Generic competitive strategy
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This document discusses generic competitive strategies as proposed by Michael Porter in 1980. It outlines three main competitive strategies: cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs in the industry to offer lower prices broadly. Differentiation creates unique product attributes that allow charging higher prices. Focus strategies target specific market segments by emphasizing either low costs or differentiation for a narrow market. Examples are given like Walmart for cost leadership and Apple for differentiation.
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2. Monitoring customer loss or defection rates to identify potential issues.
3. Tracking the performance of competitors to benchmark satisfaction levels.
Product life cycle & marketing strategies
The document discusses the product life cycle and marketing strategies at different stages. It defines the product life cycle as having 5 stages: development, introduction, growth, maturity, and decline. Each stage poses different challenges and opportunities for sellers. The strategies discussed include penetrating pricing in introduction, expanding distribution in growth, modifying products/markets/marketing in maturity, and harvesting/divesting in decline.
Distribution channel-decisions ppt
Distribution channels are an important part of the supply chain that focuses on making products available to customers. Channel decisions can significantly impact what consumers pay, with distribution costs sometimes accounting for over 60% of the retail price. While more efficient channels like supermarkets have lower margins, distribution still makes up around 30% of the consumer price. Producers have various channel options to sell directly to consumers or through retailers, agents, wholesalers or a hybrid system. The objectives are to make the right products available to customers at the right time and place cost effectively while meeting service requirements.
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© 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw Hill.
Copyright Image Source/Getty Images
Chapter 5 describes the five basic competitive strategy options—which of the five to employ is a company’s first and foremost choice in crafting overall strategy and beginning its quest for competitive advantage.
© McGraw-Hill Education
Learning Objectives
After reading this chapter, you should be able to:
Understand what distinguishes each of the five generic strategies and explain why some of these strategies work better in certain kinds of competitive conditions than in others.
Recognize the major avenues for achieving a competitive advantage based on lower costs.
Identify the major avenues to a competitive advantage-based on differentiating a company’s product or service offering from the offerings of rivals.
Explain the attributes of a best-cost strategy—a hybrid of low-cost and differentiation strategies.
© McGraw Hill
This chapter presents the concepts and analytical tools for zeroing in on a single-business company’s external environment.
© McGraw-Hill Education
3–2
Chapter Overview
This chapter describes the five generic competitive strategy options:
How well is the company’s present strategy working?
What are the company’s strengths and weaknesses in relation to the market opportunities and external threats?
What are the company’s most important resources and capabilities, and will they give the company a lasting competitive advantage over rival companies?
How do a company’s value chain activities impact its cost structure and customer value proposition?
Is the company competitively stronger or weaker than key rivals?
What strategic issues and problems merit front-burner managerial attention?
© McGraw Hill
Why Do Strategies Differ?
A firm’s competitive strategy deals exclusively with the specifics of its efforts to position itself in the market-place, please customers, ward off competitive threats, and achieve a particular kind of competitive advantage.
Key factors that distinguish one strategy from another:
Is the firm’s market target broad or narrow?
Is the competitive advantage being pursued linked to low costs or product differentiation?
© McGraw Hill
A company’s competitive strategy deals exclusively with the specifics of management’s game plan for competing successfully— its specific efforts to please customers, strengthen its market position, counter the maneuvers of rivals, respond to shifting market conditions, and achieve a particular kind of competitive advantage.
The biggest and most important differences among competitive strategies boil down to:
Whether a company’s market target is broad or narrow
Whether the company is pursuing a competitive advantage linked to low ...
Generic competitive strategies
Michael Porter identified three generic strategies for competitive advantage: cost leadership, differentiation, and focus. Cost leadership involves standardized products offered at the lowest price. Differentiation creates a unique product or service valued by customers over low cost. Focus targets a narrow market segment. Pursuing a single strategy is no longer sufficient - hybrid approaches integrating cost leadership and differentiation offer flexibility to address changing customer expectations for quality, service and price.
