Porter S Broad Differentiation Strategy Essay

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Strategy

Michael Porter described four types of generic strategies, a matrix with cost leadership and differentiation on one axis, and broad market/niche along the other. The underlying logic is that companies either must undercut their competitors (cost leadership) or they must differentiate themselves in a way that is meaningful to the consumer, that would compel the consumer to pay a premium for their goods/services. (QuickMBA, 2010). The broad market differentiation strategy is a common one. The broad differentiation strategy implies that the service or good "offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition." (QuickMBA, 2010). While many differentiated companies are in niche markets, some companies target the broad market with this strategy, and ultimately are the market leaders. Companies like Nike, Apple, and even McDonalds when viewed within the context of the fast food industry are all firms that utilize this strategy. This report will focus on Apple, as that company is not only a dominant player in its market, but directly sells its differentiation in its marketing communications. Furthermore, Apple has a genuine differentiation strategy -- its products are legitimately differentiated while many companies differentiate mainly on brand image.

Apple's Strategy

Apple is a consumer electronics company that utilizes the Apple brand across several different product lines. Apple has always sought differentiation for its products. In the 1980s and 1990s this differentiation was specifically vis-a-via Microsoft/Windows, the dominant platform in personal computing. Apple was a niche product at the time. With the launch of the iPod, however, Apple began a strategic shift to the mainstream. While it has always remained a niche product in the personal computing business, Apple is mainstream everywhere else, and has captured enormous market shares for many of its products, all while maintaining the key elements of its differentiation strategy -- Apple's brand positioning has evolved but remains aligned with the early principles (Marketing Minds, 2015).

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At the core of Apple's differentiation strategy is its design. The company is vertically-integrated in terms of developing not only its own hardware but software as well, an approach that is unusual in consumer electronics (though more common today than it once was). By keeping the entire design function in house, Apple is able to ensure that its products are 100% according to its vision, and perhaps just as important that its products are compatible with each other. In this way, Apple products are basically a family -- they work better with each other. Competitors simply do not take this approach. Again, this is a key point of differentiation, unique to Apple.

Apple has also sought to utilize design as a point of differentiation. This is in line with the longstanding objectives of Apple -- to seek profit over market share, to seek the high end, and to create a halo effect that makes people starve for new Apple products (Nielson, 2014). Design is an element of consumer electronics that most other firms in the industry ignored. Innovation was always important, as the product life cycle in this industry has always been very short, and that encouraged other companies to focus only on the internal aspects of the product. Apple recognized, however, that high end anything usually has an element of design to it, and the design element is a critical factor in convincing the market that the product is worth more. Normally, design-centric products are niche products, but Apple hit upon the reality of people's relationship with electronics -- that they wanted electronics that looked good. Thus, Apple's emphasis on….....

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