TOMS Shoes' Business -Level Strategy (Chapter 5)

TOMS Shoes' competitive strategy includes three key elements: a differentiation strategy, a one-for-one business model, and a focus on social responsibility. They do not aim to be a low-cost provider but target a niche market that supports social responsibility. The company uses differentiation by offering unique products that come with a promise of helping a person in need for every product purchased. Its business model suits a specific niche of customers who are not just looking for quality shoes, but also wish to contribute to a social cause. Hence, we can say that although TOMS offers a broad range of footwear, it seems to intentionally focus on a specific market that values and supports socially-responsible businesses.

In our text, it states, " Potential pitfalls of differentiation strategies include: uniqueness that it not valuable, too much differentiation, too high a price premium.." With knowing the history of TOMS, it could be said that its initial business strategy is one of the reasons the company faced its hardships. The company's One- for-One business model soared in the beginning but later became an issue for the company. With times changing, the model should have changed as well. Studies done on the model showed that the donations didn't have a life-changing impact, but that the children who received the shoes were more likely to agree that others should provide for their family's needs.In April 2021, TOMS announced that it would no longer donate a pair of shoes to a child for each pair purchased, and instead pledged to give one-third of its profits to organizations that create grassroots good.