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Getting into the core tools that everyone needs in their Strategy Toolkit, it is impossible to ignore the impact that Michael Porter had on Business Strategy in the 1970s. For an introduction to this series and links to the other articles please read my previous article here. Porter developed several tools that were revolutionary in the way they made businesses think about their positioning in the market, or their Strategic Fit. We will discuss two other tools in the next article, but we start with Porter’s 3 Generic Strategies.
3 (or is it 4?) Generic Strategies Matrix
Although called the 3 Generic Strategies, named for the main strategies of Differentiation, Overall Cost Leadership, and Focus, the latter is actually broken down into Cost-Focus and Differentiation-Focus, as shown in the graphic below.
It is important to understand the term Focus here – it is being specific about the market you serve. For example, centring on a subset of customers with specific desires. The first two (top row) are industry-wide, while Focus is particular to a segment. Looking vertically, Differentiation is uniqueness perceived by the customer and Cost Leadership is just that – lowest cost at all times.
1. Differentiation – make your products or services distinctly different from your competitors. No ‘me too’ here, this is where you clearly set out your stall to be different and, hopefully, attract customers because they prefer your solution. Think of Lexus or Mercedes (or most large luxury brands) in the automotive industry.
2. Overall Cost Leadership – seems pretty clear, be the low-cost solution at all times. Walmart and other big-box retailers come to mind.
3. Differentiation Focus – still pursuing differentiation but for a specific sub-set of customers within a given market. Great examples are Porsche and Lamborghini, who focus specifically on high-end sports car enthusiasts with a limited set of products, as opposed to the luxury cars mentioned earlier. (One could argue that both are moving away from this focus with the addition of SUVs and sedans to their line-ups!)
4. Cost Focus – just like overall cost leadership, but again, for a specific market. Ikea is one of the best examples of this, focusing on low-cost home décor, though self-service and self-assembly to keep costs down. Some of my students argue that they are moving away from overall cost leadership and are no longer the low-cost leader they once were. They also now provide value-added services like delivery and assembly (through sub-contractors, however).
The big warning clearly marked in this chart is to beware of being “stuck in the middle” (!) There is nothing worse than a lack of clarity when it comes to your market focus. Looking at the examples above, Porsche and Ikea (and many others) need to be careful as they move amongst these strategies in order not to get stuck in the middle!
The 3 Generic Strategies is an exceedingly simple way to look at how you can place products or services into your market. A concept that has arisen more recently and gained popularity for its usefulness is that of Strategic Fit, or simply put, how your product or service sits within the market. Perhaps think of this model is an outside-in view, where the generic strategies are inside, looking out.
There are 4 types of Strategic Fit:
Commodity strategy – targets a mass market with a single, standardised product. There is low substitution cost in this kind of strategy, customers can start buying Scott vs Charmin toilet paper with no extra effort (they’re next to each other on the shelves). Price is often the main driver in choosing commodity products or services.
Segmentation strategy – targets a segmented market with a range of products, geared to each of the different segments. Here we see large fast-moving consumer goods (FMCG) companies like Proctor & Gamble and Unilever. They have virtually everything you need as a consumer, broken down in segments; low-cost/generic brand right up to high-end (and high priced!) products targeting status sensitive consumers.
Niche strategy – targets a small isolated market segment with a sharply delineated product. A niche is a well-defined sub-segment of a larger market. Think about QuickBooks and its success in small to medium businesses (SMBs), versus larger packages used by large companies. SMBs can afford Oracle or SAP and QuickBooks is not powerful enough for the big boys.
Customisation strategy – (the ultimate in both niching and segmentation) designs or tailors each specific product to one particular need. A market of one. If you hire an architect to design you a home for scratch, that is full customisation for a niche segment of one family.
I think applying these two views at the same time as a single tool provides the most complete view of how your products or services are offered to and sit in the market(s) you serve.
I’d love to hear your feedback and don’t hesitate to get in touch if there is a particular topic you would like to see in this series or to discuss directly!
Master of Business Administration with a concentration in Marketing Online
This program provides the practical knowledge necessary to understand demographically diverse populations while covering all aspects of promotion, account management, advertising, sales, and global marketing adaptable to lead marketing roles in any business.Request InformationHome » Online Programs » Business Programs » Master of Business Administration with a concentration in Marketing Online
The 100% online MBA in Marketing degree from St. Thomas University conveys a wide variety of general business skills, along with specialized knowledge of consumer psychology, communication and analysis, and decision-making skills.
as few as 12 monthsProgram Duration
The MBA core curriculum emphasizes a broad range of skills in managerial accounting, policy and planning, strategy systems, international business, data analytics, financial management, and organizational behavior. Plus, you will benefit from more specialized business courses in entrepreneurship, strategic brand management, and marketing of services.
This quality marketing MBA online program is structured specifically for working professionals, with accelerated courses delivered in a convenient format ideal for a busy lifestyle. Coursework is taught by faculty with real-world experience. Choose from six start dates each year and finish your business master’s degree in as few as 12 months.
