A best cost provider strategy

CHAPTER 5 The Five Generic Competitive Strategies

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LEARNING OBJECTIVES

THIS CHAPTER WILL HELP YOU UNDERSTAND:

What distinguishes each of the five generic strategies and why some of these strategies work better in certain kinds of competitive conditions than in others

The major avenues for achieving a competitive advantage based on lower costs

The major avenues to a competitive advantage based on differentiating a company’s product or service offering from the offerings of rivals

The attributes of a best-cost provider strategy—a hybrid of low-cost provider and differentiation strategies

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WHY DO STRATEGIES DIFFER?

A firm’s competitive strategy deals exclusively with the specifics of its efforts to position itself in the market-place, please customers, ward off competitive threats, and achieve a particular kind of competitive advantage.

Is the competitive advantage pursued linked to low costs or product differentiation?

Is the firm’s market target broad or narrow?

Key factors that distinguish one strategy from another

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THE FIVE GENERIC COMPETITIVE STRATEGIES

Low-cost provider Striving to achieve lower overall costs than rivals on products that attract a broad spectrum of buyers
Broad differentiation Differentiating the firm’s product offering from rivals’ with attributes that appeal to a broad spectrum of buyers
Focused low-cost Concentrating on a narrow price-sensitive buyer segment and on costs to offer a lower-priced product
Focused differentiation Concentrating on a narrow buyer segment by meeting specific tastes and requirements of niche members
Best-cost provider Giving customers more value for the money by offering upscale product attributes at a lower cost than rivals