It is only sustainable to work on a product or service with a strong competitive strategy since soon, a competitor will start delivering the same features at a lower price or additional features at the same price. Therefore, maintaining a strong position in the market requires a carefully thought-out competitive marketing strategy. Numerous kinds of techniques exist.
Four Different Competitive Strategy Types
Michael Porter, an American economist and researcher, categorized competing strategies into four categories. Could you take a look at them down below?
A differentiation-focused approach. Businesses that employ this tactic also concentrate on particular market niches, but their main motivator is the distinctive value. Differentiation focus strategy refers to enhancing the product with distinctive qualities to help your business stand out.
In contrast, cost-focused strategy refers to offering the lowest price in a narrow niche. For instance, there are a few adult-only hotels in Turkey and Egypt. People may unwind, knowing that no child will annoy them in this way.
How Can a Competitive Strategy Be Put into Practice?
Every company that develops a competitive marketing strategy adheres to a few fundamental principles. They deal with company goals, offerings, size, and breadth. The key steps a business takes to develop a competitive strategy are listed below:
- Specify the business goal of the company. Determining the firm’s impact on the lives and experiences of its customers is crucial. This is the rationale behind consumers purchasing its goods or services.
- List the essential skills. Next, define a company’s distinct tangible and intangible characteristics. These could be anything that convinces a customer to pick you above your competitors, such as staff knowledge, product design, or the speed at which last-minute goods and services are delivered.
- Choose the main strategy for business expansion. Business owners then have to choose a direction for their company and a growth strategy. Naturally, a different competitive approach will be needed for an acquisition than a market expansion.
- Determine the most important goods and market priorities. At this point, businesses discover the goods and market niches that generate the most money and pinpoint the areas that still require development and revision.
Example of Competitive Analysis
How do you compare to the other players? What makes you different, and where are you similar? This is what competitive analysis aims to do.
Knowing the points of convergence and divergence between your brand and those of your competitors puts you in a stronger position to make wise strategic choices to advance your brand.
Naturally, comprehending the advantages of competitive analysis is one thing, but conducting an analysis that produces useful results is another. Don’t worry; we’ve provided you with a little sample.
Let’s examine two well-known game system manufacturers, Sony and Nintendo.
Recently released, Sony’s PlayStation 5 has been beset by supply problems.
In contrast, Nintendo’s Switch platform has been around for a long and is still a popular choice, particularly with kids and teenagers.
Many businesses on both sides of the issue are familiar with this situation; some have launched new items meant to rival well-established market leaders, while others are trying to ensure steady sales continue.
This brief competitive analysis example uses a few of the previously mentioned processes.
1. Ascertain the identities of your rivals.
The competition is between Sony and Nintendo, but Microsoft’s Xbox, which is in the same general market vertical, should also be considered.
This is essential for conducting an effective analysis; even if your attention is on a certain rival and their comparison, it’s still useful to consider other comparable products.
2. Find out what goods your rivals are selling.
Nintendo’s console comes in three models, while PlayStation provides two PS5 versions, digital and standard, at varying price ranges.
Both businesses also offer accessories. For instance, Sony offers VR add-ons, and Nintendo offers game accessories, including controller configurations, steering wheels, and tennis rackets.
3. Examine the strategies and outcomes of sales used by your rivals.
Significant differences exist between Sony and Nintendo’s approaches to marketing and sales competitive marketing strategy.
Due in part to the recent shortage of semiconductors, Sony has increased demand by creating a minimal quantity of PS5 consoles. On the other hand, Nintendo has taken a more expansive tack and is focusing on families as its main market.
In contrast, the PS5 boasts better graphics hardware and computing capability for players seeking the utmost fidelity.
4. Examine the product marketing strategies used by your rivals.
The differences between Sony’s and Nintendo’s marketing campaigns are immediately noticeable: Sony uses realistic game footage in their advertisements, emphasizing the exclusivity of their games.
With several well-known game creators, the business has been able to negotiate agreements for exclusive access to both new and old intellectual property.
On the other hand, Nintendo utilizes vividly illuminated advertisements featuring contented families playing together or kids utilizing their smaller Switches while on the go.
5. Examine the degree of interaction with the material of your rivals.
Sales are boosted, and repeat business is encouraged through engagement.
While there are several methods to gauge participation, social media is among the easiest to use: More followers generally translate into higher levels of involvement and market effect.
In our case, Sony has a big advantage over Nintendo: Nintendo has only 5 million Facebook fans, compared to 38 million for the official PlayStation page.
