A leading cost strategy for McDonalds is the ability to purchase the land and buildings of its restaurants
McDonalds also developed a strong division of labor for its production processes, tight management control and product development strategy. Creating a strong top-down style of management is another leading cost strategy for McDonalds
Using fewer in-store managers allows the company to hire lower-wage workers to complete tasks.
A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition.
The value added by the uniqueness of the product may allow the firm to charge a premium price for it. The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product.
Firms that succeed in a differentiation strategy often have the following internal strengths:
Access to leading scientific research.
Highly skilled and creative product development team.
Strong sales team with the ability to successfully communicate the perceived strengths of the product.
Medimix herbal soap differentiated itself on the herbal plank two decades back when there were only synthetic soaps .
A new brand of herbal soap launched in today’s context has to probably define the herbal qualities through an enhanced mix of ingredients to convey the differentiation because `herbal’ is the proposition of several brands both new and old.
The established Medimix brand is currently running a campaign, which conveys the brand benefits through appropriate imagery.
By successfully adopting the 'focus' strategy since 1997, PepsiCo has emerged as the second largest consumer packaged goods company
The company has significantly strengthened its competitive position in the beverages segment.
By acquiring leading beverages' company like Tropicana products (July 1998), South Beach Beverage Company (October 2000) and Quaker Oats (December 2000)
Rivals cannot meet differentiation-focused customer needs. Brand loyalty to keep customers from rivals. Better able to compete on price. Rivalry Specialized products & core competency protect against substitutes. Customer's become attached to differentiating attributes, reducing threat of substitutes. Can use low price to defend against substitutes. Threat of Substitute Suppliers have power because of low volumes Better able to pass on through suppliers, price increases to customers. Better insulated from powerful suppliers. Supplier Power Large buyers have less power to negotiate because of few alternatives. Large buyers have less power to negotiate because of few close alternatives. Ability to offer lower price to powerful buyers. Buyer Power Focusing develops core competencies that can act as an entry barrier. Customer loyalty can discourage potential entrants Ability to cut price in retaliation deters potential entrants. Entry Barriers Focus Differentiation Cost Leadership Industry Force