Porters generic strategies Flashcards
What is strategic positioning?
how a business is perceived in the market compared to similar businesses by its customers
what is cost leadership?
become the lowest cost producer in the industry, this is traditionally achieved by producing on a large scale so that they can benefit from economies of scale.
what will a firm do to achieve cost leadership (be a low cost producer)
high levels of production, high capacity utilization, lean production, use of technology
what are some examples of businesses who use cost leadership?
Poundland, Easy jet, Lidl, travel lodge
what is differentiation leadership?
a business aims to target larger markets and aims to achieve a competitive advantage through differentiation across the whole industry, and will typically use premium pricing
why does a firm looking to use differentiation leadership use premium pricing
the extra revenue generated from selling at a higher price will cover the additional production costs which occur from differentiating the product
what does differentiation leadership require a business to do that makes it difficult to achieve?
substantial and sustained marketing investment, superior product quality, branding, industry wide distribution, consistent promotional support
What is cost focus?
a business will seek a low cost advantage in just one or a small number of market segments. The product will be similar to a higher-priced substitute that might be a market leader but it will be a close enough substitute that sufficient customers will buy it over the higher priced one
What are cost focus products sometimes known as?
“me too’s” because they provide a similar product but at a lower price
what are examples of cost focus orientated businesses?
essential waitrose, Morrisons own brand etc
