Introduction
Most companies face challenges like deregulation, e-commerce exertion of pressures on the profits made by the company and also globalization. For companies to overcome these problems in their phases, they must put in place some innovative strategies like differentiating their products or services from those of the competition to prevent their performance from declining and extinction from the market (Moore, 2005).
A company faced the problem of stiff competition of its products in the market which lead to its decline in performance, and thus to prevent the company from being kicked out of the market the managers had to come up with a solution. Competition is one of the problems faced by many companies in their revolution phases and this leads to firms striving to get more market share to sell their services or goods. It also causes the companies to develop new services and goods and also to adopt new technology thus making the customer have a wider selection of products and services (Elaine 2002). Due to this selection by the customers, the prices of products and services are lowered compared to how they could have been sold in the absence of competition. This pause great challenge to most companies especially those which are still young. To survive in a competitive market, the company needs to come up with strategies that will help it have an edge in the marketplace (Moore 2005). The following are some of the strategies managers use to cope with the competitors:
Differentiation strategy
Involve the decision to choose on criteria that consumers apply when purchasing a product to design them according to the needs and demands. This strategy usually involves “charging premium prices for the services or products which reflects the high cost of production and cost of the value-added features given to the customers” (Elaine 2002).
Cost leadership strategy
In this strategy, the team’s objective was to make the company become the lowest-cost producer in the industry. If the “achieved selling price is near or equal to the average for the market, the lowest cost producer thus enjoys the most profit” (Elaine 2002). Many of the customers would accept such differentiation since the products get standardized to their demands and needs. In some cases the company can offer discounts to maximize the sales and this can further lead to an increase in the market share and thus attain a competitive advantage.
Differentiation focus strategy
In this strategy “the company differentiated its products to fit small segment of the market” (Elaine 2002). The unique needs of the customers provided the company with the opportunity of “providing products which are different compared to those of the competitors who targeted larger group of customers” (Elaine 2002).
Cost focus strategy
In this strategy, the company got a lower cost advantage from a few market segments. The company sells a product that is a standard one and acceptable to many customers.
Conclusion
In conclusion, this article has cited the different challenges faced by companies in their evolution. Competition is a challenge that is faced by all companies and thus the article has explained the different strategies that were adopted in a certain company to survive in the market and have an edge in the competitive market environment.
Reference list
- Moore, G.A. (2005). Dealing with Darwin: How great companies innovate at every phase of their business, New York: Portfolio (Penguin).
- Elaine D. (2002) Seeds of Innovation – Cultivating the synergy that fosters new ideas, AMACM Pub, Vol.12, Issue 3, pp.654-676.