Competitive Advantage

PORTERS GENERIC STRATEGIES, USING THE EXAMPLE OF GERMANYS SUPERMARKET LANDSCAPE

Philipp Thunecke, General Management, 2. Semester

Outline
Introduction
Generic Strategies Examples
Philipp Thunecke, General Management, 2.Semester

Introduction

Strategies

Examples

Introduction
Success in strategy rests upon Position in relation environment/competitors Porter argues that a firms strengths fall ultimately into one of two headings: Cost advantage or differentiation As a result: 1. Cost Leadership 2. Differentiation 3. Focus/Niche Strategy

Philipp Thunecke, General Management, 2. Semsester

Introduction

Strategies

Examples

Generic Strategies

Essa, 2012
Philipp Thunecke, General Management, 2. Semester

Introduction

Strategies

Examples

Cost Leadership I
Main Goal: Low cost relative to competitors (not at cost of quality/service)firm can compete on price and earn superior profits. Cost reductionFocus of the companys strategy Targets a broad market Especially beneficial: where customers are price sensitive

Philipp Thunecke, General Management, 2. Semsester

Introduction

Strategies

Examples

Aldi

Cost Leadership II

Germanys discount supermarket pioneer Revenue of 25.53 bn. Euro (2011) Competitive Advantage Strategy low retail prices, strong own brands (+margin)

Price Sensitive Customers

Lidl
Germanys other discount retailer Revenue of 29.70 bn. Euro Competitive Advantage Str. low retail prices, carries branded products Lidl lohnt sich (Lidl pays off)
Philipp Thunecke, General Management, 2.Semester

Introduction

Strategies

Examples

Differentiation I
Main Goal: Develop Products/Services that offer unique attributes that are valued by the customer Key: Consumers perceive the product to be different, better than that of the competitors Unique value allows the company to charge a premium for it

Philipp Thunecke, General Management, 2.Semester

Introduction

Strategies

Examples

Differentiation II
REWE
Second biggest food retailer, 36.77 bn. Euros revenue (2011) Focused on offering high quality products Competitive Advantage Str.: high quality , broad range of products, clever advertising Jeden Tag ein bisschen besser (Every day a tad better)

Edeka
Biggest food retailer, 49.23 bn. Euros revenue (2011) Same strategy as REWE
Philipp Thunecke, General Management, 2.Semester Gt

Introduction

Strategies

Examples

Focus/Niche Strategy I
Main Goal: Concentration on a narrow segment/specific target audience Within Segment Either cost advantage/differentiation Premise: Focusing allows the company to satisfy the needs of the target group better and more efficient than competitors.

Philipp Thunecke, General Management, 2.Semester

Gttingen 28.05.2013

Introduction

Strategies

Examples

Focus/Niche Strategy II
Alnatura
Germanys biggest retailer for organic food, 516 m. euros revenue
Specified target audienceeco-conscious customers, seeking high quality willing to pay a price premium

Philipp Thunecke, General Management, 2.Semester

Gttingen 28.05.2013

Introduction

Strategies

Examples

Retail Landscape at a glance

Philipp Thunecke, General Management, 2.Semester

Gttingen 28.05.2013

If all youre trying to do is essentially the same thing as your rivals, then its unlikely that youll be very successful
-Michael Porter-