The higher the competition in your industry, the more difficult it will be for you to keep up. Plain and simple.

Simply put, to build a successful business in the competitive world that we’re living in, you need to raise the bar. Otherwise, you will never be able to beat the competition.

You have to deeply analyze the strengths and weaknesses of your competitors and rival companies. Besides that, you need to take a deep dive into the needs, preferences, and pain points of your potential customers.

That’s exactly where a competitive strategy comes into play. It helps you achieve a competitive advantage, beat the competition, and win your customers’ hearts.

In this blog, we will walk you through everything you need to know about a competitive strategy – from what it means, why it matters to ways to sustain your competitive advantage. Ready? Let’s go.


What Exactly is Competitive Strategy?

A competitive strategy is an action plan that is developed by a company to achieve a competitive advantage over the competition. This strategy is devised after assessing the strengths, weaknesses, opportunities, and threats of the competition and comparing them with your own.

Having a competitive strategy is most important when a company has a competitive marketplace and several similar products are available for consumers. This strategy helps you create a defensive position in your industry, along with generating a superior return on investment.

In simple words, a competitive strategy refers to the research, planning, and tactics implemented by a company to increase its market share and stay ahead of the competition. The strategy involves multiple business functions – from product development to advertising and customer service.


Competitive Strategy VS Business Strategy: What’s The Difference?

A business strategy has a much wider scope than a competitive strategy. A business strategy encapsulates all the actions and strategies that the business would implement for combatting the competition. Along with that, it also comprises of the ways management will address strategic issues.

Basically, a business strategy is all about the plan of action that the company would adopt in order to gain a competitive advantage over the rivals – using the company’s resources and the differentiating factor.

In addition to ‘how to compete, a business strategy deals with strategic issues as well. After all, a company has to address these issues effectively if it wants to survive in the market.

On the other hand, a competitive strategy is only about the company’s action plan for providing superior value to the target market and keeping the competition at bay.

Read more: Competitor Analysis: What is it & How to do it? (Template Included)


The 4 Types of Competitive Strategy, According to Michael Porter

According to Michael Porter, there are four types of competitive strategies that can be implemented in any business – irrespective of the size and the nature of the product/service. As these strategies can be implemented by businesses globally, they’ve been labeled as ‘generic strategies’.

1. Cost Leadership

In the cost-leadership strategy, a company offers its products and services at a lower price than the competitors. The cost-leader needs to spend as little as possible to build a product so that it can still earn a substantial amount of profit while selling the product at the lowest price.

Basically, the successful cost-leader needs to control costs throughout the value chain. The supplier has to sell the parts at the lowest prices, the manufacturing process needs to take place in the least expensive labor market, and operations need to be automated to increase efficiency.


2. Differentiation

The differentiation strategy is completely opposite of the cost-leadership strategy. After all, not all the products and services in the market are sold at low prices. In this strategy, companies try to differentiate their products by adding value to them. This is done in order to attract customers who’re willing to pay a higher price.

At each step of the value chain, the company tries to increase the features, quality, and attractiveness of the product. Innovation, research, and development, excellent customer service, solid marketing – all these tactics are a part of the differentiation strategy.

Starbucks is a classic example of a differentiator. There are a lot of restaurants that offer coffee at a much lesser price, however, people are willing to pay high prices just for a cup of Starbucks coffee! Why? Because they love the restaurant’s atmosphere, product quality, customer service, and of course, the brand.


3. Cost Focus Strategy

Just like the cost leadership strategy, a cost focus strategy is about attracting customers and beating the rivals by offering the least value for your products and services.

So, what’s the difference between a cost leadership strategy and a cost focus strategy? Well, in this method, you focus your marketing and selling efforts on a smaller market segment instead of a broad one.


4. Differentiation Focus Strategy

Just like the cost focus strategy, this strategy targets a specific part of the market. But, instead of offering a product at low prices to the customers, their driving force is providing unique value.

In short, the differentiation focus strategy is about improving the product with unique features that will make your company stand out from the crowd. Luxury products often fall under this category.

Read more: Root Cause Analysis (RCA): Definition, Importance, Types & More!


Two Solid Examples of Competitive Strategy

1. Apple

The manufacturer and marketer of electronic products such as smartphones, music players, tablets – Apple have attained a special position in the market. How? Through its competitive strategy!

The company’s consistent practice of developing new products, premium pricing policy, and the ability to make products complement each other create a barrier for competitors in the market.

Apple offers high-quality products with distinctive features and uses high prices that give a perception of ‘value’, along with maintaining high profits.


