What is niche low competition

The 3 possible business strategies for your start-up

Corporate strategies: which one suits you?

The corporate strategy of your company is an essential factor for success or failure. Many start-ups fail because they don't follow a clear strategy. It is therefore difficult to position yourself clearly and to communicate what the company actually stands for.

Business start-ups should therefore pursue a clear corporate strategy right from the start. You can choose one of the three possible corporate strategies, taking into account various factors (such as the competitive advantage): cost leadership, differentiation & niche.

Once you have selected the right one for your company from the possible corporate strategies, you should also think about who you want to align the strategy with. You don't necessarily have to record this in the business plan, but it is important for the next chapter in the business plan (marketing).

1. Establishing the corporate strategy

There are various factors that influence your target group when making a purchase decision - but the two criteria quality and price are almost always among the most important reasons for a purchase decision.

Since you have already determined how you would like to position yourself in relation to the competition when positioning yourself, it should now be relatively easy to choose one of the following three company strategies:

A.) Company strategy differentiation: Best quality!

The corporate strategy differentiation (this corporate strategy is often referred to as quality leadership) is about clearly differentiating oneself from the competition. “Different and / or better than the others” is the motto here. To do this, you provide your own offer with features that competitors do not have (see also: Unique Selling Proposition).

This makes your product unique and your customers are usually willing to pay a higher price. They are also more loyal as there is no alternative. A differentiation can be made on the following levels:

  • Product (differentiation through quality, performance, image, design, service life, etc.)
  • Service (differentiation through service quality, delivery, additional services)
  • Personnel (differentiation through competence, courtesy)
  • Sales (differentiation in delivery, assembly, delivery times)
  • Image (differentiation in design, symbols, events, testimonials, etc.)

A good example of differentiation is the Apple iPhone. Companies that pursue a corporate strategy differentiation often achieve a higher margin, but usually also sell lower sales volumes.

B.) Corporate strategy cost leadership: focus on price

The corporate strategy of cost leadership aims to be able to offer lower prices than the competition through low manufacturing costs. This is usually achieved through large production volumes (size effects; experience curve effects) and strict cost control. A high level of efficiency is therefore the basis of the corporate strategy of cost leadership.

The following factors must be taken into account in the corporate strategy of cost leadership:

  • Price (best price / performance ratio is the basis for cost leadership)
  • Costs (technological lead in production, economies of scale due to large quantities, favorable purchase prices)
  • Financing (attractive financing offers)

Two very well-known cost leaders are the retailer Aldi and the airline Ryanair. Both companies are constantly working on increasing efficiency and thus reducing costs.

With the corporate strategy of cost leadership, the profit margin is usually below that of quality leader, but companies with a cost leadership strategy usually sell a much larger amount.

C.) Company strategy niche: You are a specialist

With the niche corporate strategy, you concentrate on a very limited market segment (niche) that the competition has mostly not dealt with, or only inadequately.

With a niche strategy, it is even more important than with the differentiation of the company strategy that you align your competencies and skills fully with the specialized niche market - this is the only way to further specialize and stand out from the competition.

You should consider the following points in the niche corporate strategy:

  • Customer focus (even more important in the niche corporate strategy than in the aforementioned strategies)
  • Attractive price / performance ratio (the price must not be set too low in order to be profitable with small quantities; on the other hand, the price should not be too high, otherwise new providers will quickly push into the market)
  • Communication (clear communication of customer benefit)
  • Image (image building as a specialist in the niche segment is an important part of this corporate strategy)

As an example of the niche corporate strategy, there are two very successful companies: Tesla, the Elektor sports car manufacturer from America, and the world-famous Weber kettle grill. Both companies have understood how to successfully occupy a niche. Read on to discover 4 strategies and examples of market niches.

An experienced start-up coach will help you find the right corporate strategy for you. Benefit from the subsidized advice!

Book subsidized advice

2. The strategic direction

After you have determined the right one for your company from the three corporate strategies and checked the critical points, the next step is to align the corporate strategy.

Although you don't necessarily have to include this part in your business plan, you should still be aware of its direction - especially with regard to the next chapter, Marketing. With the alignment, you determine the focus of your corporate strategy, which affects both communication, advertising, etc. Four alignment options are available to you:

  • Customer-oriented corporate strategy
    Your focus is on the customer and the fulfillment of his needs - from our point of view the most important orientation.
  • Competitive corporate strategy
    Focus on the competitors. It is your goal to exploit their weaknesses and inefficiencies and to oust them.
  • Sales Intermediate corporate strategy
    Focus on sales; i.e. you concentrate mainly on the sales partners.
  • Instrument-oriented corporate strategy
    You particularly value communication, advertising and image building

The goal is ...

... that you can determine the right one for your company based on customer benefit and positioning from the three possible corporate strategies. In the business plan, it should be clear why you have chosen a cost leadership, differentiation or niche strategy.

To whom you align the corporate strategy and how you implement it, you determine in the following chapter, starting with the 4Ps of marketing.

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.