Types of Business Strategies

Cost leadership is one strategy where a company is the most competitively priced product on the market, meaning it is the cheapest. You see examples of cost leadership as a strategic marketing priority in many big corporations such as Walmart, McDonald's and Southwest Airlines.

Differentiated business strategies are among the two basic types of competitive strategies companies can use to distinguish themselves in the market. The other general category of competitive strategies is the low-cost strategy.

Differentiation focus strategy is a hybrid of focus strategy and differentiation strategy. With focus strategy, a company chooses a small segment of the industry to focus its marketing efforts on. The advantage here is that there is less competition and, therefore, greater pricing flexibility.

Being a low-cost provider is a basic business strategy. It is the straightforward strategy of selling at a lower price than your competitors. But even such a basic strategy comes in two different types -- the low-cost-provider strategy and the focus low-cost strategy. These two strategies are appropriate for differently sized businesses.

Figure: Integrative Cost Leadership/ Differentiation Strategies A variety of other factors also may enable companies to gain a competitive advantage and earn above-average returns from an integrated cost leadership/differentiation strategy.