The Five Generic Competitive Strategies : Which One to Employ?

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    The Five Generic Competitive Strategies : Which One to Employ? - Presentation Transcript

    1. The Five Generic Competitive Strategies Which One to Employ? Part II
    2. The Agenda
      • Best Cost Provider Strategy
      • Focused Low-Cost Strategy
      • Focused Differentiation Strategy
      • Risks of Focused Strategies
      • Deciding Which One to Choose
    3. Best-Cost Provider Strategies
        • Make an upscale product at a lower cost
      Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation
    4. Best-Cost Provider Strategies
        • Give customers more value for money
      Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation
    5. Best-Cost Provider
      • Strategic Targets
      • Value-conscious customers
      • Competitive Advantage
      • Ability to give customers more value for money
      • Product Line
      • Items with appealing attributes, assorted upscale features
    6. Best-Cost Provider
      • Marketing Emphasis
      • Tout delivery of best value
      • Either deliver comparable features at a lower price than rivals or match rivals on prices and provide better features
      • Keys to Sustain
      • Unique expertise in simultaneously managing costs down while
      • incorporating upscale features and attributes
    7. Risk of a Best-Cost Provider Strategy
        • Low-cost leaders may be able to siphon customers away with a lower price
        • High-end differentiators may be able to steal customers away with better product attributes
      A best-cost provider may get squeezed between strategies of firms using low-cost and differentiation strategies
    8. Focused (Market Niche) Strategies
      • Concentrated attention on a narrow piece of the total market
      • Objective is to serve niche buyers better than rivals
      • Niche can be defined by geographic uniqueness, specialized requirements in using the product, or by special product attributes appealing only to the selected niche
      Introduction
    9. Focused (Market Niche) Strategies
    10. FUNCTIONAL EXPERIENTIAL RELATIONAL PSYCHOLOGICAL Value for me SOCIAL Value of me Source: Adopted from “A Customer Value Typology: Beyond the Functional – Emotional Dichotomy., Liyanage (2003) Re-Visiting Value Based Segmentation
    11. Focused Low-Cost Strategy Securing a competitive advantage by serving a lower price than rival competitors Introduction How?
      • Out-manage rivals in controlling the factors that drive costs
      • Reconfigure the firm’s value chain in ways that yield a cost edge over rivals
    12. Focused Low-Cost Strategy
      • Strategic Target
      • A narrow market niche where buyer needs and preferences are distinctively different
      • Basis of Competitive Advantage
      • Low overall cost than rivals in serving niche members
      • Product Line
      • Features and attributes tailored to the tastes and requirements of niche members
    13. Focused Low-Cost Strategy
      • Production Emphasis
      • A continuous search for cost reduction while incorporating features and attributes matched to niche member preferences
      • Marketing Emphasis
      • Communicate attractive features of a budget-priced product offering that fits niche buyers’ expectations
      • Keys to Sustaining the Strategy
      • Stay committed to serving the niche at lowest overall cost; don’t blur the firm’s image by entering other market segments or adding other products to widen market appeal
    14. Focused Low-Cost Strategy
    15. Focused Differentiation Strategy Introduction Aims at securing a competitive advantage by offering niche members a product they perceive as, well suited to their own unique tastes and preferences Targets upscale buyers who desire products and services with world class attributes.
    16. Focused Differentiation Strategy
      • Strategic Target
      • A narrow market niche where buyer needs and preferences are distinctively different
      • Basis for Competitive Advantage
      • Attributes that appeal specifically to niche members
      • Product Line
      • Features and attributes tailored to the tastes and requirements of niche members
    17. Focused Differentiation Strategy
      • Production Emphasis
      • Custom made products that match the tastes and requirements of niche members
      • Marketing Emphasis
      • Communicate how products offering does the best job of meeting niche buyers’ expectations
      • Keys to Sustaining the Strategy
      • Stay committed to serving the niche better than rivals; don’t blur the firm’s image by entering other market segments or adding other products to widen market appeal
    18. Focused Differentiation Strategy
      • Big enough to be profitable and offers good growth potential
      • Not crucial to success of industry leaders
      • Costly or difficult for multi-segment competitors to meet specialized needs of niche members
      • Focuser has resources and capabilities to effectively serve an attractive niche
      • Few other rivals are specializing in same niche
      • Focuser can defend against challengers via superior ability to serve niche members
      When a Focused Low-Cost Strategy or Focused Differentiation Strategy is Attractive
      • Competitors find effective ways to match a focuser’s capabilities in serving a niche
      • Niche buyers’ preferences shift towards product attributes desired by majority of buyers – niche becomes part of overall market
      • Segment becomes so attractive it becomes crowded with rivals, causing segment profits to be splintered
      The Risks of Focused Strategies
    19. Deciding Which Generic Competitive Strategy to Use
      • Each positions a company differently in its market
      • Each establishes a central theme for how a company will endeavor to out-compete rivals
      • Each creates some boundaries for maneuvering as market circumstances unfold
    20. Deciding Which Generic Competitive Strategy to Use
      • Each points to different ways of experimenting with the basics of the strategy
      • Each entails differences in product line, production emphasis, marketing emphasis, and means to sustain the strategy
    21. This rarely produces a sustainable competitive advantage or a distinctive competitive position The big risk Selecting a “ stuck in the middle ” strategy!
    22. Thank You! www.amisampath.com

    + Ami SampathAmi Sampath, 8 months ago

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