THE FIVE GENERIC COMPETITIVE STRATEGIES: WHICH ONE TO EMPLOY?

Miss Ummi started the lecture by asking the student who ever get on a plane or travel by plane before. She ask about which airlines that give an affordable ticket price. In my opinion and also my other members in the lecture hall agree that Air Asia provided the lowest airline ticket price. So, what does this airlines story related to our lecture? Actually it really related because Miss Ummi would like to introduce us with competitive strategies company use to compete with other rivals. 

Competitive strategy means an action plan that is devised to help a company gain a competitive advantage over its rival. This type of strategy is often use in advertising campaigns by somehow discrediting the competition's product or service. Competitive strategies are essential to companies competing in markets that are heavily saturated with alternatives for consumers.

There is five generic competitive strategies which is:

1. Low-cost provider
2. Broad differentiation
3. Best-cost provider
4. Focused low cost provider
5. Focused differentiation

Lower-cost provider means a pricing strategy in which a company offers a relatively low price to stimulate demand and gain market share. It is one of the high demand strategy used by many companies. It is usually employed where the product has few or no competitive advantage or where economies of scale are achievable with higher production volumes. Also called low price strategy. Example of company that use this strategy is Air Asia, Mydin, KFC, MCD.

Broad differentiation means a product that offer a unique product attributes that a wide range of buyers find appealing and worth paying for. A unique product will make the costumer happy to use it and they will repurchase it again. A unique product means that the product should have a value that there is no other rivals have. The value or element that only your company have. Example of company that use this strategy is Louis Vuitton, Apple, Sony, Rolex, Rado.

Best cos provider means a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality/features/performance/services attributes while beating rivals on price. Best cost provider combine the low-cost provider which provided a product with a little or low cost and differentiation which provided a unique attributes product.

Focused low cost provider means a strategy that only focused fully to low cost operations or activities. This strategy did not put much effort on the rivals, it only pay full attention to the market niche or market segmentation. It just concentrating on a narrow buyer segment.

Focused differentiation means the strategy only concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rival's product.