What is a Competitive Strategy?

Malcolm Tatum
Malcolm Tatum

A competitive strategy is the approach that a company takes to distinguish itself from various competitors, and go about the task of obtaining customers. The idea is to increase the demand for the goods and services offered by the company, either by capturing a larger share of the current consumer base, or by going after niche markets that competing companies have yet to recognize and attempt to enter. In many situations, the configuration of the competitive strategy will contain elements that are both defensive as well as proactive.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

With a defensive competitive strategy, the idea is often to respond to claims of competitors or even perceptions by consumers that the goods and services offered by the company are somehow inferior to those offered by others. Part of the marketing and public relations efforts will be tailored to refuting the claims as false, and providing information that implies that the goods and services offered are actually of superior quality. For example, if the canned soups made by one company are identified as using inferior ingredients, the business may counter the claim by creating television commercials and print ad campaigns that point to the freshness of their ingredients, and thus the superiority of their product.

A competitive strategy that is proactive or offensive is usually aimed at cultivating new markets or developing new products that attract additional consumers, before competitors have the chance to do likewise. With this approach, the idea is to establish the business as the standard or benchmark that all competitors must match or exceed, a task that is sometimes hard to manage once customer loyalty is firmly entrenched and the brand name is well known. In like manner, a business that is forward-thinking and develops products that meet emerging consumer needs before anyone else will quickly build a reputation of being the only source for that product. If the strategy is particularly effective, the business is likely to maintain that status even when the competition releases similar product lines.

Competitive strategies are more than just marketing and publicity tactics. They also involve refining the structure of the company so that it is able to produce high quality products and sell them at a profit, within a price range that is acceptable to as many consumers within the marketplace as possible. This includes developing processes and procedures that allow the business to obtain materials for production at the lowest possible cost, and operate plant facilities with the highest degree of efficiency. Unless the business is able to deliver on the claims made during the marketing campaign, even the most expertly crafted publicity will fail.

It is not unusual for a business to create and execute a competitive strategy that is both proactive and defensive. This well-rounded approach makes it possible to answer competitor claims and consumer concerns before they have the chance to become a threat to the profitability of the business, while at the same time raising public awareness of what the business has to offer. Since the marketplace in most industries is constantly changing, refining the competitive strategy so that it remains evergreen in the face of those changes is imperative.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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So basically, competitive strategy is when a company is worried about how to gain a competitive advantage by competing with other companies?

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