Porter Flashcards
What are the 3 sustainable Porter methods?
Differentiation, low cost and hybrid
What is the only unsustainable porter method?
Stuck in the middle
What is differentiation?
offering a product that sets a business apart from the competition
Possible if R+D is CC
What is differentiation leadership?
Differentiation in the mass market
Mercedes offer a range of cars at different prices
Design your dream car
What is differentiation focus?
Differentiation in the niche market
Disney target kids only
Now moving to mass marke
What are the benefits of differentiation?
USP which can justify a higher price…. profits… reinvestment…innovation
Competitive advantage… quality… innovation…risk bearing EOS
What is low cost?
offering product at the lowest price possible
Possible is lean production is CC
What is low cost leadership?
Lowest cost in mass market
Aldi have low rent costs, efficient checkouts, low cpu and benefit from purchasing eos
What is low cost focus?
Lowest cost in niche market
Poundland target lower incomes.. unknown brands, no fresh goods, purchasing eos
What are the benefits of low cost?
First mover… loyalty
Market share
Purchasing eos.. .cpu .. .costs low… prices low
What is Hybrid?
Offering a unique product at the lowest price
Ikea- flatpack furniture, range of designs, out of town stores, unique design by skilled staff
What is stuck in the middle?
Neither differentiation or low cost
No competitive advantage
McDonalds have a saver menu have a limited run range - which do customers value?
Morrisons - customers don’t see value for money, no longer a top 4
