3.8.2 - Strategic positioning: Choosing how to compete

Differentiation and cost strategies

2 Axis: Competitive Advantage and Markets where businesses compete

Sources of competitive advantage are cost and differentiation whereas markets where the business competes are either broad (mass) or narow (niche).

Costs + Mass market = Cost leadership
Costs + Niche market = Cost focus
Differentiation + Mass market = Differentiation Leadership
Differentiation + Niche market = Differentiation focus.

Leadership strategies seek competitive advantage in a range of market or industry segments where focus strategies are best used in smaller industries.

Cost leadership: Keeping costs as low as possible in order to exploit economies of scale
If selling prices are similar inbetween competition, then if a business has lower costs, they will achieve higher profits.
Markets where there are standard products, little differentiation and where branding is relatively unimportant is where this will succeed the…