Four Strategies

Question: 

Between cost leadership, differentiation, focused cost leadership and focused differentiation, which of these 4 strategies would you consider the most appealing as a customer and why?

Gary's Answer: 

This question cannot be answered generically. One strategy is not more “appealing to customers” or better in any other sense outside of a specific situation. The choice of any strategy is based on circumstances, that is, the specifics of the situation.

The only general advise for choosing among these four strategies is to pick the one that no one else is using. The general rules is to look for an empty position. You don’t want to be compared on the same basis that another company has already established.

However, don’t get trapped into the silly idea that these are the only four competitive strategies that you can use to win a market position. These are only academic categories into which specific strategies are shoehorned by those writing books and teaching classes. If I wanted to waste your time, I could invent a dozen other
categories for common strategies. For example, that of a “geographical” strategy of being local or a “size” strategy of being the largest.

ALL real world strategies are most specific that this, tailored to the unique specifics of a given competitive situation.

New categories are invented all the time. We can shoehorn Google’s pricing strategy of “free” into the “cost leadership” category, but “free” doesn’t work unless you combine it with the idea of selling advertising space or some other idea unique to the possibilities hidden in the situation.

Unlike game theory, where all possible strategies are predefined, real life strategy is a creative enterprise where individuals are always finding new ways to carve out niches for themselves.