The two most widely used types of strategy in the world of business are:
1) Cost leadership, and
Small businesses rarely have the ability to be true cost leaders. Let's face it, we just don't have the scale and resources that the big boys have to offer the lowest prices and still generate large profits (think Walmart).
So we're left with differentiation, offering a product or service that is done "differently" or "better" than the competitors - at a slight premium that customers can and/or willing to pay for.
But here's the key: you can't do so without fully knowing your competition - both direct and indirect competitors (think substitutes).
At Scopo, we conduct a thorough competitor analysis when helping our small business clients. It proves to be a valuable aspect of the strategic plan because it assists in identifying new and exciting revenue opportunities by aligning key resources and processes to customer needs and wants, in such a way that differentiates them from their competitors, does not reduce the quality of their product or service, and seeks to fulfill the PURPOSE (aka SCOPO) of their organization. Oh yeah, it also comes in handy when you're looking to finance your small business - lenders and investors want to know this information.
Get to know the competition. Differentiate yourself. Earn higher profits. Fulfill your purpose.
Joe Immordino, MBA