When we produce a product, we must think about how competitive it is. We have to define the structure, evaluate the product’s weakness or strength. First of all we have to define a competitive strategy. We are not just on the market.
There are already companies that have already begun to think about how to get in the user’s mind.
Therefore, we should select the priorities on what we will focus on, how can we find a place in the user’s mind.
Porter’s Five Forces
Porter’s Five Forces is a simple but powerful tool for understanding the competitiveness of your business environment.
This is useful, because, when you understand the forces in your environment, you’ll be able to adjust your strategy.
For example, you could take fair advantage of a strong position or improve a weak one, and avoid taking wrong steps in the future.
We look at how they can help you to analyze the strengths and weaknesses of your position, also how they can impact your long-term profitability.
In cost leadership, a firm sets out to become a low-cost producer in its industry.
The sources of cost advantage are varied and depend on the structure of the industry.
They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors.
A low-cost producer must find and exploit all sources of cost advantage.
If a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry.
Provided it can command prices at or near the industry average.
In a differentiation strategy, a firm seeks to be unique in its industry along with some dimensions that are widely valued by buyers.
It selects one or more attributes that many buyers in an industry perceive as important and uniquely positions itself to meet those needs.
It is rewarded for its uniqueness with premium cost.
The generic strategy of focus rests on the choice of a narrow competitive scope within an industry.
The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.
The focus strategy has two variants.
In focus – cost a firm seeks a cost advantage in its target segment.
While in differentiation focus a firm seeks differentiation in its target segment.
Both variants of the focus strategy rest on differences between a focuser’s target segment and other segments in the industry.
The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target.
Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation.
Make an upscale product a low-cost.
Give customer’s more value for the money.