Section 2

Michael Porter’s competitive strategy is broken down into three primary categories: low cost, differentiation, and focus (niche). Cost leadership, the low cost category, is when the organization strives to have the lowest costs in its industry and produces goods or services for a broad customer base. The emphasis in this section is the cost, not the price of the product. This means that the company can make a product fairly cheap but charge the customers as much as they want by making a fairly inexpensive product or service seem really expensive through marketing. The second category, differentiation, is when the organization competes on the basis of providing unique goods or services with features that customers value, perceive as different, and for which they are willing to pay a premium. The last category, the focus or niche, is when the organization pursues either a cost of differentiation advantage, but in a limited (narrow) customer group. A focus strategy concentrates on serving a specific market niche. Based on research about our product and other companies out there with similar products such as ours, we have decided to use the differentiation strategy. The competitive scope is to have a broad target and the advantages we will be using are how our product differs from the other similar products. We feel as if this is the best strategy to use because our product is on the expensive side, which means we will not want to use the cheaper materials just to gain profit, and we do not want to have a narrow target market. We want to be able to give our customers what they pay for as far as quality and we want to reach as many targets as possible, not just a small group. Our product is for anyone and everyone so we want to advertise in a way that grabs the attention of people that may have no other interests in common besides our product.