What is a Competitive Strategy?


Businesses and companies develop various strategies to increase the sale and revenue. Competitive strategy is among one of them out of all strategies. A Harvard University professor, Michael Porter, came up with a concept of competitive strategy. He divided his strategy into four types. Today, we’ll discuss what is a competitive strategy and its types along with an example. 

What is a competitive strategy?

A competitive strategy is a long-term plan of a company to achieve a competitive edge over rival companies and competitors in the industry. The focus of this strategy is to achieve a higher return on investment (ROI) and a better position in the industry. However, it’s a very important strategy in a competitive industry where different companies are offering the same type of products. Smartphone mobile is a very good example of it.

It’s different to compete in a market where competition is higher. When you’re entering into the competitive market, then your bars and standards should be higher because you won’t be able to keep up with the competitors. 

If you want to succeed in a competitive business environment, then you should conduct the swot analysis of your competitors. You would learn their strengths, weaknesses, opportunities, and threats so that you could develop the product accordingly. 

The competitive strategy helps businesses and companies to make better decisions and improve their products and services. 

Types of Competitive Strategy

Some of the main types of Porter’s competitive strategy are as follows; 

Cost Leadership Strategy 

The cost leader strategy is a long-term commitment of the company to offer products and services at a lower price. It’s a bit difficult strategy for small businesses to implement because the lower cost means that you’d have to agree to low profit. However, it is a perfect strategy for big businesses. 

When we talk about cost leadership, then you would have to manufacture products at a mass scale in order to achieve cost-leader via low cost. Some of the cost leadership factors are bargaining power, tech development, distribution channel, and efficient operation. 

Walmart is successfully implementing the cost leadership strategy. 

Differentiation Leadership Strategy 

Differentiation leadership strategy means adding unique attributes to the product/service in order to stand out from the competitive crowd. The unique attributes help the company to become different in the market. However, the uniqueness and differentiation allow the company to charge premium prices from the customers. The customers would be willing to pay for it because the competitors don’t offer such features. 

T Mobiles, Ben & Jerry’s, Clif Bar and Company, Apple, and Starbucks are some of the main examples of companies that are following the differentiation leadership strategy. 

Cost Focus Strategy 

The cost focus strategy is similar to the cost leadership strategy. However, the main difference is that the strategy focuses on the particular segment of the market and offers them low prices for its products/services. It’s a very useful strategy to address the needs and wants of customers and increases the company’s brand awareness. 

Many companies use the cost focus strategy to focus their efforts on the particular geographical segment of the market to satisfy customers’ needs. Like Sonata Watches, etc 

Differentiation Focus Strategy 

Differentiation focus strategy is similar to the differentiation leadership strategy. Here your focus is on targeting the needs of the particular segments of the market. However, the company tries to differentiate itself from the competitors, instead of offering products/services at low prices. 

This strategy focuses on offering differentiated products/services only to the target segment of the market. For instance, Breeze Resort offers hospitality services only to childless couples, so that they could enjoy the vacation without the disturbance of children. 

Examples of Competitive Strategy 


Apple offers a variety of products and services to its customers worldwide. Like Music Players, Smartphones, tablets, computers, and many other consumer products. The brand has achieved a unique position in the market through premium prices and product innovation. 

Apple has been consistently developing new products/services and its complementing products are increasing brand loyalty among its users. It has made it very difficult for competitors to enter the market and win the market share. 

The company offers high-quality products and services with unique features, and the customers are willing to pay premium prices. 


Aldi is a food retail company and it followed the lean production competitive strategy which has made the company’s production more efficient. The lean production has allowed the company to decrease the number of consumed resources. It also helped the company to reduce waste, time consumption, labor, space, and other resource utilization. Consequently, the production cost decreased significantly. 

Aldi implemented the other competitive strategy is investing resources in the professional development of its staff. It means offering comprehensive training programs to its employees. It has developed their skills and expertise and they’re able to perform their job better. 

Conclusion: What is a Competitive strategy? 

After an in-depth study of what is competitive strategy, its types, and examples, we’ve concluded that competitive strategy helps companies to stay in the competitive market. If you have any questions relevant to the competitive strategy, leave them in the comment box below, I’ll answer them to you as soon as I can. 

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