As with broad market strategies, it is still essential to decide whether you will pursue Cost Leadership or Differentiation once you have selected a Focus strategy as your main approach: And would you ever consider a small company with just a few routes? Remember that Cost Leadership is about minimizing the cost to the organization of delivering products and services.
The choice is up to you, of course.
One of the most important reasons why this is wise advice is that the things you need to do to make each type of strategy work appeal to different types of people. You increase value by lowering prices or increasing benefits and services to justify the higher price.
He then subdivided the Focus strategy into two parts: How you do this depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality, durability, support, and also brand image that your customers value.
Competitive Advantage A competitive advantage is one gained over competitors by offering consumers better value.
Service Focused Strategy Examples Service-focused firms offer a narrow range of services to a fairly broad market. The Cost Leadership strategy is exactly that — it involves being the leader in terms of cost in your industry or market.
For example, Aspen Travel serves the specific needs of the film production industry. Location within that industry comes in at a close second. A company either sells its goods at average industry prices to earn higher profits than its competitors or it sells at below-industry prices, trying to profit by gaining the market share.
Porter specifically warns against trying to "hedge your bets" by following more than one strategy. Cost Leadership Strategy Cost leadership is a tough strategy for small businesses to implement, because it requires a long-term commitment to selling your products and services at a cheap price.
Firms themselves vary widely in their abilities to serve different types of customers. The no-frills operators have opted to cut costs to a minimum and pass their savings on to customers in lower prices.
Local charities are great examples of organizations using Focus strategies to get donations and contribute to their communities.
Finally, many service providers fall into the unfocused category because they try to serve broad markets and provide a wide range of services. Focus is not normally enough on its own.
Cost Focus Strategy A cost focus strategy is similar to a cost leadership strategy, but the major difference is that in a cost focus strategy your business targets a very specific segment of the market and offers that market the lowest prices available.
Focus can be based on cost or differentiation strategy. That way, the company can sell generic acceptable goods at the lowest prices.
There are two main ways of achieving this within a Cost Leadership strategy: Fully Focused Marketing Strategy Example A fully focused organization provides a very limited range of services perhaps just a single core product to a narrow and specific market segment. Share on Facebook Without a competitive strategy, your business will have a tough time attracting customers.
Differentiation Strategy Differentiation strategy calls for a company to provide a product or service with distinctive qualities valued by customers. Cost Leadership Strategy To practice cost leadership, organizations compete for the largest number of customers through price.
The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not unique to you, and that other competitors copy your cost reduction strategies.Focus strategies The focus strategy is really a hybrid of the cost and differentiation strategies. This strategy states that in some ways, a firm is really good about managing costs; and in other ways, this firm is really good about differentiating products or services.
Market focus is the extent to which a firm serves few or many markets, while service focus describes the extent to which a firm offers few or many services. These dimensions define the four basic focus strategies shown in Figure.
In general, releasing excess energy throughout the day will help you stay on task. "The longer you try to focus on something without moving around, your mind will start to tire," Levrini says. To improve your focus, climb the stairs between tasks, pace while you talk on the phone, or simply change your environment throughout the day.
4. Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market).
He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus." These are shown in Figure 1 below. Porter's four major types of competitive strategies focus on offering the lowest prices, targeting a very narrow market, or offering products and.
Differentiation and cost leadership strategies search for competitive advantage on a broad scale, while focus strategies work in a narrow market.
Sometimes, businesses look for a combination strategy to please customers looking for multiple factors such as quality, style, convenience and price.Download