Marketing Strategy and Focus
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Marketing is the way companies interact with consumers to create relationships that are beneficial to both parties. Businesses use marketing to identify their audience before advertising to them. Today, this is most visible through social media interactions.
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The document discusses different business level strategies including cost leadership and differentiation strategies. It describes Porter's competitive strategies of cost leadership, differentiation, and focus. It also discusses Bowman's Strategy Clock and how companies can pursue various positions along the axes of price/value to implement different business level approaches. Specific Sri Lankan companies are provided as examples to illustrate how they employ strategies like low cost, hybrid cost/differentiation, risky high margins, monopoly pricing, and focused differentiation.
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Michael Porter suggested three generic competitive strategies: cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs in the industry to compete on price for a broad market. Differentiation targets a broad market by making the product or service unique in some way. Focus strategy involves targeting either a cost or differentiation advantage at a narrow market segment. Companies must choose one of these strategies to gain a competitive advantage.
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Michael Porter developed three generic strategies for competitive advantage in 1979: cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs in an industry for a given level of quality. Differentiation creates unique attributes that are valued by customers over competitors' offerings. Focus involves targeting a narrow customer segment and achieving either cost advantages or differentiation for that segment. The strategies aim to leverage a firm's strengths to gain competitive advantage through lowering costs, differentiating products, or specializing in a niche.
Porters generic strategies
The document discusses Porter's generic competitive strategies framework, which identifies three strategies for achieving competitive advantage: cost leadership, differentiation, and market segmentation/focus. Cost leadership involves having the lowest production and distribution costs to offer the lowest prices. Differentiation involves making products unique in some way to appeal to customers who are less price-sensitive. Market segmentation/focus involves tailoring offerings to serve specific market segments. Examples are provided of companies that employ each strategy successfully. Criticisms of the framework are noted, but it is still viewed as providing a useful model for understanding sources of competitive advantage.
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The document discusses Michael Porter's generic strategies for achieving competitive advantage. Porter developed three generic strategies in the 1980s - cost leadership, differentiation, and focus. Cost leadership involves having the lowest costs to appeal to cost-conscious customers on a broad scale. Differentiation creates unique product attributes that allow premium pricing. Focus targets a narrow market segment, aiming for cost advantage or differentiation. Firms must choose one generic strategy to avoid being stuck between approaches.
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As producer of outdoor cloth Patagonia considers the environment as their most important stakeholder in their decision-making. Their environmental efforts go far beyond required law and impose extra costs on their customers. As to basic economic logic providing environmental quality beyond required law will put a company in a competitive disadvantage.
Patagonia’s vision is environmental conservation and restoration. They consider their purpose of being in building the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis. Patagonia wants to compete in the market by pursuing an environmental differentiation strategy.
Patagonia’s key tactics in providing value for their stakeholders are summarized under the so-called ‘Product Lifecycle Initiative’. This initiative is a holistic commitment to lengthen the product lifecycle and reduce landfill waste. Those tactics can be categorized into what Patagonia refers to as: Reduce, repair, reuse and recycle. To reduce their customers consumption Patagonia heavily invests into R&D to produce the most durable garments. In addition, they only use organic and recycled garments to reduce the footprint of their products. Patagonia offers a free repair service for all of their products for the whole product life. Furthermore, they offer a second market where consumers can resell their used products. Patagonia encourages their customers to return Patagonia products instead of throwing them away so that they can recycle them correctly.
Patagonia provides a lot of value to the environment. This value needs to be captured via the consumers. Hence, the environmental quality they provide needs to find a willingness to pay among the customers. Some, but few people buy Patagonia products for altruistic reasons because they know that buying Patagonia products will do good to the environment. Patagonia bundles the public good of environmental quality, which is difficult to charge the customer for, with the private good being product quality. They do this by constantly communicating environment friendliness together with quality. Hence, consumer value environmental friendliness for the implicit quality Patagonia offers. Another aspect to buy their products is environmental prestige. Most importantly, however, environmentalism resonates with their customer values as Patagonia’s customers, as buyers of outdoor wear, usually love the nature. The fact that environmentalism is deeply integrated into their business model makes their engagement credible and difficult to imitate by competitors.
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Cost leadership strategy
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Product differentiation is a business strategy where firms create differences between their products and competitors' products. These differences can provide competitive advantages if customers prefer the unique attributes. Products can be differentiated based on their form, features, customization, performance quality, conformance quality, durability, reliability, and style. For many Indian customers, important factors are durability, features, performance, style, and an affordable price.
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Marketing Strategy and Focus
- 2. Marketing: Focus • Product focus • Customer focus • Profitability
- 3. Product Focus • Inside-out • Market Share • Volume • One size fits all • Reduce Costs
- 4. Customer Focus • Outside-in • Segmentation • STP • Value Creation • Customer Share • Wallet Share • Cross selling • Loyalty • Customer acquisition • Retention • Multiple sales over time
- 6. Customer Experience • Co-create with customer
- 7. Customer Decision Process • Bundle: • Operational feature sets • Design • Meet Needs
- 9. STP • Segmentation • Target • Position
- 10. 3 Principles • Customer Value • Differentiation • STP – Segmentation – Targeting – Position
- 11. Tools • Marketing Mix • 4 Ps
- 12. Value Map Fair Value Line
- 14. Market Focus & Competitive Advantage • Product – Scale • Market – Differentiate • Experience – Co create • Trust – Transparency
- 15. PRIZM