A Critique of Porter's Cost Leadership and Differentiation Strategies: An Update | Chapter 14 | New Innovations in Economics, Business and Management Vol. 9

 This is an updated version of a previously published critique of Porter's cost leadership and differentiation techniques (Datta, 2010a).

The author presented an alternative competitive paradigm in this critique of Porter. To test his idea, he conducted investigations of twelve consumer marketplaces in the United States.

This revision integrates the findings of that empirical study and updates it.

Porter associates high market share with cost leadership, using General Motors (GM) as an example of a successful implementation. GM, on the other hand, became the market share leader in the American car industry thanks to a 1920s-era market segmentation, differentiation, and broad reach strategy.

Cost leadership and distinctiveness, according to Porter, are both feasible paths to competitive success. Despite this, a When contrasted to the competition, a differentiation strategy based on greater quality is more lucrative than a cost leadership plan. It may help a company become a market share leader and, as a result, a low-cost leader.

Differentiation and cost leadership may coexist, according to research. Porter, on the other hand, maintains that any generic approach needs a distinct culture and philosophy. Porter's generic tactics, on the other hand, are far too broad. His main concept, which prescribes cost leadership approach as the sole way to market share leadership and provides a restricted vision of differentiation with a unique product—sold at a premium price—on one side, and a "standard, or no-frills" product on the other, is faulty.

Porter's cost, according to Mintzburg, is The term "price differentiation" should be used to describe a leadership strategy that is based on a lower price than the competitors. Business strategy, according to him, has two dimensions: distinction and scope. Setting aside scope, competitive strategy consists of only one element: distinctiveness.

So, the question isn't whether to differentiate, but rather how to do so.

First, make customer-perceived quality the cornerstone of competitive strategy, since it is considerably more important than any other component in long-term success. Second, serve the middle class by competing in the mid-price market, providing superior quality at a somewhat higher price than the competitors. This is the approach that can lead to market share leadership, which is a successful and long-term strategy.


Author(S) Details

Y. Datta
College of Business, Northern Kentucky University, Highland Heights KY 41099, USA.

View Book:- https://stm.bookpi.org/NIEBM-V9/article/view/6969

Study on Experience Differentiation Strategy (2): Focus on Embodied Cognition and ACT Module | Chapter 17 | Modern Perspectives in Economics, Business and Management Vol. 5

 “Experiential marketing” has gotten a lot of attention as a “differentiation strategy” in a mature market like the Japanese economy. We focus on behaviour experiences (ACT Module of SEMs) in terms of "embodied cognition" in this work. Consumers' behaviours and the physiological/psychological impacts of such behaviours are referred to as behaviour experiences (ACT Module). The findings reveal that two factors influence behaviour (ACT Module): 1) create products with aspects that influence consumer behaviour, and 2) create scenarios with factors that influence consumer behaviour. We also show that illogical or unique conditions might elicit unusual behaviour experiences. These modes of thinking will aid marketers in comprehending consumers' behavioural experiences and applying ACT to marketing from a customer experience standpoint.

Author (S) Details

Shin’ya Nagasawa
Graduate School of Business and Finance, Waseda University, Tokyo, Japan.

View Book :- https://stm.bookpi.org/MPEBM-V5/article/view/3343