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In many open markets, most goods and services can be purchased from any
number of companies, and customers have a tremendous amount of choice. It's
the job of companies in the market to find their competitive edge and meet
customers needs better than the next company. So, how, given the high degree
of competitiveness among companies in a marketplace, does one company gain
competitive advantage over the others? When there are only a finite number of
unique products and services out there, how do different organizations sell
basically the same things at different prices and with different degrees of
success?
This is a classic question that has been asked for generations of business
professionals. In 1980, Michael Porter published his seminal book, "Competitive
Strategy: Techniques for Analyzing Industries and Competitors", where he
reduced competition down to three classic strategies:
• cost leadership
• product differentiation; and
• market segmentation.