There are three ways to compete--product, service, and price. That's it! The rest is about execution. Sure, there are all kinds of other details to be worked out to craft a killer strategy. Decisions related to marketing, distribution, operating models, physical location, and the like are all essential considerations. But the choices made in those areas only serve to further inform your product, service, and pricing strategies. Indeed, these three strategic elements are the only levers you need to create a successful business. Let's explore how they work.
1. Product strategy.
This lever is about what is being delivered to the marketplace and consumed by the customer. The opportunity for differentiation relates to perceptions about quality, value, features, and functions. Commodity companies spend little time with product strategy, relying more on service and pricing to compete, while other businesses fine-tune their product strategy by varying their combination of quality, value, features, and functions to meet the perceived needs of a specific market niche.
To illustrate, let's compare Lamborghini and Ford. The former is offering a superior quality and feature-rich product, while the other ratchets the product lever down a bit to produce a value-based product for the market. Both are competing on product but they move the lever in very different ways.
2. Service strategy.
This lever is about defining how to provide customer support to the marketplace. Differentiation happens on the quality of the service provided and the customer experience. Lloyds of London, for example, provides concierge-level service to its high-end insurance clients, who are willing to pay higher premiums to receive exceptional service. Lloyds is competing on service. Its product (i.e., insurance coverage) is very similar to what can be obtained elsewhere, but Lloyds has made a strategic decision to attract its clientele by offering impeccable service.
3. Pricing strategy.
This lever is about determining the rate to be charged for the product or service being offered. Walmart is competing on price, so don't expect outstanding service to be part of the package. By comparison, your local boutique may have a personal shopper option to go with the hot lattes and imported wood paneling that covers the walls at the store, but don't expect to find bargain-basement pricing there--because the boutique's strategy is tipped toward an emphasis on product and service differentiation.
How you deliver your specific combination of product, service, and price can make your business unique and compelling in an ever-diverse and discerning marketplace. So, don't let the gurus scare you into thinking strategy is only for the big guys. Everyone can learn to adjust these three levers and compete very successfully.