An aggressive competitive strategy is a type of business strategy that involves actively trying to pursue change within the industry. Companies that go on the offensive generally invest heavily in research and development (R&D) and technology in order to stay one step ahead of the competition. They will also challenge their competitors by cutting into, or going with, new or underserved markets. Defensive competitive strategies, on the other hand, aim to thwart offensive competitive strategies.
Break down the offensive competitive strategy
Various techniques and strategies can be used alone or as part of a concerted effort to create a competitive offensive strategy. Businesses can even use entirely different strategies in different places or markets. For example, consider how a global soft drink company can react to a competitor in its mature home market versus how it would react to a starting competitor in an emerging market. Such variability can lead to certain complex offensive strategies, or even the incorporation of certain defensive strategies as part of an offensive effort.
The most extreme offensive competitive strategy is to actively seek to acquire other businesses to stimulate growth or limit competition. These companies are often considered to present a higher risk than those that are defensive because they are more likely to be fully invested or mobilized, which could prove to be problematic in the event of a market slowdown or dislocation. A feature of all offensive strategies is that they tend to be expensive.
Types of offensive competitive strategies
There are several types of offensive competitive strategies, each with its own advantages and disadvantages.
- An “end-of-lifecycle strategy” avoids direct competition and rather seeks to exploit intact markets or neglected segments, groups or demographic areas.
- A “preventive strategy” is simply the natural advantage a business has when it is the first to serve a particular market or demographic group. It can be extremely difficult to dislodge. Also known as the “first come” benefit.
- A “direct attack strategy” is more aggressive than the final run or the preventive offensive competitive strategies. Such a strategy can involve comparisons with competing products or unflattering companies, a price war or even competition as to who can introduce new product features at a faster rate. Direct attack can also borrow tactics from previously listed strategies, all in order to support public conversation through marketing campaigns.
- An “acquisition strategy” aims to eliminate a competitor by buying it. As such, it is a strategy used by the richest or best capitalized competitor. Such a strategy offers the advantage of instantly integrating new markets, new customer bases or business intelligence. Since this strategy is so costly, it must be used wisely and taking into account corporate antitrust or local competition laws.
Here are some examples of defensive strategies:
- A price war, in which a company undertakes to match or beat a competitor on price.
- Add more functionality to stay one step ahead of a competitor.
- Offer better service or guarantees that speak of having better products.
- Advertise more to promote awareness of improved products or services.
- Partnership with suppliers or retailers to exclude or limit access to competitors.
- Counter a decision by a competitor, for example when entering the internal market of a company by entering its own national market.