The 4 business strategies that you need to know

Moving away from the topic of building a small business brand (for this post anyway) I had some marketing strategy brainwaves that came over me in a fit of insomnia last night.

I was visited by the ghost of Porter. (Luckily, no clanking chains.)

However, it occurred to me that many small business owners, no matter the strength of their brand, communications platform or  high level marketing strategy, have not considered their own enterprise in the context of Porters Generic Strategies.

(Obviously Porter did not consult a copywriter nor did he deep-dive into a well of untapped creativity when naming his now iconic strategic silos. Even worse, he could have gone acronymic with PGS, I suppose.)

Anyway, copywriter or no, understanding Porters modestly named model is fundamental to your understanding and building your small business strategy. And that understanding feeds into your marketing and brand strategy. Which ultimately leads into your communication strategy and (sigh) into your tactical design. So: Porters Generic Strategies:

  • Porter proposes that there are 2 strategies which a firm could adopt that would lead to a sustainable competitive advantage. These are based on the cost (to the enterprise, not necessarily the consumer) of the product or service delivered. They break out into low cost and high cost.
  • Both of these can be subdivided into 2 further strategies based on the scope of the business, i.e. the target market size. The scope of a business can be either  broad or narrow.  Simple huh?
  • So, using the above strategy/scope categories, we can create a matrix of 4 generic strategies.
  • These are:
  1. Low cost/broad scope (called cost leadership.)
  2. HIgh cost/broad scope (called differentiation)
  3. Low cost/narrow scope (called cost focus)
  4. Low cost/narrow scope (called differentiation focus.)

Almost every business enterprise you can name falls into one of these 4 categories. Many businesses fit between 2 categories, which most marketing consultants (including me) will tell you indicates that the business lacks focus and, ultimately, a sustainable strategic advantage.

So what do these mean? Well, I think that deserves a 2nd post.

Attention entrepreneurs: understand this chart!


About cojent. marketing communications.

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