Competitive Advantage : 5 strategic approaches you can use to set your business apart from competitors

In building on my previous post about How to Gain Competitive Advantage where I also shared a case study on how Starbucks gained its competitive advantage in the coffee shop business , today I am sharing 5 of the most frequently used and dependable strategic approaches that you can use to set your company apart from competitors and build a strong customer loyalty.

5 strategic approaches you can use to set your company apart from competitors and build a strong customer loyalty.

  1.  A low-cost provider strategy

When products are the same consumers generally opt for the lesser-priced product. And that’s the basis of the cost-leader strategy, which relies on decreasing costs enough to secure profits even while prices are lower than competitors’ prices.

To be a cost leader you need to increase efficiency in your operations, eliminate waste and control your costs. .

Where can you start? Start at the  value and supply chain.


The reason why you’d find a Pakistan owned spaza shop selling products at cheaper prices compared to common market price, is because they are controlling their costs. It does not necessarily mean their products are fake (not dismissing the 2018 cases of expired/fake products). What they do is that they use group economics to purchase their stock; instead of going to wholesalers individually, they buy as a group to leverage on economies of scales through bulk buying. [the more products you buy(bulks), the lesser the price, compared to when you buy single products]

Perhaps instead of hiring a full-time accountant, contract an accountant that you use only during specific times;

perhaps instead of hiring a production equipment, have a once-off cost by purchasing one;

perhaps instead of using agents in your real estate business deal directly with clients;

perhaps instead of agreeing to every face-to-face-meeting opt for a call, skype or WhatsApp and meet up if it is really necessary.

Punchline: How can you control costs today in your business?

Low-cost provider strategies can produce a durable competitive edge when competitors find it hard to match the low-cost leader’s approach to driving costs out of the business.

2. A broad differentiation strategy

This approach is about differentiating the company’s product or service from that of rivals in ways that will appeal to a 1.broad spectrum of buyers. It is about developing products that offer 2.unique attributes that customers want, creating products or services that consumers view as 3.superior to or different than the competitors’ products.

This strategy works well in a competitive industry or marketplace – markets with with a broad range of consumer preferences. Markets such as Smartphones, Cars, Cosmetics, etc.

The advantages that comes with winning at this strategy;

  • You have the ability to apply premium pricing to products or services
  • Increased customer loyalty because of the ‘unique’ product or service offering
  • You discourage new businesses from entering the marketplace for fear of the ability to compete.


Some of the successful adopters of differentiation strategies include Apple (innovative electronic products), Johnson & Johnson in baby products (product reliability),  and BMW (engineering design and performance).

To win at this approach, you need to invest in R& D and Innovation, and have an effective sales and marketing.

3. A focused low-cost strategy

This approach is about concentrating on a narrow buyer segment (or market niche) and outperforming competitors by having lower costs and thus being able to serve niche members at a lower price.

Private-label manufacturers of food, health and beauty-products, use their low-cost advantage to offer supermarket buyers lower prices than those demanded by producers of branded products.

For example; Pick ’n Pay No Name cornflakes are cheaper than Kellogs branded cornflakes.

4. A focused differentiation strategy

This approach is about concentrating on a narrow buyer segment (or market niche) and outperforming competitors by offering buyers customized attributes that meet their specialized needs and tastes better than competitors’ products.


Rolex  serves the highest end wristwatch market (premium pricing and image)

Rolls Royce serves the luxurious end of automobile market (premium pricing and image)

5.A best-cost provider strategy

This approach is about giving customers more value for the money by satisfying their expectations on key quality features, performance, and/or service attributes while beating their price expectations. This approach is a hybrid strategy that blends elements of low-cost provider and differentiation strategies; the aim is to have lower costs than rivals while simultaneously offering better differentiating attributes.

This approach is more common in the car, cellphone, TV markets – the product can do the basic job it is intended to and the price is affordable. The loyal customers are people who are not brand loyal, so long as they have a cellphone, whether it’s Samsung, Apple, Nokia or Mobicel, they don’t care.

Now looking at your line of business, which approaches are commonly used, which ones aren’t and which one/s can you test?

Do you think being a cost leader or differentiation or a mixture of those could work for you? That’s your homework.

In the next post I will introduce a business model and how it relates to business strategy. It is important to touch on a business model because a company’s business model sets forth the logic for how its strategy will create value for customers and at the same time generate revenues sufficient to cover costs and realize a profit.

I hope this post gave you insights on how you can gain competitive advantage over your rivals.

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