A firm can face only two fundamental economic conditions, one of which gives rise to low-cost strategies, and another that gives rise to differentiation strategies.

Commoditized = Price Driven Purchases (race to the bottom) Differentiated = Value Driven Purchases (sell in a category of one with no comparison.

The good news is only three types of pricing strategies matter: maximization, penetration, and skimming. Let's look at each. Maximization: This strategy maximizes your goal (such as profit or revenue) in the short term.

In general, there are five ways that an individual firm can build sustainable competitive advantage: 1. Creating real product differentiation through superior technology or features 2. Creating perceived product differentiation through a trusted brand or reputation 3. Driving costs down and offering a similar product or service at a lower price 4.