The main types will be covered briefly. If you need more information you can search online, read a book about it, or take a class.
- Differentiation. This type of strategy is one where the company creates a product that is unique to the market. They use this to their advantage by clearly indicating to the consumer why their product is better or why the extra features or unique nature of the product makes it superior.
Determine what makes their product unique. What do they think makes their product special? Do you agree? List all you can about the product or service and analyze whether or not you believe them to be correct.
Factors include special features, a certain way they deliver the product, their staff, etc. For example, Saturn’s differentiation from the competition is that you can go to a Saturn dealership and all the prices are fixed. They call it their “No Hassle, No Haggle” policy.
- Overall cost leadership. This strategy takes advantage of the fact that they have lower prices. They guarantee that their prices will always be lower than the competitions. Certain department stores have this strategy. Some say that you can bring a sales flyer from another store and get their price.
Determine why it is these companies can have lower costs. Do they skimp on customer service? Do they try to cut costs with a poor benefits program? Do they have an exhaustive list of suppliers? Are they a large company? Can they product the product less expensively than the competition?
- Niche. Some companies use a niche market as their strategy. A niche is a portion of a market that is completely unique. For example, a gym for women only is considered a niche because it caters to a specific target audience.
Some believe that taking advantage of a niche is one of the most effective ways for a small business to compete with larger companies. In general, they take advantage of certain specialties. There are a lot of different kinds of specialties. If you believe your competition is using a specific type of specialty, such as a channel specialty, it is worth it to do some additional research.