It doesn’t matter what type of business you have – the industry, size, niche and market are all somewhat irrelevant when we’re talking about business strategies – you need to have a strategy in place. This is a plan that details how your business will achieve its goals and succeed in the market. A business strategy usually includes things like what products or services your business will offer, who the target audience is, how you will market and advertise your offerings, and how you will manage your resources.
To put it simply, a business strategy helps a business to focus its efforts and resources on what’s important when it comes to growth, success and beating competitors. But, which business strategy will you choose? Below, we’ve taken a look at the main types of business strategy and some popular examples.
The 3 Main Types of Business Strategy
There’s no getting away from the fact that a business strategy is hugely important, and there are three main ways to approach things. Not all strategies are the same, and it’s important to find the right kind of strategy for your business.
- Business-Level Strategy – This type of strategy deals with how a business competes within a specific market. It involves decisions related to products, target markets, customer segments, pricing, marketing approaches and distribution channels. The goal is to create value for customers and gain a competitive edge in the industry.
- Corporate-Level Strategy – This type of strategy focuses on a business’ vision and mission, guiding major decisions such as mergers, acquisitions and resource distribution. It sets the direction for the entire business, focusing on objectives and strategic priorities that impact the business as a whole.
- Functional-Level Strategy – This type of strategy focuses on the operational aspects of a business, such as production, marketing and finance. It supports both corporate and business-level strategies by improving the efficiency and effectiveness of various business processes, ensuring that resources are used productively and that goals are met.
Why is a Business Strategy Important?
A lot of people underestimate the importance of a business strategy, even though it’s a major part of whether or not a business is successful. Without a strategy, you run the risk of wasting time, money and resources on projects that aren’t going to drive your business forward in the way you want to. There’s a lot that goes into growing a business, and going off track is easier than you think. You might find yourself going in different directions or making decisions that don’t help your business to succeed, as there’s nothing to guide you.
A business strategy helps you to avoid this by setting clear goals, focusing your efforts, and helping you to make informed decisions, all with growth in mind. It ensures that everyone in your team is on the same page and working towards common goals, which increases the chances of achieving long term success. Without a business strategy, even the most successful businesses can find themselves scrambling around in the dark.
Business Strategy Examples You Should Be Paying Attention To
There are a lot of ways to approach a business strategy, some of which will work better than others for your business. The right business strategy for you will depend on your long term goals, the resources you have to get there and your target market. Here are some of the most popular business strategy examples to consider.
- Cost Leadership – This business strategy example is all about offering the lowest prices in the market, whilst also remaining profitable. IKEA is a good example of this, as the company uses its impressive scale and efficiency to keep costs down and prices competitive, making it a business that customers want to use. This strategy involves careful cost management and operational efficiency. While it may be challenging for smaller businesses to compete on price, those that can achieve low costs without compromising quality can attract customers that are looking for a bargain.
- Customer Retention – There are a lot of customer retention programs out there, but Amazon Prime is by far one of the most effective. It’s a way of keeping existing customers engaged, loyal and hesitant to take their business elsewhere. With Amazon Prime, next day delivery, streaming services and Prime Day sales all keep customers interested. They don’t want to go elsewhere, as they’ll miss out on the exclusive benefits that the marketplace offers. Retaining customers tends to be more cost effective than acquiring new ones, with existing customers more likely to make repeat purchases.
- Differentiation – Differentiation is about setting your business apart from competitors by offering something, well, different. This could be through unique product features, quality that goes above and beyond what others are offering, or a compelling brand story. As a business strategy, differentiation allows businesses to charge higher prices, knowing that customers who identify with their unique value proposition will still be interested in what they have to offer. For example, Starbucks is by no means the cheapest place to buy coffee, but customers are drawn in by the brand story. Effective differentiation helps to build a strong brand identity and loyal customer base.
- Cross Selling and Upselling – This is a strategy aimed at increasing sales by encouraging customers to buy additional products or to upgrade their current choices. It’s often a lot easier to increase how much an existing customer is spending, compared to trying to get a brand new customer on board. Things such as offering customers discounts if they return and giving incentives for repeat purchases work well. This approach boosts revenue and strengthens customer relationships by providing added value and convenience.
- Customer Experience – A customer experience business strategy focuses on making every interaction with a business as positive and satisfying as possible. This is something that we’ve seen a lot with Amazon and Starbucks, both of which go above and beyond to turn a simple transaction into a memorable customer experience. This approach to business growth helps you to build strong customer loyalty and it encourages repeat business, whilst also encouraging customers to recommend the business to others. By prioritising how customers feel, businesses can turn satisfied customers into brand advocates.
- Innovation – Innovation involves creating new or improved products, services or business approaches to stay ahead in the market, and it’s something that Apple does very well. By introducing smartphones that go above and beyond that other companies offer, Apple has made a name for itself as the ‘go to’ brand for innovation. By consistently offering cutting edge solutions or improvements, you can differentiate your business and capture new market opportunities.
- Social Responsibility – Social responsibility is a business strategy that focuses on ethical practices and contributing positively to society and the environment. There are a range of ways to approach social responsibility, such as donating a portion of sales to environmental causes, or by providing products to those in need. This business strategy not only helps build a positive brand image, but it also appeals to eco-conscious consumers and those who prioritise ethics. By aligning business practices with social values, you can attract and retain customers who share your desire to make a positive impact. It’s not something that all businesses do, and so it’s a way to stand out as going above and beyond what’s expected of you.
There’s a lot that goes into implementing a business strategy, but we are here to help. As business growth partners, we can provide valuable guidance and support, helping you to tailor and implement the business strategies that best align with your goals. Thanks to our industry insights and experience, we can assist with strategic business planning and ensure that your plans are executed efficiently. By partnering with Profici, you can streamline your approach to business growth, overcome obstacles and drive success. Get in touch to find out more.
No Blogs