michael Porter uses 4 strategies that an organisation can choose from. There are three main streams for the Michael Porter’s Generic Strategies w hich are: Cost leadership; Differentiation; Focus Generally, pricing strategies include the following five strategies. a. As mentioned above, competitive strategy is a long-term action plan of firms so as to gain a competitive advantage over its rivals in the industry. Nonprice competition entails two phases: one that implements new aspects of production or services and another that markets these changes to the public. For example, Breezes Resorts, is a company having several resorts and caters only couple having no children and offer peaceful environment without any children disruption. The Generic Strategies can be used to determine the direction (strategy) of your organisation. Therefore, the competence of competitive intelligence has become essential for companies seeking to win in an increasingly competitive and challenging market. Example of competitive Marketing Strategies, Advantages of Competitive marketing strategies, Strategies for High Market-Share Companies, 4. Nestle’s research and development capabilities are off the charts. Cost leadership strategy is difficult to implement for small scale businesses as it involves making long term commitment for offering products and services at lower prices in the market. For example, the company … Lecture Notes for Chapter 5 369 Chapter Chapter Summary 5 The Five Generic Competitive Strategies Chapter Five describes the five basic competitive strategy options – which of the five to employ is a company’s first and foremost choice in crafting overall strategy and beginning its quest for competitive advantage. 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