Choosing How to Compete

What are the two primary strategies businesses can choose when competing?

Price or customer benefits.

What is price competition?

A strategy where businesses compete based on pricing, often through price-matching or undercutting.

Give an example of a company that uses a cost leadership strategy.

Aldi competes on price by being the cheapest retailer.

What is meant by 'cost leadership'?

The approach taken by businesses that aim to be the cheapest retailer or producer in the market.

How can businesses increase their competitiveness?

By reducing costs through better supplier deals and in-house production.

What does the differentiation approach involve?

Competing based on the unique benefits offered to customers from products or services.

Provide an example of a company that uses differentiation.

Apple, which competes with its iOS product and the unique benefits it offers.

What is a common consequence for businesses that do not target cost or differentiation?

They are classified as 'stuck in the middle'.

What do businesses often invest in to enhance the differentiation of their products?

Research, development, and innovation.

How do discount retailers typically compete?

By trying to price-match or undercut one another.