What Are the 5 Basic Business Strategies?

A business strategy is a roadmap that guides the entrepreneur in accomplishing the envisaged vision for the entity. It lays down a plan for achieving both short-term and long-term goals. The strategy supports the entrepreneur in making decisions and utilising the available funds and resources in an effective manner. It allows the business owner to maintain a positive bottom line and develop a competitive edge in the marketplace. Thus, if you are planning to purchase a business for sale in New Zealand, you must be aware of the basic business strategies.

Different types of strategies help develop a distinct brand value, engage the target audience, communicate significant information to customers, and influence them to make a purchase. These are needed to function as a thriving organisation by leveraging the strengths and eliminating the weaknesses. Here is a list of the five basic business strategies that will help you to grow with utmost efficiency and control over the functions.

1. Pricing Strategy

The cost leadership strategy entails becoming the market leader by providing the best quality product at a price lower than the competitors. However, it can be achieved only when the production costs come down. Otherwise, the business will have to bear losses. The entrepreneur should not compromise on the quality of the products in his quest to offer the lowest price as it will drive away from the buyers. The catch here is that the business should be able to generate profits while offering a bargain price to the customers. It helps in gaining a bigger market share as customers are always looking for cheaper products that offer high quality. Eventually, the business becomes the dominant player, with the rise in sales and acquisition of new customers.

Many small businesses utilise the pricing strategy as they have small setups with a smaller number of employees and middlemen. It allows them to cut down on the production cost and extend a valuable product to the customers at an affordable price. It helps in creating a niche with loyal customers who are unable to resist the tempting offer of value for money. The big brands which offer a vast range of products are also able to take advantage of this strategy as large-scale operations and wholesale purchasing of the stock lowers the cost. Also, they rely on automated and efficient processes that enhance productivity.

2. Product Differentiation Strategy

The market is flooded with similar products that can make the customers confused. Thus, it is necessary for businesses to have a product differentiation strategy that helps them to create a unique identity for their offering. It helps in standing out in the clutter and presenting a unique value proposition through superior features and attributes. It can also help in boosting customer loyalty and retention as buyers are interested in products that are advanced and better than other similar products.

The strategy works best for the technology sector as well as the automotive industry as these verticals witness stiff competition and innovation every year. Businesses in these segments have to keep evolving according to changing environment and technological advancements to provide their customers with cutting-edge and ground-breaking products. Apple has been using this strategy for decades to retain its top position in the market and is followed by tech giants like Google, Microsoft, and Amazon. These companies can even use the premium pricing strategy because they have solid customer loyalty and credibility.

3. Customer Service Strategy

Customer service strategy involves preparing actional plans for providing positive experiences to buyers through various touchpoints. These include both pre-sale and post-sale experiences that are customised and customer-centric. They help in building a lasting rapport and relationship with the buyers and make them come back to the brand for making purchases. The plan is to provide a seamless experience that exceeds their expectations, resolves their problems, answers their queries effectively and makes them feel comfortable.

Every business must utilise this strategy to stop their customers from going to the competitors. It involves thorough market and target audience research. It aids in the demographic and psychographic study of the consumers to create a customer experience design and learn about changing consumer behaviour. It includes training the support staff in offering a satisfying and friendly interaction with the audience. In addition, the business needs to be aware of the needs and desires of the consumers to fulfil them and must obtain feedback to make improvements.

3. New Product Strategy

Growing the business is an ongoing endeavour for the entrepreneur. The new product strategy aids in developing the company through the expansion of product lines. It helps the entity to sell more products to a larger target audience and enter new markets. It also aids in cross-selling, which involves selling more products to the existing customers as they are aware of the brand and already buying it. The introduction of new products assists in diversification that reduces the risk factor of being dependent on a single product line.

Before utilising this strategy, the business must ensure that it has the available resources, time, and funds to manufacture, distribute and advertise the new product. The cost and time involved in the production should not affect the existing offerings. Also, the company must have a solid inventory management system to handle the growing stock list.

4. Technology Advantage Strategy

Technological advancements are inevitable, and every business needs to adapt to stay relevant. Accepting change and transitioning is the key to avoiding stagnation. Thus, businesses need to leverage the technology advantage strategy. Becoming the first few to adopt can have a lasting impact on the sales of the company as buyers will associate the brand with a technologically advanced entity.

It helps in becoming competent, productive, cost-efficient, and also improving the output and profitability of the company. The entrepreneur, however, needs to make an investment to gain this advantage by developing the IT function, digital infrastructure, and adoption of high-tech equipment. It has helped several businesses during the pandemic to stay afloat. Thus, developing the technological capabilities of the business is a must for growth.

Conclusion

Entrepreneurs looking for a business for sale in New Zealand must be aware of the basic business strategies that will help them to develop their venture. These well-laid out plans are imperative for the success of the entity as they offer directions for the achievement of the envisioned objectives.