Definition of Competitive StrategyA plan to build and sustain competitive advantages and to achieve objectives in an environment of competition.
Competitive strategy often involves growing your business and improving your brand, products, customer experience and operations. The overarching goal of these strategies is to establish durable competitive advantages known as an economic moat.
Growth Strategy
Growth is a key type of business goal that can also be viewed as a competitive advantage in itself if it is done in a scalable way. Generally speaking, large businesses benefit from effects such as economies of scale and increased brand recognition that are major advantages. As such, simply becoming larger tends to make you more competitive.
Product Strategy
It is common for the product that offers the most value to customers to dominate its market. This is not always the most advanced or stylish product but is typically the product that customers prefer because it meets their needs, aligns to their preferences or generally makes life easier in some way. It is also common for the lowest price product to dominate whereby this generally requires the lowest cost at some reasonable level of quality.
Brand Strategy
A brand is an identity for your products and services. Consumers are more likely to purchase a brand they recognize even if they have little information about the actual product. It is also common for a consumer to develop strong opinions about a brand one way or another that can cause brand loyalty or avoidance.
Customer Experience
Competing by improving your customer experience, customer service or by building customer relationships. This can include solving customer problems and finding ways to make things more convenient or pleasant for the customer. Customers will often follow the path of least resistance.
Marketing Strategy
Competitive advantages or strategic battles related to product, promotion, pricing and distribution. Generally speaking, product strategy and brand strategy have a long term focus because it can take a long time to build a valuable product or brand. Other parts of marketing strategy such as promotion, pricing and distribution can be tactical and constantly changing. However, some firms will sustain stable pricing and distribution practices as a long term strategy.
Operational Strategy
Perhaps you want to produce the fastest, most reliable and highest quality products and services at the lowest cost. Operational strategy are plans that make all this actually happen or at least move things in this direction. These differ by industry but can include processes such as manufacturing, logistics, order fulfillment, service operations and IT operations.
Economic Moat
An economic moat is a significant competitive advantage that can be sustained over time. The overarching theme of a good competitive strategy is to reach a point where you have established some time of an economic moat such that you are no longer as vulnerable to the competition.
