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Porter's Generic Strategies - Coggle Diagram
Porter's Generic Strategies
Competitive Advantage
Definition
A condition——offer better products/products at lower production cost than its rivals.
Consumers
May choose products over offered by competing businesses.
Product
Revenues profits may rise
Lower costs-Profits increase
Strategies
Aim
How to respond to external competitive environment
Porter's Generic Strategies matrix
Lower cost
Lower differentiation
Make product different or better than others
Consideration
A broad market of consumers
A narrow niche market
Apply to
Generic Strategies
For-profit commercial
For-profit social enterprises
Cost leadership/differentiation strategies
Business which selling products to a broad target market
Cost leadership
Definition
Becomes the low-cost producer in the industry
Suited to market where the products are standardised
Less opportunity to differentiate——product quality/branding/promotion
Hypothesis
Large——reduce unit costs of production——economics of scale/specialised technologies/more efficient supply chains
Differentiation focus(niche market)
Deifinition
Producing a specialised/differentiated/product for a niche market
Key points
High quality
Exclusive
Provide kind of special characteristic——niche market want
Example
Shoemaker——make custom shoes for clients
Matters needing attention
Understand needs and wants of niche market
Aim
Charge premium prices
Increase revenues
Compensate for the small market size
Cost focus(niche market)
Definition
Low-cost producer in a niche market
Main strategy
Product is relatively basic——lower-cost copy of popular and higher-priced product
Example
Career coach——offer low-cost online coaching.In-person——expensive.Develop range of service with lower costs——Lower price to customers
Differentiation focus(niche market)
Definition
Able to make product better or different from competitors——according 7 Ps and unique selling point
Have differentiation
Revenues increase
Sell more products
Charge a premium price
Profit increase
Keeps production/promotion costs
Stuck in the middle
Definition
No differentiated enough to convince consumers to buy
Compare to competitors
prices——too high relative
Earning low profits
Experiencing losses
Method
Increase profits
Cut costs of production
Work on differentiatin
Whether focused on broad/narrow market
Problem
Confusion the scope of market——make strategies unclear