So you are second best.
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Or maybe in third place. How do you climb to the champion's podium? Winning takes effort, and may require a lot of time spent on planning. But it's all worth it in the end.
It's not always about fighting it out with the leading firms using a tit-for-tat strategy or by simply copying them. In fact, that may backfire and cost you dearly, especially if you are a small firm that is competing against large, established industry leaders.
There are six well-known textbook strategies for runner-up firms, of which three are more viable and thus preferred for our discussion. Here are the strategies that you can consider adopting.
1. The "Superior Product" Strategy
For customers who value quality more than anything else, this strategy works. Of course, you must ensure that your product really is what you claim it to be, and performs in accordance with the customer's expectations.
To exact this strategy, expect to put in considerable effort in marketing your product, as you will want to communicate the right message to the customer.
Your targeted customers are willing to pay a premium for the 'best' product. Therefore you need to be certain that your product is truly superior. It is important to protect your reputation and to keep these customers coming back.
2. The "We Specialize" Strategy
To become a specialist firm, you need to take your pick of some product lines that you are good at, and then work on these lines to make them something that you are exceptionally good at.
For example, the industry leader may be a provider of body care products such as lotions and creams, while you may decide to specialize in selling only foot care products. You then start to develop more products for foot care, including those that the industry leader does not provide.
Specialist firms don't develop overnight, and you need to be patient in seeing the strategy work for your firm. You may even see a decline in sales due to the dropping of certain product lines. However, over time, you build up a specialist capability that is not easily replicated. Often, the branding and reputation of specialist firms are spread via word-of-mouth.
3. The "Go Niche" Strategy
Many top players aim to serve the mass market, benefitting from the cost effectiveness of economies of scale and the ability to build successful marketing campaigns. Smaller competitors therefore find it extremely difficult to gain market share on the same products.
Small firms can try to identify areas of the market that are currently not being served. The niche market offers small firms potential growth. Small firms can also build up their brand name to be synonymous with catering to the needs of the targeted market. In this way, these customers will instantly connect your brand with the relevant products that they need.