12 most used business strategies
Ever wondered how companies play their cards and compete with each other?
At the beginning there is always a business strategy.
Find out more about the 12 most used business strategies to keep up-to-date with market dynamics independently from the industry in which you work.
White Label Business Strategy
🔹 A white label producer allows other companies to distribute its goods under their brands, so that it appears as if they are made by them.
🔹 The same product or service is often sold by multiple marketers and under different brands.
🔹 This way, various customer segments can be satisfied with the same product.
Adopters of this strategies have been:
Richelieu Foods (1994)
User Designed Business Strategy
🔹 Within user manufacturing, a customer is both the manufacturer and the consumer (e.g., an online platform provides the necessary support to merchandise a product)
🔹 Thus, the company only supports the customers in their undertakings and benefits from their creativity.
🔹 The customer benefits from the potential to realise entrepreneurial ideas without having to provide the required infrastructure.
🔹 Revenue is then generated as part of the actual sales.
Adopters of this business strategies have been:
Amazon Kindle (2007)
Ultimate Luxury Business Strategy
🔹 A company to focus on the upper side of society's pyramid.
🔹 This allows a company to distinguish its products or services greatly from others. High standards of quality or exclusive privileges are the main focus to attract these kinds of customers.
🔹 The necessary investments for these differentiations are met by the relatively high prices that can be achieved - which usually allow for very high margins.
The World (2002)
Abbot Downing (2011)
Two-sided market Business Strategy
🔹 A two-sided market facilitates interactions between multiple interdependent groups of customers.
🔹 The value of the platform increases as more groups or as more individual members of each group are using it.
🔹 The two sides usually come from disparate groups, e.g., businesses and private interest groups.
Amazon Store (1995)
Metro Newspaper (1995)
Trash-to-cash Business Strategy
🔹 Used products are collected and either sold in other parts of the world or transformed into new products.
🔹 The profit scheme is essentially based on low-to-no purchase prices. Resource costs for the company are practically eliminated, whilst the supplier's waste disposal is either provided, or associated costs are reduced.
🔹 This also addresses customers’ potential environmental awareness ideals.
Duales System Deutschland (1991)
Freitag lab.ag (1993)
Target the base Business Strategy
🔹 The product or service offering does not target the premium customer, but rather, the customer positioned at the base of the pyramid.
🔹 Customers with lower purchasing power benefit from affordable products.
🔹 The company generates small profits with each product sold, but benefits from the higher sales numbers that usually come with the scale of the customer base.
Duales System Deutschland (1991)
️Grameen Bank (1983)
Arvind Mills (1995)
Bharti Airtel (1995)
Hindustan Unilever (2000)
Tata Nano (2009)
Supermarket Business Strategy
🔹 A company sells a large variety of readily available products and accessories under one roof.
🔹 Generally, the assortment of products is large but the prices are kept low.
🔹 More customers are attracted due to the great range on offer, while economies of scope yield advantages for the company.
King Kullen Grocery
Merrill Lynch (1930)
The Home Depot (1978)
Best Buy (1983)
Subscription Business Strategy
🔹 The customer pays a regular fee, typically on a monthly or an annual basis, in order to gain access to a product or service.
🔹 While customers mostly benefit from lower usage costs and general service availability, the company generates a more steady income stream.
Next Issue Media (2011)
Dollar Shave Club (2012)
Solution Provider Business Strategy
🔹 A full service provider offers total coverage of products and services in a specific domain.
🔹 Special know-how is given to the customer in order to increase his or her efficiency and performance.
🔹 By becoming a full service provider, a company can prevent revenue losses by extending their service and adding it to the product.
🔹 Close contact with the customer allows great insight into customer habits and needs which can be used to improve the products and services.
Tetra Pak (1993)
Geek Squad (1994)
3M Services (2010)
Shop-in-shop Business Strategy
🔹 Instead of opening new branches, a partner is chosen whose branches can profit from integrating the company's offerings in a way that imitates a small shop within another shop (a win-win situation).
🔹The hosting store can benefit from more attracted customers and is able to gain constant revenue from the hosted shop in the form of rent.
🔹 The hosted company gains access to cheaper resources such as space, location, or workforce.
Tim Hortons (1964)
Deutsche Post (1995)
Self-service Business Strategy
🔹 A part of the value creation is transferred to the customer in exchange for a lower price of the service or product.
🔹 This is particularly suited for process steps that add relatively little perceived value, but incur high costs.
🔹 Customers benefit from efficiency and time savings, while putting in their own effort.
🔹 This can also increase efficiency, since in some cases, the customer can execute a value adding step more quickly and in a more target-oriented manner than the company.
Robin Hood Business Strategy
🔹The same product or service is provided to ‘the rich’ at a much higher price than to ‘the poor’. Thus, the main bulk of profits are generated from the wealthy customer base.
🔹Serving ‘the poor’ is not profitable per se, but creates economies of scale, which other providers cannot achieve.
🔹Additionally, it has a positive effect on the company's image.
Aravind Eye Care System (1976)
One Laptop per Child (2005)
TOMS Shoes (2006)
Warby Parker (2008)
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