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:

• 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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