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PORTERS GENERICSTRATEGIES, USING THE

EXAMPLE OFGERMANYS

SUPERMARKETLANDSCAPE

Competitive Advantage

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Philipp Thunecke, General Management, 2. Semsester

Introduction Success in strategy rests upon Position inrelation environment/competitors

Porter argues that a firms strengths fallultimately into one of two headings: Cost advantageor differentiation

As a result: 1. Cost Leadership 2. Differentiation 3.

Focus/Niche Strategy

Introduction Strategies Examples

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Introduction Strategies Examples

Generic Strategies

Essa, 2012

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Introduction Strategies Examples

Cost Leadership I Main Goal: Low cost relative to competitors (notat cost of quality/service)firm can compete onprice and earn superior profits.

Cost reductionFocus of the companys strategy

Targets a broad market

Especially beneficial: where customers are pricesensitive

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Introduction Strategies Examples

Cost Leadership IIAldiGermanys discount supermarketpioneerRevenue of 25.53 bn. Euro (2011)Competitive Advantage Strategy lowretail prices, strong own brands(+margin)

LidlGermanys other discount retailerRevenue of 29.70 bn. EuroCompetitive Advantage Str. low retailprices, carries branded productsLidl lohnt sich (Lidl pays off)

PriceSensitiveCustomers

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Introduction Strategies Examples

Differentiation IMain Goal: Develop Products/Services thatoffer unique attributes that are valued by thecustomer

Key: Consumers perceive the product to bedifferent, better than that of the competitors

Unique value allows the company to charge apremium for it

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Introduction Strategies Examples

Differentiation IIREWESecond biggest food retailer, 36.77 bn. Eurosrevenue (2011)Focused on offering high quality productsCompetitive Advantage Str.: high quality ,broad range of products, clever advertisingJeden Tag ein bisschen besser (Everyday atad better)

EdekaBiggest food retailer, 49.23 bn. Euros revenue(2011)Same strategy as REWE

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Introduction Strategies Examples

Focus/Niche Strategy I

Main Goal: Concentration on a narrowsegment/specific target audience

Within Segment Either costadvantage/differentiation

Premise: Focusing allows the company tosatisfy the needs of the target group betterand more efficient than competitors.

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Introduction Strategies Examples

Focus/Niche Strategy II

AlnaturaGermanys biggest retailer for organic food,516 m. euros revenue

Specified target audienceeco-consciouscustomers, seeking high quality willing topay a price premium

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Introduction Strategies Examples

Retail Landscape at a glance

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If allyoure trying to do isessentially the same thing as

your rivals, then its unlikelythatyoullbe very successful

-Michael Porter-