A newly-opened company can use several business strategies, depending on its situation. A scenario like a new company may face different challenges compared to a more established company. Therefore, the business strategies they execute may vary from those of key competitors.
Here are four types of business strategies:
Product Variation Strategy
Small businesses will frequently use a product variation strategy when they have a competitive edge, such as greater quality or service. For example, a small manufacturer or air purifiers may set themselves apart from competitors with their superior engineering design. Obviously, companies use a product variation strategy to set themselves separately from key competitors. In addition to that, according to a published article “Porter’s Generic Strategies at QuickMBA.com, the product variation strategy can also aid a business create brand loyalty.
A growth strategy involves establishing new products, services or adding new attributes to existing products. Sometimes, a small business may be obligated to modify or enhance its product line to carry on with competitors. Otherwise, customers may start using the new technology of a competitive company. For example, cell phone creators are continually adding new features or unravelling new technology. Cell phone companies that do not sustain with consumer demand will not be successful in staying in the industry for very long time. A small business may also adopt a growth strategy by discovering a new market for its products. Sometimes, companies find new markets for their products unintentionally. For example, a small consumer soap manufacturer may notice through marketing research that industrial workers like its products. Hence, in addition to selling soap in retail stores, the company could package the soap in larger containers for factory and plant workers.
A price-skimming strategy concerns charging high prices for a product, particularly during the introductory phase. A small business will utilise a price-skimming strategy to hastily mend its production and advertising and production costs. However, there should be something distinct about the product for consumers to pay the extravagant price. An example would be the primer or introduction of a new technology. A small company may be the first to present a new type of solar panel. Because the company is the sole distributor of the product, customers that really want the solar panels are willing to pay the higher price. One disadvantage of a price-skimming is that it tends to entice competition relatively rapid, according to the Small Business Administration.
A small business with extra capital may use a gaining strategy to acquire a competitive benefit. This tactic involves buying another company, or one or more product lines of that company. For example, a small grocery shop on the east coast may acquire an equivalent grocery chain in the Midwest to develop and expand its operations and target market.