Michael Porter's Generic Strategies

Sun, 03/30/2014 - 21:34 -- Gulzar Ahmed

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.

porters generic strategies cost leadership, differentiation & focus

When a company applies these strengths this results in three generic strategies:

  1. Cost leadership Strategy
  2. Differentiation strategy
  3. 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:

  1. Improving process efficiencies
  2. Gaining access to lower cost material
  3. Making optimal outsources
  4. Vertical integration decisions or
  5. avoiding some cost altogether

Differentiation Strategy

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