Competitive Strategy: Definition, Types and More

Have you ever felt left behind or bombarded by competitors? You are not alone in this business battle. Since the business sector is growing, having a competitive strategy is essential to continue generating profit and extend their operations to make distinctive decision-making processes.

This blog will cover the different types of competitive strategies and their importance to thrive successfully in the business market. 

Defining Competitive Strategy

A competitive strategy is a long-term action plan to gain a competitive advantage within the organisational sector. In this process, it overlooks the strengths, weaknesses and opportunities against the competitors to take a winning course of action, which is a guidance to outperform competitors.

In the business world, being superior or above in the market means you are already ahead of your competitors and have implemented proper competitive strategies. The main target is to strengthen your business market and offer similar products and services as companies do to thrive and succeed. 

Moreover, competitive strategies should be distinctive, as no competitor can copy them. An organisation with an easy-to-repeat plan doesn’t hold much value or an edge.

What is the Importance of Competitive Strategy?

The importance of competitive strategies impacts an organisation’s overall business to gain an advantage over its competitors. Obtaining a competitive strategy is vital as it offers new ideas for developing products and services. 

The importance include:

  1. Finding and exploring new opportunities for the organisation
  2. Equipping the customer with the right products and services
  3. Staying with current technological trends and innovations to transform the business market.

Different Types of Competitive Strategy with Examples

Here are the different competitive strategies to look forward to for better comprehension.

1. Cost-Leadership Strategy: A cost-leadership strategy involves offering lower prices than competitors by reducing production costs and offering reasonable prices for products and services. A company with low production costs tends to make more profit. 

This strategy is helpful for large-scale companies that can manufacture products at low cost and implement cost leadership. To achieve good cost leadership, maintain high technology and adequate bargaining power.

Example: Walmart is a prominent example of a cost-leadership strategy, which generally offers its branded products at lower costs.

2. Differentiation Leadership Strategy: Businesses use differentiation leadership strategies to differentiate products from competitors and utilise specific features of the products. These strategies focus on different product attributes to find value in customer services. This can involve innovative factors, exceptional services, solid brand identity, etc., for premium pricing and customer loyalty.

Example: Apple focuses on innovative design and cutting-edge technology to ensure high-quality products and services to customers.


  • 3. Cost-Focus Strategy: A cost-friendly strategy is the same as a cost-leadership strategy, which involves cost-cutting within a specific market. This strategy focuses on offering lower-priced products and making a unique market segment with different needs and preferences. A company that employs a cost-friendly strategy also establishes brand awareness within the market.
  • Example: Wrando is a clothing store that uses cost-focused strategies to create budget-friendly clothing stores for young children and parents. The company is successful because it offers budget-friendly cost on clothing, which is high in quality and has high demand. 
  • 4. Differentiation Focus Strategy: The differentiation focus strategy offers unique products within a specific market segment. This strategy mainly values a particular market while balancing a standout position within a market strategy that involves goods and services from a niche market and helps the company grow significantly.
  • Example: Windy Skies Resorts is an island resort with swimming pools, hotels, and advanced adventure activities like zip lines. It implements and fosters a differentiation-focused strategy to serve hospitality to adult couples without children. This strategy helps this report distinguish itself from others, which have large areas that cater to large families.

Points to Consider When Choosing a Competitive Strategy

Below are the points to consider when choosing competitive strategies for the business market.

1. Understand the Size of the Business: If the business is small, it is helpful to prefer differentiation strategies to focus more on localised niches. Large businesses may affect economies of scale, while smaller companies can oversee marketing nieces to gain an advanced competitive edge. 

2. Outline Enhanced Skillset: Be assured that the company has a robust skill set that will help deliver products and services quickly and efficiently, oversee staff expertise, and design products that make the client choose you over your competitors.

3. Establish a Dynamic Work Environment: An organisation must understand the dynamics and industrial sector to which it belongs to track changes and ensure that it sustains a competitive advantage. 

Once you offer products and services within the industry, you must monitor technological advancements and innovations to stay ahead of competitors. Understanding these market dynamics will help you guide the company’s efficiency and maintain its position in the business market.

4. Long-Term Vision: The competitive strategies should align with your organisation’s long-term goals, ensuring action support to build future aspirations.

5. Target Audience: Oversee and identify your target audience to tailor a solid strategy to meet organisation needs, support, and preferences, fostering the ideal approach to increasing the audience team.

6. Risk Management: Identify complex risks associated with your strategy and develop an action-based plan to limit them and ensure risk-free business continuity.

7. Sustainability: Use sustainability to strengthen your strategy to impact the environment and social responsibility; these factors are essential to increasing customer and stakeholder satisfaction.

8. Cost-Benefit: Use cost-benefit analysis to boost potential returns on your strategy against the investment required, fostering profitability.

9. Focus on Existing Market Strategies: The ongoing market trends and objectives should align with the marketing strategy. Otherwise, it should be revised to meet current trends.


An organisation with a competitive strategy is necessary to succeed in the business marketplace. A complete understanding of competitive strategies and their types is crucial when choosing one that can positively impact the organisation. The ultimate target goes through cost-effectiveness, leadership, focus strategies, and differentiation, which can create customer value and achieve sustainable advantage.

MBA Full Form : FAQs

Q1. Define Competitive Strategy

A competitive strategy is defined as an organisation’s ability to gain customers without putting competitive pressures and build efficiency in its market position. 

It involves finding a company’s strengths and weaknesses and leveraging them to win competitive advantages over other competitors. The target of competitive strategies is to achieve better performance and sustainable profit. 

Q2. What are the different 4 types of competitive marketing strategies?

The 4 different types of competitive marketing strategies are:

  1. Cost Leadership
  2. Cost Focus
  3. Differentiation Focus
  4. Differentiation Leadership

Q3. What are competitive strategies four P’s?

The four P’s are:

  1. Product
  2. Price
  3. Place 
  4. Promotion

Q4.What are the four C’s of marketing strategies?

The four C’s are:

  1. Customer
  2. Cost
  3. Convenience 
  4. Communication

Q5. What are the two types of competitiveness?

The two types of competitors are:

  1. Superiority Competitiveness
  2. Mastery Competitiveness

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