Corporate Strategies - Porter's Generic Strategies

There are other strategies that could help the company generate more sales. One of these would be Porter’s Generic Strategies.

Porter’s Generic Strategies

This set of strategies consist of three: segmentation strategy, differentiation strategy and cost leadership (Porter, 1980).

Cost leadership strategy pertains to mass production of standardized products to lower the cost. Manufacturing the product in high volumes or by bulk would lower the costs of the product because fixed costs are maximized.

Differentiation strategy means creating products that are being packaged as unique. Customers believe that the features of the products are incomparable and superior compared to others hence the reason for its uniqueness.

Segmentation strategy means products are focused on few, selected market or the specialized markets. The company creates the product to suit the tastes or demands of a specific market.

The company could choose to implement any of the three strategies that would best promote the product at the same time usher in more sales. Of course, before choosing the strategy it is important that the company chooses the target market first and clearly define their objectives. Choosing the best strategy could spell the difference between success and failure in the business market.

Coca Cola uses segmentation to be able to remain competitive. It diversified into various products starting in 1960 when it acquired Minute Maid Corporation, producer of Hi-C fruit drinks. It also merged with Duncan Foods Corporation. Then in 1969, it bought the Belmont Springs Water Company Inc. which produces bottled spring water. It also acquired Aqua Chem Inc and Taylor Wines Company and other wineries. Aside from diversification it also expands its product line by producing Fanta, Sprite, TAB, Fresca and diet colas.

Perhaps an antithesis to segmentation and diversification is the Unilever and Proctor and Gamble’s move to downsize, instead of increase, on its product lines.

Unilever implemented its year-old marketing strategy which is to trim down its focus on 400 “master brands” instead of the usual 1,500. To remain true to its campaign, Unilever focuses on promoting its three fabric-care master brands - Wisk, All and Surf.

Proctor and Gamble also downsized some powder detergent brands last year , just like Unilever, to be able to focus on its core products Tide.

Lenovo is able to develop into a top brand by using segmentation which means producing catering separately to cost-conscious and premium customers.

Struggling company Levi Strauss has to embark on globalization in order to address its decreasing sales.