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Example Of Porter's Four Generic Strategies

Majority of the successful businesses follow mainly four generic strategies. Cost leadership is mainly companies serving price-conscious customers. A good example in the USA would be McDonald's, Walmart, Dollar Tree. When you think about McDonald's, you can think about their drive-throughs, or the questionable meats, either way there one can find a quick bit for a $1. The same thing with Dollar Store, everything is $1 and that is a great attraction for price-sensitive customers.

Differentiation is another strategy that works. Think about Zappos, which does not offer many discounts, but due to their quality and service they can charge a premium to their customers. Likewise, when we think about Whole Foods Market, this grocery chain attracts a health-conscious crowd who mainly follow some sort of diet. Whole Foods Market has all organic foods and diet-specific grocery. Because of that, people following those special diets are often regular to the Whole Foods Market, despite the higher price tags.
Focused Cost leadership – Apple is a good example of focused cost leadership. Apple manufactures premium products and only people above a certain income level can afford Apple products.
Focused differentiation – Carvana is a good example of focused differentiation. They sell cars online, deliver it to your doorstep, and it is targeted towards the millennials who love to shop online.

In this paper, I will discuss “Focused differentiation”. For any company to be successful in the long term needs to differentiate itself from the competition. The major component in focused differentiation is finding a niche demand and serving that market. That niche can be a product or service. Finding that niche is most critical, like whole foods market has found organic health food, Carvana has found selling a car over the internet. Size of the Auto industry is worth 1 trillion, Carvana offers used cars, financing to delivery(Forbes,n.d.).Apple has created an ecosystem and keeps the customers inside that ecosystem. So, the differentiation in the product or service happens when a segment is not served or could be served better. Like when Blockbuster used to rent out CD/ DVDs Netflix came up with a monthly fee for unlimited DVD rental or unlimited streaming. The service got differentiated and it was focused on a group who were not happy with Blockbuster’s policies or had access to high-speed internet.

For any organization following one strategy is essential but might not be enough. While Walmart was a cost leader, Amazon grew quickly and became a cost leader too. Mostly because of the scale, these firms can offer cheaper prices. In today’s world, none of the strategies are impenetrable. While Amazon Prime was offering 2 days free shipping, Walmart started offering the same and then Amazon is offering one-day shipping now. WhatsApp was a differentiated product, but Facebook bought the whole company to kill the competition. Being agile, customer-focused is very important for every firm. Being customer-focused means, knowing or anticipating what customer wants or might want and addressing those. Being a cost leader is important but that cannot be the only one differentiator. McDonald's had a bad reputation about the meat they use, and they had to launch “Our Food, Your Questions” campaign to regain reputation. They have a long supply chain, but they were open to having a 2 ways conversation with customers and skeptics about the pork or beef they use ( Starkman,2014).

References -
Retrieved on 7/21/2019. Retrieved from https://www.forbes.com/companies/carvana/#34e6584c959e
Starkman, N ( October 2014). What McDonald’s New 'Transparency' Campaign Is Hiding. Retrieved from https://time.com/3501921/mcdonalds-transparency-campaign/

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