Choosing Strategic Direction (3.8) Flashcards
(Marketing Strategy Challenge)
To find a way of achieving a…
To find a way of achieving a sustainable competitive advantage over the other competing products and firms in a market.
Competitive Advantage :
An advantages over competitors gained by offering consumers greater value, either by means or lower prices or by providing greater benefits and services that justifies higher prices.
Porter’s Generic Strategy :
1) Cost leadership
2) Differentiation
3a) Cost Focus
3b) Differentiation focus
Strategic advantage is on the top (e.g. low cost, high quality), Strategic target (scope) is along the side.
1) Cost leadership is low cost, broad (mass) target/market.
2) Differentiation is differentiation, broad (mass) market.
3a) Cost focus is low cost, narrow (niche) target/market.
3b) Differentiation focus is differentiation, narrow target/market.
Porter’s suggested four ‘generic’ business strategies that could be followed…
- The differentiation and cost leadership strategies seek…
- By contrast, the differentiation focus and cost focus strategies are…
Porter’s suggested four ‘generic’ business strategies that could be followed in order to gain competitive advantage.
- The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments.
- By contrast, the differentiation focus and cost focus strategies are best used in a narrow market or industry.
(Porter’s ‘Generic’ Strategies, Cost Leadership)
- The objective is to become the __________-cost producer in…
- Typically involves production on a _________ scale which enables to business to…
- Good for businesses with…
Objective is to become the lowest-cost producer in the industry.
- This typically involves production on a large scale which enables the business to exploit economies of scale.
- Good for businesses with little product differentiation.
(Porter’s ‘Generic’ Strategies, Cost Focus)
- Here a business seeks a _________-cost advantage in just one or a…
- The product will be _________…
-
- Here a business seeks a lower-cost advantage in just one or a small number of market segments.
- Product will be basic, perhaps similar to the higher-priced and featured market leader.
(Porter’s ‘Generic’ Strategies, Differentiation Focus)
- The classic _________ marketing strategy.
- A business aims to differentiate…
- Business must ensure…
- Approaches could be through…
- Classic niche marketing strategy.
- A business aims to differentiate within just one or a small number of target market segments.
- Must ensure : needs and wants are clearly identified, there’s a valid basis for differentiation.
- Could achieve through selling high quality, using specialist expertise and exclusiveness.
e.g. Ferrari and Bentley
Porter’s ‘Generic’ Strategies, Differentiation Leadership)
- Business targets much larger…
- Usually associated with charging…
- Requires a substantial and sustained…
- About ensuring customers have a reason to…
- Methods include…
- Business targets much larger markets and aims to achieve competitive advantage across the whole of an industry.
- Usually associated with charging a premium price, added value features.
- Requires a substantial and sustained marketing investment.
- About ensuring customers have a reason to prefer the product over other, less differentiated products.
- Methods include : superior product quality, branding, consistent promotional support.
e.g. Apple, Nike, Jack Wills.
(Bowman’s Strategic Clock)
A model that explores the options for…
- There’s two dimensions which determine the strategic options around the clock face…
Model that explores the options for strategic positioning - i.e. how a product should be positioned to give it to the most competitive position in the market.
- 2 Dimensions : Price and Perceived value.
(Bowman’s Strategic Clock)
1) Low _________ and low __________ added :
2) Low _______ :
3) H_________ :
1) Low Price and Low Value Added : not a very competitive position, product isn’t differentiated and the customer perceives very little value.
2) Low Price : Look to be the low-cost leaders in a market. Profit margins on each product are low, but high volume of output can still generate profit.
3) Hybrid : Involves some element of low price but also some product differentiation, aim is to persuade consumers that there is good added value for the price.
(Bowman’s Strategic Clock)
4) Differentiation :
4) Aims to offer customers the highest level of perceived added value. Branding & quality plays a key role in this star.
