In business, there are only three winning offensive strategies to beat your competition.
First, you can compete directly against your competitor, going head to head. This is only advisable if you have some sort of major advantage vs. your competitor in cost, quality, service, technology, marketing channels, product leadership, or relationships. For instance, Fedex can claim a dominant advantage compared to the United State Postal Service in reliability. For a price, Fedex will get your product where it needs to be, faster and with greater reliability than the USPS. On the other hand, if you don’t absolutely need your product to arrive by 10:30 am the next day, the USPS can claim a major cost advantage over Fedex with its Priority Mail service.
If you don’t have a major advantage that matters in your market, then the direct strategy is a mistake. It leads to a commoditized marketplace and negative effects like price wars, as many airlines experience.
In that case, your next best strategy is to find a small niche and dominate that niche. Your niche can be based on geography, demographics, psychographics, or industry. For instance, few consulting firms have the resources to be considered the best consulting firm in the world. Therefore, many consulting firms specialize with a specific solution in a specific industry (e.g. marketing for technology firms; operational improvement for health care systems).
If you can’t find a niche, then your final strategic option is to completely change the game. Microsoft did this when they bundled a suite of office software into one low-cost product, effectively putting Word Perfect with its single word processing software product out of business. TIVO changed the game with its revolutionary product for recording television shows. Changing the game means either providing a more complete, bundled solution, or coming up with an entirely new way of doing business.
Every business needs to know whether it should compete head to head, find a niche, or change the game. This applies to overall strategy as well as strategies to win specific customer accounts in RFP or multiple bidding scenarios.
