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Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
Five generic competitive strategies
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Five generic competitive strategies

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  • 1. Five Generic Competitive Strategies
  • 2. Type of advantage sought
    Low costDifferentiation
    Broad differentiation
    Overall low-cost provider
    Broad
    range
    of buyers
    Market Target
    Best-cost provider
    Focused differentiation
    Focused low-cost
    Narrow
    range
    of buyers
  • 3. How to compete
    Low cost provider
    Obsessively control costs
    Closely examine the value chain
    Broad differentiation
    Buyers have diverse needs
    Buyers pay a premium for a good fit
    Best cost provider
    Need to create the perception of value compared to competitors
  • 4. How to compete (continued)
    Low-cost niche
    Narrow band of price conscious customers
    Big enough and concentrated enough
    Differentiation niche
    High end customers
    High quality
    Customized, rare or exclusive products and services
  • 5. When to go low-cost
    Heavy price competition
    Standardized product
    Hard to differentiate
    Consumers use product in similar ways
    Low switching costs for users
    Buyers have bargaining power
    Newcomers use pricing to get into the market
  • 6. Downside to low-cost
    Heavy pricecutting can lead to losses
    Train consumers to expect ever lower prices
    Maybe easy for competitors to copy strategy
    New technology may give rivals a pricing edge
    Over focus on costs may mean;
    Failure to notice change in usage
    Failire to notice desire for additional benefits/ features
    Failure to respond to changes in price sensitivity equated to growing spending power
  • 7. When to used differentiation
    Customers have diverse needs
    Firm has the ability to create diverse products
    Rivals unable or unwilling to use a differentiation strategy
    Rapid pace of design and technology change
  • 8. Downside to differentiation
    Buyers may not care about the perceived benefits
    Firm may not be able to create the perception of value
    Competitors copy so no longer unique
    Differentiation obsession may lead to unacceptable costs
    Feature creep
  • 9. When to be a best-cost provider
    Firm can provide a quality product at a relatively low cost
    Firm can provide a better performance at cost lower than rivals
    Firm can provide a higher level of customer service than rivals at no or low cost to customer
  • 10. Downside of best-cost provider
    Danger of being stuck in the middle
    Low cost providers draw away the price conscious
    Focused differentiators draw away the more discerning
  • 11. When to use a niche focus
    Segment not important for industry leaders
    Availability of relatively rare resources and skills
    Few rivals in the niche
    Customers perceive firm to be experts and / or have high credibility
    The niche is big enough to be profitable
  • 12. Downside of niche focus
    Changes in technology and fashion may render product / service irrelevant
    Profits in the segment make it attractive to new rivals

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