Four Porter’s Generic Competitive Strategies that help your business to be ahead of the competition by making your place in the market. Let’s start with an example. When you book a flight ticket, you get the option of both low-class as well an expensive airline that has all the facilities. The customer can book the flight as per his choice and budget. So, there is a dedicated market for both types of customers. Therefore, the airlines that are expensive know their competitive advantage. It is important for brands and companies to find their competitive advantage to be ahead of the competition. # #1 Porter’s Generic Competitive Strategies Porter introduced competitive forces that will help you to be better than your competition and to make your own place in the market. This approach is known to be generic because it is applicable to all industries or companies of any size and any product. Porter’s Generic Competitive Strategies are discussed as follows: #### 1. Cost Leadership In this strategy, the companies target those customers who think a lot before spending the money. So, you will have to produce or manufacture your product at a cheaper cost and eliminate the unwanted expenses in your business. You can eliminate these expenses by either increasing profit or market share or reducing production cost or price. You will have to become the leader of the lowest cost in your market. To do so, you should: `a. Achieving asset turnover` Suppose, if you are in the service industry, like a café or a restaurant, you will have to increase your efficiency by delivering the order fast so that the turn of the next customer comes faster. If you are running a taxi service, reach your customer fast, drop them, and take payment quickly so that you can serve the new customer without wasting time. Low-cost airlines like IndiGo, Air Deccan, or Spice jet have lesser planes and they sell their tickets at cheap rates and that is why those customers who do not require full-service airlines prefer them. `b. Take advantage of economies of scale` Produce on a large scale to reduce the cost per unit. For example: The prices of products at Big Bazaar are cheaper as compared to the other stores because they have opted for cost leadership strategy. They either produce on large scale or take lots of products from the supplier at a cheaper rate to keep the prices less. They introduce new offers and schemes at cheaper prices. `c. Use the latest technology` Make use of the latest technology to reduce cost and increase productivity. `d. Minimise overhead cost` The expenses that are not important should be minimised. `e. Negotiate with the supplier` Negotiate with the supplier for cost-cutting. `f. Shift to a cheaper location` Shift your unit to a cheaper location to get cheaper rent, electricity, water, and labour. For example, Nirma is a leading detergent brand and has a cheaper cost as compared to the competitors because their manufacturing cost is less as they make use of the latest technology and spend less money even on research. #### 2. Differentiation This means to make your product different and more attractive than the competitor. You can create a difference by adding new features, working more efficiently, making a durable product, perfecting the customer service, or providing a unique offer. When you offer something unique to the customers, you can even raise the cost of your product and sell it. For example: `i. Apple` Apple has the best technology and whenever they launch any new product, it becomes famous worldwide. When ipod and ipad were launched, there was no such product available in the market. Also, due to their good designs, they have attracted a big customer base and that is why they sell their products a bit expensive as compared to others. Apple achieved it by focusing on research and innovation, not compromising with the quality, following the good branding and marketing strategy, and forming a good distributing network. `ii. Titan` Titan made their watches a premium quality product and that is why their watches are a bit expensive as compared to other Indian brands. Titan started with making durable and strong watches but today, their watches also have style and class. The design of the watch that Rado sells at Rs. 1 lakh, Titan provides a similar design at Rs. 10,000. Focus strategy works for a focused target group or a smaller market. Therefore, you must understand the needs of customers of a specific market and then design your product. The product should either be low cost or should have some unique features as it caters to a smaller segment and that is why, customer loyalty can be very strong. This strategy is divided into 2 parts – cost focus and differentiation focus. #### 3. Cost focus You are providing your product or services at a cheaper rate to the target market and that is why, remember that there is a difference in market size between cost leadership and cost focus. The example of this strategy is food items, home appliances, etc. For example: Papa Murphy’s is a pizza brand and unlike other pizza brands, this brand provides ready to cook pizzas that are cheaper and can be baked at home. The cost of a company is less as they don’t need to create a restaurant and deal with the related expenses. Therefore, this brand is affordable and also impresses its target customers. Another example is low-cost airlines, as they also use the focus strategy. Airlines with less routes opt for this strategy. Urban Ladder that is a furniture brand also follows the same strategy. It influences the youth especially working couples as they can easily order the furniture online at cheaper rates as compared to the showroom. #### 4. Differentiation focus Under this strategy, you offer a unique product or service but do remember to target a small but good customer base. For example: Craft beer comes in different flavours and is made in small quantities with a traditional technique. Due to its uniqueness, it is a bit expensive as compared to the normal beer. Another example is organic food that also has its own target market for those who prefer eating this food. A brand ‘I Say Organic’ implemented a differentiation focus strategy to target a small audience. # #2 Choosing the Right Strategy for your Business Before using any strategy, know your strengths and follow the below steps: SWOT Analysis: If you do a S (strengths) W (weakness) O (opportunities) T (threats) analysis of your company, you will come to know about the strategy that fits you the most. Market and industry trends: Lookout for these trends as they will help you to gain knowledge about the market. You will also come to know about your competitors and at what price are they selling the product. You must choose the right strategy so that it helps in increasing the customer benefit/experience and revenue.