Porter's Generic Strategies
Porter's Generic Strategies are also called Porter marketing techniques. These strategic tactics used by different companies in order to penetrate a market and after penetration then sustain a strong advantage over the competitions. It can also be elaborate as “the primary aim of a company is to attract the industry in which it operates and secondary purpose of the company is to position itself with in that industry. A company positions itself or its products by the help of its strengths. The strengths may be product features and attributes or it may be well trained company staff, a well organized marketing campaign etc. Michael Porter emphasized that strengths of a company lies in its cost advantage and positioning. The table exemplify the Michael Porter’s Generic Strategies.
When a company applies these strengths this results in three generic strategies:
- Cost leadership Strategy
- Differentiation strategy
- Focus strategy
Cost Leadership Strategy
Cost Leadership marketing strategy used to penetrate the industry by using the cost of company’s products or services. This could be possible when a company increase efficiency and lowering operation and production costs, a company will be able to offer its specific products or services at a much lower rate to its target market, this will effectively make a company more attractive than competitors. Cost Leadership strategy can be very effective for those companies who want to penetrate a targeted market that's dominated by a few high-cost companies. In order to sustain the advantage a company also needs to regularly improve its product and services while maintaining cost leadership.
Some of the ways by which a company can acquire cost advantages are:
- Improving process efficiencies
- Gaining access to lower cost material
- Making optimal outsources
- Vertical integration decisions or
- avoiding some cost altogether