Fifth Entry : The Five Generic Competitive Strategies: Which One To Employ?

Low-Cost Provider  à

 Effective Low-Cost Approaches:

Pursue cost-savings that are difficult to imitate, avoid reducing product quality to unacceptable levels.

 Competitive Advantages and Risks:

Greater total profits and increased market share are gained from underpricing competitors and the larger profit margins is  when the firm’s selling their  products at prices comparable to and competitive with rivals. Lowing the price does not attract enough new buyers, while rival’s retaliatory price cutting set off a price war (For instant, competitive between Maxis, Celcom and Digi).

Broad-Differentiation Strategiesà

Effective Differentiation Approaches:

Carefully study buyer needs and behaviors, values and willingness to pay for a unique product or service.

Incorporate features that both appeal to buyers and create a sustainably distinctive product offering.

Use higher prices to recoup differentiation costs.

Advantages of Differentiation:

Command premium prices for the firm’s products

Increased unit sales due to attractive differentiation

Brand loyalty that bonds buyers to the firm’s products