BA L3 Bus Strat OHP Generic Strat(1).ppt

Generic strategies

1. You Should Be Reading

2. Competition
“A contest in which a winner is selected from among
two or more entrants “
Ref: Oxford Dictionary
“Rivalry between a number of businesses in the
position of products and services to current
prospective customers”
Ref: Advanced Dictionary of Marketing
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3. Building Foundations of a Business
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4. Generic Strategy
Sustainable competitive advantage
Focused upon one of the foundations quadrents
Generally more profitable but higher risk
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5. 5
Lower Cost Differentiation
Generic Strategy - M. Porter 1980
Competitive Advantage
Broad
Target
Narrow
Target
Competitive
Scope
Cost
Leadership
Differentiation
Focus / Niche
Porter M E (1998) Competitive advantage: creating and sustaining superior performance New
York, Free Press

6. Characteristics of Cost Leaders
Economic perceptive
High volumes
Standardized
Economies of scale
Marketing perspective
Mass markets
Limited product range
Very low price
Risk
to cheap
to basic
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7. Characteristic of Differentiation
Economic Perspective
High volume
Variation through economic platform
Economies of scale
Marketing perspective
Branding - physical or psychological
Product quality
Broad segmentation
Risk
Price to high
Counterfeiting 7

8. Characteristics of Focus / Niche
Economic perspective
low volumes
no economies of scale
niche – exclusive
focus – general but geographical very localized
Marketing perspective
niche -high price
focus –relatively high price in price sensitive market

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9. Characteristics of Focus / Niche
Marketing perspective
niche – specialist
very low sales volume

focus – generalist providing very local need
Risk
customer base might shrink very quickly
bigger competitors move in

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10. Porter’s Stuck in the Middle
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11. “Stuck in The Middle”
Embraces a number of issues:
How far do you extent your produce range?
How stretched are your core competencies?
What sort of branding strategy do you have?
Do consumers get confused about who / what your are?
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12. “Stuck in the Middle”
Ford: single brands for
multiple products
Kia – budget
Fiesta – upper budget
Focus - lower middle
Mondeo - middle
Galaxy -upper middle
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13. “Stuck in the Middle”
VW: multiple brands for
multiple products
Seat – budget
Skoda – lower middle
VW - middle
Audi - upper middle
Bentley - luxury
Lamborghini – luxury
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14. Porters Generic Strategy –
Cost leadership
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Hampton Inns
Holiday Express

Premier Inns
Campanile Ibis Budget
Days Inn
Travelodge
YHA

15. Porters Model- Development
Approaches:-
Porters Generic Strategic
Supply side perspective
Competitive Advantage / Competitive Scope
Bowman's Clock:-
Demand side perspective
Price / Perceived Added Value
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16. Bowman’s Strategy Clock
Faulkner, D., and Bowman, C. (1995) The Essence of Competitive Strategy, Prentice Hall, cited in Johnson, G.,
Scholes, K., and Whittington, R. (2008) Exploring Corporate Strategy (8th Edn) Harlow, Prentice Hall

17. Bowman Clock - Strategies
1 Low price/low added value – segment specific
2 Low Price – price wars
3 Hybrid – low cost but marginally differentiation
4 Differentiation – perceived value/price relationship
5 Focused differentiation – segment specific
6 Increase price/ standard value – competitor reaction
7 Increase price/low value – only in a monopoly
8 Low value/standard price – loss sales
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18. 18
The Strategy Clock Simplified
Courtesy of Richard Whittington, co-author Exploring Corporate Strategy

19. Which Strategic Generic Foundation ?
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