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FOCUS OR NICHE STRATEGY

-Is directed towards serving the needs of a limitedcustomer group or segment.

-Concentrates on serving a particular market niche,which can be defined geographically, by type ofcustomers, or by segment of product line. Ex.Globe account for OFW, reviewer for nursingstudents.

Niche- synonymous to focus, is used to refer to adifferent or unique kind of market w/c is usually

limited in number.KEYS TO SUCCEESS IN FOCUSNICHE STRATEGY

A. Choosing a market niche where buyers havedistinction preferences, special requirements, or

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Unique needs.

b. Developing unique capabilities to serve needs

of target buyer segment.APPROACHES IN FOCUS/NICHE STRATEGY

1. Achieve lower costs than rivals in serving the

segment.2. Offer niche buyers something different from

rivals-a differentiation strategy.

EXAMPLES OF FOCUS STRATEGYA. E-BAY- ONLINE auctions.

B. Porsche- sports cars.

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WHAT MAKES A NICHE ATTRACTIVE FORFOCUSING?

1. Is the market big enough to be profitable andoffers good potential.

2. The niche is not crucial to success of the otherplayers particularly the industry leaders.

3. it is costly or difficult for multi-segmentcompetitors to meet specialized needs ofniche members.

4. The focuser has resources and capabilities toeffectively serve an attractive niche.

5. Only a few other rivals are specializing in sameniche.

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6. The focuser can defend against challengers viasuperior ability to serve niche members.

BEST COST PROVIDER STRATEGY-combines strategic emphasis on low-cost anddifferentiation.-Higher Attributes + Low Price = Best Cost ProviderStrategy

CHARACTERISITCS1.Make an upscale product at a lower cost.2.Give customers more value for their money.

OBJECTIVES OF BEST-COST PROVIDER STRATEGIES.1. DELIVER SUPERIOR VALUE BY MEETING OREXCEEDING BUYER EXPECTATIONS ON PRODUCT

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ATTRIBUTES AND BEATING THIER PRICE

EXPECTATION.

2. BE THE LOW-COST PROVIDER OF A PRODUCTWITH GOOD-TO- EXCELLENT PRODUCT

ATTRIBUTES, THEN USE COST ADVANTAGE TO

UNDERPRICE COMPARABLE BRANDS.

COMPETITIVE STRENGHT OF BEST-COST

PROVIDER

a. Its competitive advantage comes from

matching close rivals on key product attributes

and beating them on price.

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b. Success depends on having the skills and

capabilities to provide attractive performance

and features at a lower cost than rivals.c. Best-cost-provider can often out-compete both

a low-cost provider and differentiator when

buyers belong to the lower strata.

d. Standardized features/attributes will not meet

the diverse needs of buyers

e. Many buyers are price and value sensitive.

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Ex One of the best examples would be ToyotaLexus. Toyota had been doing various researchesand experiments on producing a Luxury vehicle

which can outperform Benz, BMW, Cadillac andVolvo. (A vehicle with higher attributes/ featuresthan Benz, BMW) So the ultimate result was theintroduction of Lexus. But the main important

thing was that they could sell this Luxury Vehicleat a lower price compared to its maincompetitors Benz and BMW. This is mainly due totheir Lean Management (Keeping wastage at the

minimum level and increase the efficiency)Toyotahas been recognized as the best company forpracticing Lean Management at the best possiblelevel. According to Toyota

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Performance of Lexus = Performance of BMW 5

series car but the price of Lexus = BMW 3

series car price. Inthisexamplethestrategy was to offer a

product with highattributes at a lower

price (Lexus) - Low Cost Provider Strategy

Ultimateresult was the advantage achieved by

Toyota over and above its competitors -BMW,

Benz

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Exercise

The business that Leapfrog entered is the preschoolelectronic learning market. With its LeapPad product, itclaims to have a product that is a toy in its shape, butan educational product in its soul. Appealing toparents who want the preschool years to be well-spent, the product also appeals to children. Our worstnightmare was that kids would pick the thing up, playwith it for a few minutes, and forget about it, says JimMarggraff, Executive Vice President for Content whodirects all created design. Clearly that didn't happen-sofar the company has sold more than 8.6 millionLeapPads.

Guide questions:What kind of generic strategy Leapfrog used? Why? 10pts

Reading Assignment:Offensive strategies; frontal, bypass,etc.

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