Strategic Choice

Strategic Choice. Write a 1250 word paper answering; Porter’s Generic Strategies model (Porter, 1985) illustrated that competitive scope is to be either, focused on the whole market, or a narrow segment of the available market. In addition, the model emphasised that only two effective marketing strategies existed: lowest product costs or high-perceived value by the customer (differentiation) (Macmillan & Tampoe, 2000). The model depicts three generic strategies: 1) cost leadership. 2) differentiation. and 3) focus on a target market. The least attractive strategy is one that takes the middle ground between two options. For example, British Airways (BA) uses a differentiation strategy (Johnson & Scholes, 1999). “The “BA Way” business strategy actively engages with employees, shareholders, customers and the community (Johnson & Scholes, 1999). During 2004-2005 BA experienced an increase of 3.3% in revenue. In contrast, Adria Airlines’ Customer Relationship Management strategy focuses on quality and the personal touch, according to Porter’s model would be focusing on a target market (Adria Airways, 2004). In contrast to Porter’s model Adria experienced an increase in production and administrative costs of 12% during 2003-2004 (Adria Airways, 2004). Both airlines are concerned with only a narrow segment of the airline market, yet neither benefited substantially from their strategic choice.Bowman’s Strategy Clock model (Macmillan & Tampoe, 2000) is comparable to Porter’s model in that he also categorised competitive strategy into cost leadership or degree of differentiation (Johnson & Scholes, 1999, Macmillan & Tampoe, 2000). However, Bowman’s model extended Porter’s by incorporating a “hybrid” strategy that represented an optimal balance between perceived customer value and price. This provides an organisation with three broad strategies that exist on a continuum: 1) low cost and low value as perceived by the customer (i.e., generic brands). 2) “good value” products that find balance between price and value. and 3) high cost and high perceived value items (i.e., luxury goods) (Macmillan & Tampoe, 2000). Bowman’s model is much more reflective of the 21st century marketing environment, in that many organisations specialise in providing products and services that blend low cost and high differentiation (Macmillan & Tampoe, 2000). For example, British Airways could be considered to be using the hybrid strategy of Bowman’s, as its business strategy seeks to lower costs yet differentiate itself by way of increasing its engagement with stakeholders (British Airways, 2005). According to Porter’s model, this would be a weak strategy as it combines two generic strategies (i.e., cost leadership and differentiation). Adria Airlines Customer Relationship Management strategy (Adria Airways, 2004), could be considered to be in Bowman’s category of focused differentiation, due to its provision of seasonal charter services, and personal high quality services. So that the higher price of their product also has perceived added value for a select target market.

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