Broad Target
Narrow Target
Lower Cost
Differentiation
- Cost Focus – exploits the differences in cost behavior in some segregated segments.
- Example: a business offering the chartering of small planes for business trips for companies. (narrow target)
- Providers must , however, always be cost conscious. (Cost Focus)
- Otherwise customers will find another provider.
Broad Target
Narrow Target
Lower Cost
Differentiation
- Differentiation Focus - exploits the needs of buyers in a certain segment.
- Example: Voyages of longer duration which are targeted at elderly people who want extra service: no stairs, trained nurses to accompany them on the journey.
- Exclusive Travel is a narrow target of the total market and the elderly are a focused differentiation within this segment
Differentiation_Stuck_in_the_middle__Airlines'>Broad Target
Narrow Target
Lower Cost
Differentiation
- Porter warns about companies that do not have defined a clear generic strategy. They engage in each generic strategy but fail to achieve any of them.
- They are stuck in the middle.
- They possess no competitive advantage
- Competitiveness is weak compared to those firms that have a clear strategy either as cost leadership, differentiation or focus.
Broad Target
Narrow Target
Lower Cost
Differentiation
Stuck in the middle
- Cost Leader – could be a firm that achieves economies of scale by sourcing mass-produced identical bags in the far east. These are then sent to Europe in containers and are sold without service through discount stores. All costs must be kept down to sell at lower prices than their competition in the industry
- Differentiation – this might be branded bags like Gucci or Prada. These are bags with a brand that customers are willing to pay a high price for.
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