We're continuing to talk about generic competitive positions. And remember, these are sort of for ideal types of competitive positions that a firm can occupy. And it arises from understanding the firm's generic source of competitive advantage, either cost leadership or differentiation, and also understanding the competitive scope of the firm's product or service offerings within the industry. So we're gonna talk about two of these specifically. And we're gonna talk about, first, focused, low-cost strategies. So, what is this? This is a lot like the cost-leadership strategy, except it has a narrow competitive scope. Right? So, once again, it's about firms keeping their cost lower than those of the competitor's, but it's in a narrower segment of the market. Oftentimes, this is used as an entry strategy by new firms attempting to enter a mature market, or an advanced industry segment. Right? So, it's easier to come in and not try to offer everything, but offer just a few things, but offer them at a better price. So, oftentimes, we'll see it Implemented that way as sort of an entry strategy. Right? So what are some examples? We might think of, in automobiles, Kia. Again, it's a low cost auto manufacturer. When it enters the market it doesn't have a wide range of models, it just has a few. But it's focused on competing on cost against a couple of specific models that are offered by competitors. We might think of generic drug manufacturers, right? So, once a particular formula, or a patent, lapses and the formula becomes widely available for a particular drug or medicine, a generic drug manufacturer that has some good cost structure can go in and say let's execute and make that formula. And, of course, then by doing so, we're going to compete with the name brand, but we can do it at a lower price. So what are the strategic approaches that we often see here? One big key is to attempt to deter rivalry by kind of dividing the market up. Right? So, if we can focus on a narrower segment of the market, but we can go into and go after that segment of the market with a lower cost structure, then we might have a chance of really making a difference there. So, budget airlines would be a great example of this. So, it's a lower cost, but you can't fly anywhere and everywhere on these budget airlines. They're much more constrained about where they fly to and from. But given certain routes by the major carriers, those budget airlines can come in and compete head to head on just those routes. Right? And so, they leave other parts of the market to other competitors. Another way to compete here, another strategic approach, can involve trying to capture some narrow economies of scale. So, again, it's trying to achieve some economies of scale in manufacturing, say, but it's not across a wide, broad range of products. It's over just a very narrow set of products, or maybe a product. Right? So the generic drug manufacturers might be an example of this. Let's talk about the second strategy that we're going to focus on today, and that's the niche strategy. And this is a strategic position, again, that sort of occupies that place on the chart where we have a narrower scope of offerings, a narrower, strategic scope, competitive scope, but we're trying to compete based on uniqueness or differentiation instead of low cost. So, again, just like the differentiation strategy, the objective here is to generate profits from higher willingness to pay on the part of consumers or buyers. But in this case, in the niche competitive position, we're doing it by targeting a smaller, often a premium segment, of the market. So what are some examples? We might think of Tiffany's in jewelry and clothing, and that sort of thing. We might think of Porsche in auto-manufacturing. Again, it's a very different kind of auto manufacturer than Kia, that we talked about a moment ago. Even in things like professional services we can think about sort of botique, these specialized boutique consultancies that offer very specialized consulting services, right? And they're well-known, they're considered high quality. So, what are the strategic approaches that a firm can take if it's attempting to occupy this competitive position? They might focus on really leveraging, ironically, the narrowness, excuse me, the narrowness of the knowledge and expertise from that narrow sort of product or service segment. Right? In other words, the very narrowness of the scope, of the competitive scope, is something that can be perceived by buyers and consumers as expertise. And these firms really try to understand their target buyers and really meet the specialized needs of those buyers. So, you know, in network systems we might think of Juniper Networks as doing that. Right? It's really focused on gaining knowledge and expertise, and leveraging that in that narrow area that they operate in, and that's where they're able to realize greater profits than some of their competitors. Brand loyalty is a big thing here. So, again, if you're in to nice sports cars, Porsche's a very well recognized brand, right? And so, they don't make a car for everybody. But they make this particular type of automobile, they're well known for their quality, and how fast the cars can go, and how well they are manufactured. And so, there's a lot of brand loyalty around that particular brand. So, that's the niche strategy. We talked about the sort of more focused, cost leadership strategy, and again, as we sort of zoom out and think about these generic competitive positions, they're sort of ideal types, if you will. You know, it's a little bit of a stylized thing. A lot of firms don't necessarily occupy one particular quadrant or another. Some firms try to occupy what I would describe as an integrated competitive position, and employ an integrated strategy. And this is an attempt to sort of capture the best of both worlds. It's trying to offer differentiated products, but also offer them at a low cost. So, let me talk about that just for a minute. There are a lot of examples we could think of, but maybe in auto manufacturing, we've talked about that a little bit, Toyota might be an example, where, again, they offer largely lower kind of lower cost type automobiles. They aren't expensive like Porsches, right? But Toyota offers something else in its value proposition. It's sort of well known for quality. So they try to differentiate on quality and resale value, and those sorts of things. So they're trying to achieve kind of the best of both worlds. In low cost airlines, Southwest might be an example of this, right? So, on one hand, it's a low cost airline, so the ticket price is probably gonna be less expensive than a competing route plane ticket price from United or Delta, or a major carrier. But they also offer a differentiated kind of experience. Southwest offers this point to point, so maybe you'll have fewer layovers if you happen to need that route that Southwest happens to offer. And the experience itself, in terms of fun they try to have on airplanes and that sort of thing. They do try to differentiate in a way. So there are a lot of firms that will try to achieve kind of several different competitive positions at the same time. And to do that, they might use several different strategic approaches. They might really focus on total quality management, or lean production. That would be an example like Toyota, where they really focus on bringing manufacturing costs down, but it also increases quality, and that helps achieve a differentiator for them. We might invest heavily in R and D or innovation. I mean, there's lots of things we can do to try to achieve both. The thing is here, you've gotta be careful about getting stuck in the middle. There's lots of examples of firms who have tried to achieve both differentiation and cost leadership but haven't really been able to achieve both. I mean, we might think of, in automobiles for example, we might think of General Motors over the last ten to twenty years. They've really tried to compete based on cost and price for the consumer, but they've also try to differentiate in a way, and I think they've struggled to achieve both of those things. So, at any rate, it's possible to try to shoot for an integrated strategy, but it's difficult, and one has to be careful.
