Porter's Generic Strategies (TOOL)

Question 1

Low cost strategies

Answer 1

Keeping costs low in order to offer customers lower prices or to increase profit margins

Question 2

Cost leadership: What type of strategy and definition

Answer 2

Low cost strategy

Cost leadership targets mass markets using economies of scale and using efficient resource management to keep costs very low.

Question 3

Cost focus: What type of strategy and definition

Answer 3

Low cost strategy

Targeting more niche markets so there is a smaller scale of production. Generally, keeping things simple and avoiding unnecessary costs like R&D

Question 4

Differentiation strategies

Answer 4

Differentiation strategies focus on adding value and making their products unique from their competitors. This enables the option of charging premium prices.

Question 5

Differentiation Focus: What type of strategy is it and what is it?

Answer 5

Differentiation strategy

It focuses on targeting niche markets where it is much easier to target specific customer needs

Question 6

Differentiation Leadership: What type of strategy is it and what is it?

Answer 6

Differentiation strategy

This strategy tries to make the company unique and justify higher prices in mass markets. It is difficult but can be achieved with strong branding and marketing mix.