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:
Foxconn (1974)
Richelieu Foods (1994)
Printing-In-A-Box (2005)
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)
Ponoko (2007)
Createmytattoo (2009)
Quirky (2009)
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.
Examples:
Lamborghini (1962)
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.
Examples:
Sat.1 (1984)
Amazon Store (1995)
eBay (1995)
Metro Newspaper (1995)
Priceline (1997)
Google (1998)
Facebook (2004)
MyHammer (2005)
Elance (2006)
Zattoo (2007)
Groupon (2008)
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.
🔹 Examples:
Duales System Deutschland (1991)
Freitag lab.ag (1993)
Greenwire (2001)
Emeco (2010)
H&M (2012)
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.
🔹 Examples:
Duales System Deutschland (1991)
️Grameen Bank (1983)
Arvind Mills (1995)
Bharti Airtel (1995)
Hindustan Unilever (2000)
Tata Nano (2009)
Walmart (2012)
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.
🔹 Examples:
King Kullen Grocery
Company (1930)
Merrill Lynch (1930)
Toys“R”Us (1948)
The Home Depot (1978)
Best Buy (1983)
Fressnapf(1985)
Staples (1986)
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.
🔹 Examples:
Blacksocks (1999)
Netflix (1999)
Salesforce (1999)
Jamba (2004)
Spotify (2006)
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.
🔹 Examples:
Tetra Pak (1993)
Geek Squad (1994)
CWS-boco (2001)
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.
🔹 Examples:
Tim Hortons (1964)
Tchibo (1987)
Deutsche Post (1995)
Bosch (2000)
MinuteClinic (2000)
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.
🔹 Examples:
McDonald's (1948)
IKEA (1956)
BackWerk (2001)
Car2Go (2008)
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.
🔹 Examples:
Aravind Eye Care System (1976)
One Laptop per Child (2005)
TOMS Shoes (2006)
Warby Parker (2008)
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