To establish a company or organize, various strategies and schemes are used in marketing. These marketing strategies help the company to achieve sustainable competitive benefits and advantages. The fundamental basis of this porter’s generic strategies aims at attaining the two basic types of advantages that a company wants to have -- low cost of production and differentiation. These two aims when combined with other scope of actions leads to the generic strategies of more than average performance, cost leadership, differentiation and focus. Scroll down to get an idea of the porter generic strategies as given below:
Cost leadership strategies:
The main aim of this cost leadership strategy is to produce quality level item in low cost. The firm sells the product at either industry price or at a much higher profitable price that gains the firm market shares. Most often it so happens that in the war of price level, the companies suffers losses. Hence the firms that can produce stuffs in cheap prices will be able to stay profitable in the long run. The aim of cost leadership strategy is to reduce the production price and target at a profit in the broader market.
Some of the ways through which the firms can develop their production cost are improvement of process, efficiency and by gaining access to the large source of material in low cost rate. Outsourcing is another good strategy of reducing the cost price. When the production price gets reduced, the cost price can also be deducted to help consumer or buyer.
Not only advantage, there are some risks also in the generic strategies of porter. The taste of customer can get changed and strategies can be imitated by rival companies.
Focus strategy:
The main feature of focus strategy is to have target consumer. With the help of focus strategy, a company can have its concentration on a particular segment of consumer. The advantages of focus strategy are that the firm can have their total loyalty and service for the specific section of people.
But due to its narrow focus in market, the companies do not get much chance to bargain with the suppliers. Hence, these firms have fewer rivals and are able to adapt a high profit from customers.
There are some risks or disadvantage of focus strategy that includes the change of consumer taste and competition from big multi product companies.
Firms can always opt for these generic strategies to improve their profit but they must be aware that these strategies of marketing can fail sometimes. If a firm tries to adapt all three of the strategies, the chance of failure increases. Hence according to Michael porter, to be successful in the long term run in marketing industry, firms must opt for any one of the strategies instead of all three.
