knowt logo

10 Porter's Generic Strategies

-How a business organization can develop their USP/competitive advantage

1. Cost leadership: aims to establish a competitive advantage by achieving the lowest operational costs in the market for a particular good or service. (needs a high economies of scale or retained profit)

Methods – economies of scale; improved supply chains; relocation; insourcing production

2. Differentiation: a firm makes its mass-market products distinct from those of its competitors. (enables a business to charge a premium price thus raising the firm’s profit margins, but it can be expensive for developing and promoting a high-quality product)

3. Focus (focus on focused markets)

-  Cost focus: to compete based on price to target a narrow market (niche market customers); means a business emphasizes cost-minimization within a focused (narrow or niche) market.

- Differentiation focus: targets a niche or single segment of the market; means a business pursues strategic differentiation within a focused (narrow or niche) market.

*Serving specific customers can create a USP, thus better brand loyalty and profits

 

10 Porter's Generic Strategies

-How a business organization can develop their USP/competitive advantage

1. Cost leadership: aims to establish a competitive advantage by achieving the lowest operational costs in the market for a particular good or service. (needs a high economies of scale or retained profit)

Methods – economies of scale; improved supply chains; relocation; insourcing production

2. Differentiation: a firm makes its mass-market products distinct from those of its competitors. (enables a business to charge a premium price thus raising the firm’s profit margins, but it can be expensive for developing and promoting a high-quality product)

3. Focus (focus on focused markets)

-  Cost focus: to compete based on price to target a narrow market (niche market customers); means a business emphasizes cost-minimization within a focused (narrow or niche) market.

- Differentiation focus: targets a niche or single segment of the market; means a business pursues strategic differentiation within a focused (narrow or niche) market.

*Serving specific customers can create a USP, thus better brand loyalty and profits