Porters
Michael Porter identified three generic strategies for gaining competitive advantage: cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs in the industry. Differentiation means creating unique product attributes that are valued by customers. Focus involves targeting a narrow customer segment and achieving either cost advantages or differentiation within that segment. Firms pursuing each strategy require different internal strengths and face different risks from competitors.
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chapter 5 The Five Generic Competitive StrategiesPART 1 Concep
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Generic competitive strategy
- 1. Generic competitive strategies Presentation by Abdulkarim khanapuri MB161001 Submitted to Mr. Mahantesh Kuri
- 2. GENERIC COMPETATIVE STRATERGY The competitive theory was proposed by Michel porter in 1980. Competitive strategy is a long term action plan for how a firm will compete after evaluating its strengths and weaknesses. Competitive strategy is defined as a “ frame work” for making decision that create result in competitive market.”
- 3. An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and services that justifies higher prices. Competitive advantage?
- 4. Cost leadership Differentiation Strategy Cost leadership Focus Differentiation Focus Broad Narrow Cost Differentiation Source of competitive advantage Marketswherebusinesscompetes
- 5. TYPES OF STRATEGIES 1. Cost leadership 2. Differentiation strategy 3. Focused strategies
- 6. COST LEADERSHIP ─ The lowest cost producers or distributor within there industry. ─ The objective is to become the lowest-cost operator. ─ Involves production on a large scale which enables the business to exploit economies of scale. ─ The cost leadership strategy always Target a broad market. Advantages of Cost Leadership ─ Builds up an aggressive edge of competition, by offering low prices to potential customers because of low cost ─ Cost leader gets an advantage of reducing its price in case the substitute product enters into the market
- 7. Walmart: • Famous for EDLP; is a pricing strategy promising consumers a low price without the need to wait for sale price events or comparison shopping. Micromax phones: • low budget android phones for consumers. • Around 2014 & 2015 company gained lot of market share.
- 8. DIFFERENTIATION STRATEGY ─A differentiation strategy calls for the development of a product or services that offers unique attributes that are valued by customer. ─Customer perceive the product to be different and better than Or different from the products of the competitors. ─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 be sufficient to cover the extra costs incurred in offering the unique product. ─It includes product image or durability, after sales service, quality & additional features.
- 9. Ways to achieve differentiation ─ Superior product quality ─ Branding ─ Wide distribution ─ Sustained promotion Advantages of differentiation ─ Strategy enables the company to charge a premium price to customers ─ Helps the company to have a dominant brand image in the market. Limitation of differentiation ─ The sustainability of the brand uniqueness is in doubt because competitors might imitate it
- 10. Google Pixel ─ Differentiation by ─ Camera Examples Duracell batteries ─ Differentiation by ─ Durability Duracell batteries ─ Differentiation by ─ Reliability
- 11. FOCUSED STRATEGY ─ Companies use Focus strategies to concentrate on a particular market by understanding the dynamics of that market and the unique needs of customers within it. ─ This helps the companies to develop uniquely low cost or well-specified products for the market ─ They tend to build a strong brand loyalty amongst the customers.
- 13. FOCUSED LOW COST STRATEGY ─ It aims at securing competitive advantage by selling products at lower prices than those of its competitors. ─ It concentrates on selling products at a low cost to a narrow target segment. ─ The main objective is to serve niche buyers better than the rivals.
- 14. One plus Differentiated by • Advanced features at a price much lower than it’s competitors. • Specially targeted at geeks and software developers who want to customize the device to a great extent • Value for money flagship device Examples
- 15. FOCUSED DIFFERENTIATION STRATEGY ─ Pursuing strategic differentiation within a focused market. ─ A company aims to differentiate its products within a small number of target market segments. ─ Focused differentiation strategy is most effective when consumers have different preferences or requirements and when rival firms are not attempting to specialize in the same target segment.
- 16. Apple Inc. Differentiation by • Customer service • Software • UI • camera Fast track Differentiation by • Style Examples
- 17. Michael Porter “An industry’s profit potential is largely determined by the intensity of competitive rivalry within that industry”