Note: The MBA in Marketing online program is comprised of 36 credit hours. However, an additional nine credit hours of foundation courses may be required based on a review of transcripts.[close-]Tuition
Affordable Tuition Only $19,440 at STU
Tuition for the MBA – Marketing online degree program is the same for in-state and out-of-state students and can be paid by the course. Foundation courses (if needed) are $515 per credit hour. The program consists of 12 courses for a total of 36 credit hours. Each course has a technology fee as noted in the below table. The total tuition shown is inclusive of the fees.Tuition Per Credit HourTechnology Fee Per CourseProgram TuitionTuition$515$75$19,440*
The MBA – Marketing program is delivered in an online format ideal for working professionals, conveniently featuring multiple start dates each year. Choose the start date that is best for you.SessionProgram Start DateApplication DeadlineDocument DeadlineRegistration DeadlineTuition DeadlineSummer 2 202106/26/2106/13/2106/16/2106/18/2106/21/21Fall 1 202108/21/2108/09/2108/12/2108/13/2108/16/21Fall 2 202110/16/2110/04/2110/07/2110/08/2110/11/21Spring 1 202201/08/2212/23/2112/28/2112/30/2101/03/22[close-]Admissions
Qualifications for Our Online MBA in Marketing Program
Our very reasonable admission requirements allow students from diverse academic backgrounds greater access to the MBA – Marketing online program. You must hold an undergraduate degree and submit transcripts from all institutions previously attended, along with a resume.
MBA Online Admission Requirements
The following criteria are used for admission to MBA online programs, based on cumulative undergraduate GPA.
2.75 or greater GPA—Must submit transcripts and resume. No GMAT.
2.5 to 2.749 GPA—Must submit transcripts and resume and have at least three years of progressive administrative work experience. No GMAT.
2.33 to 2.49 GPA—Must submit transcripts, resume, and have at least four years of progressive administrative work experience. No GMAT.
Official transcripts and all other documents should be sent to:St. Thomas University, Office of Admissions 16401 NW 37th Ave., Mimi Dooner Hall Miami Gardens, FL 33054-6459
The MBA – Marketing online curriculum is comprised of 12-15 courses (36-45 credit hours), including 24 credit hours of core courses, 12 credit hours of concentration courses, and up to nine credit hours of foundation courses based on a review of transcripts.
Courses in this program are seven weeks long. Courses during the two summer terms, however, are six weeks long.
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Full Sail University is a great place to earn a business certificate for creative, forward-thinking people. Our programs are designed to help students become lifelong learners who stay ahead of the curve with critical thinking skills and practical know-how. You’ll learn real-world skills from professors who are active in their field and know how business is really done.Programs Include:
The Business undergraduate certificate program’s coursework begins with an introduction to the fundamentals of business, management, and marketing. Students will be introduced to methods for collecting and analyzing data to make business decisions and learn about basic business law concepts, including contracts, legal entities, and liability.
The Marketing certificate curriculum is designed to equip students with foundational skills in marketing as they build their understanding of business practices. Topics include an overview of business in the entertainment and media industries as well as an exploration of the principles of marketing, branding, and storytelling. Students will gain the strategy and technique in order to conduct authentic marketing research and interpret data to reach actionable solutions.
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Generic strategies Michael Porter – The Generic strategies of Michael Porter is a management model that you can use to determine the course of a company (the strategy). Generic strategies literally means general strategies. According to Michael Porter, there are four of these Generic strategies that a company should choose from.
I consciously write ‘must’, because Michael Porter believes that as a company you have to make clear choices. If you do not choose one of these four Generic strategies, you will remain stuck in the middle, and you will be caught up by companies that dare to make a clear choice. Because they specialize, they will either be able to request a lower price for their products, or get a better or more innovative product and then compete you away.
There are four Generic strategies according to Michael Porter:
Cost leadership – you offer a product or service that is in high demand at the lowest possible price.
Differentiation – you offer a product or service that is in high demand but with unique characteristics.
Cost focus – you offer a product or service in a niche market, and you ensure the lowest possible price.
Differentiation focus – you offer a product or service in a niche market, and your product or service has unique characteristics.
According to Michael Porter you can choose from a large market (where you will most likely have a lot of competition) and a niche market where you will probably have less competition. In addition, you can choose to go for a low price in the large or niche market (cost focus and cost leadership). In both cases, the entire strategy must be aimed at operating as cheaply as possible.
However, if you opt for a differentiation strategy, then the price is less important, but as a company you focus entirely on R&D, so that you have the very best or most innovative product on the market. An example of this is Apple. You can also choose to position your brand in a different way. An example of this is the Switsal brand. They make care products. This is a huge market. By only positioning themselves as a baby brand, they have to compete less with other brands such as Dove or Sanox. Switsal and Apple are good examples of companies that have opted for a differentiation strategy in Michael Porter’s Generic strategies.
Philips has focused entirely on medical equipment, a clear niche market, certainly if you compare it to the markets from which they have left (e.g. mobile telephony and televisions). This is a good example of a company that has opted for Differentiation focus in Michael Porter’s Generic strategies.
Within grocery stores the brand Aldi is a good example of cost leadership. While Albert Heijn as a grocery store brand advertises a lot on TV, Aldi does this much less. In addition, the entire business is focused on making everything, but really everything, as cheap as possible.