2. Aldi – The Supermarket

Aldi’s rise in the food retail industry is noteworthy. The company uses ‘lean production’, through which they reduce the number of resources used in the exchange of goods and services. The concept also involves reducing waste and using less material, labor, and space – which ultimately leads to low production costs.

Aldi also invests a lot in its team members. Every employee needs to undergo comprehensive training, which makes them highly skilled for the role. As a result of which they’re able to perform much more efficiently.


Competitive Advantage – The Key Goal of Competitive Strategies

First thing first, competitive advantage is the edge that a company has over its rivals. Achieving and maintaining a competitive edge is the primary goal of competitive strategies. Once a competitive advantage is achieved, every company needs to implement strategies to sustain this advantage.

This brings up the question: how long can a competitive advantage sustain? Well, it entirely depends on three factors: 1) the barriers to imitation, 2) the ability of competitors, and 3) the industry’s environment/dynamism.

Barriers to imitation make it hard for competitors to copy a company’s distinctive competence easily. Tangible USPs (machinery, buildings) are easier to imitate. Whereas, intangible resources (goodwill, brand name, marketing technique, technical know-how, patents) are difficult to imitate.

Therefore, if you want your competitive advantage to sustain for a longer time, build up your distinctive competence on unique capabilities instead of tangible resources!

Moreover, the ability of competitors to replicate a company’s distinctive competency also needs to be considered. If your competitors are deeply committed to building their products in a particular manner, they won’t suddenly copy yours. In this situation, your competitive advantage will sustain for a longer time.

The industry environment/dynamism also has an impact on how long your distinctive competency will sustain. In industries with high rates of innovation (electronics, software) competitive advantages don’t live long.


6 Ways To Sustain Competitive Advantage & Improve Your Competitive Strategy

1. The Building Blocks of Competitive Advantage

Efficiency, quality, innovation, and customer experience are the four pillars of competitive advantage. Any organization can adopt these four elements and create more value than the competitors.

Better efficiency allows you to lower your costs, better quality allows you to charge a higher price and lower the costs, better innovation leads to charging higher prices/lower unit costs, and better customer service allows you to charge a higher price.


2. Creating Distinctive Competencies

Managers need to develop distinctive competencies in order to maintain a competitive advantage. By developing distinctive competencies, you can improve performance in all four areas that we mentioned earlier.

Remember that you need to be balanced in your quest for distinctive competencies. Never develop distinctive competencies in some areas for the sake of other important areas.


3. Promote Learning Within The Organization

You can keep your company ahead of the competitors by encouraging and fostering learning within the organization, which is also known as organizational learning.

In the process of searching for knowledge and disseminating it, your company can learn from prior mistakes and improve its processes over time.


4. Deploy a Continuous Improvement Mechanism

Continuous improvement of the quality of your products and services, and everything else that your company does, is a full proof way of sustaining your competitive advantage for a long time.

As a manager, you should always be on the lookout for ways that will help you improve quality. You can try your hands at business process reengineering and Total Quality Management (TQM) programs.


5. Adopt Best Practices

You can take a deep dive into what successful business practices your competitors are using, fine-tune them as per your business needs, and start adopting them!

By adopting the best practices, you will be able to maintain your resources and capabilities, along with sustaining your competitive advantage. Best practices are essential if you want to achieve excellence in the four building blocks that we mentioned earlier!


6. Overcome The Barriers of Change

More often than not, companies fail to sustain their competitive advantage because they are not able to adapt to the changes in their organization and the industry.

To overcome this barrier, you should create appropriate control systems, provide effective leadership, involve employees in brainstorming sessions and decision making, and modify your organization structure.


Wrapping Up

With a well-crafted competitive strategy, you can make more informed decisions, outsmart the competition and increase the market share.

A competitive strategy will help your company grow, make your brand stronger and increase your customer base. That’s the dream, isn’t it?

So, what are you waiting for? Get up, grab a cup of tea/coffee and start working on your company’s competitive strategy. We are rooting for you. Good luck!

This blog was written by the team. is a powerful documentation and collaboration platform where you and your team can easily create, access, share, and manage all your documents under one roof. To learn more about this wonderful platform, visit

Further reads: 

Customer Experience: What is it & How to Deliver it?

Emotional Branding Strategy Guide for Marketers!

Business Competition: 11 Ways to Stay Ahead in 2022!

Porter’s Five Forces Analysis to Outwit your Competition!

Collaboration Strategy: Definition, Benefits & Process!

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