Porter's Generic Strategies

• Porter’s generic strategies are about gaining a competitive advantage
• Two approaches to gaining competitive advantage: low cost and differentiation
• Low-cost approach can target mass market or niche market
• Differentiation strategy adds value and stands out from rivals

Porter’s generic strategies, also known as Porter’s strategic matrix, focus on how businesses can gain a competitive advantage over their rivals. There are two main approaches: low cost and differentiation. The low-cost approach involves keeping costs as low as possible to offer customers lower prices and stand out from competitors. This can be achieved by targeting either a mass market or a smaller niche market. Cost leadership is a common low-cost approach, utilizing economies of scale and high capacity utilization to drive down costs. Alternatively, a low-cost approach can be applied to niche markets by making cost savings and offering a more basic version of a product. The differentiation strategy involves adding value by offering products that stand out from competitors, potentially through unique selling points, high quality, or excellent customer service. This allows businesses to charge premium prices. Differentiation can be targeted at niche markets, where specific customer needs can be addressed, or at the mass market, which requires a strong marketing mix and branding to justify higher prices and stand out.