Week 3

Outline:

• Corporate and Division Strategic Planning

• Components of a Mission
• The Marketing Strategy Process
• Strategic Fit
• Component of a Mission
• The Marketing Strategy Process
• Establishing the Core Strategy
• Creation of the Competitive Positioning

Corporate and Division Strategic Planning

Strategic planning at the corporate and division levels is essential for large and diversified organizations
to ensure that their operations are aligned with their long-term vision. It involves setting a mission,
segmenting business operations into manageable units, effectively allocating resources, and identifying
growth opportunities. This structured approach helps organizations respond proactively to market
changes, optimize their performance, and achieve competitive advantages.

1. Defining the Corporate Mission

The first and most fundamental step in strategic planning is defining the corporate mission. This mission
provides clarity on why the organization exists, what it strives to achieve, and how it plans to serve its
stakeholders. It serves as a compass that guides decision-making, resource allocation, and strategic
efforts.
What is a Corporate Mission?
A corporate mission is a formal statement that outlines the organization’s purpose, core values, and focus
areas. It is a declaration of its intent to address specific customer needs, compete effectively, and make an
impact in the industry or society.
Characteristics of an Effective Mission Statement
1. Focus on Limited Goals:
A good mission statement avoids being overly broad or vague. It narrows the organization’s focus
to a specific set of objectives.
o Example: Compare the broad and generic mission "To lead the industry by innovating
and exceeding expectations" with Google’s more specific mission:
"To organize the world’s information and make it universally accessible and useful."
This focused mission helps Google channel its resources and innovation into its primary
goal: improving access to information.
2. Emphasis on Policies and Values:
A mission should reflect the organization's ethical and operational standards, ensuring employees

1
 act consistently in various scenarios. Policies clarify the boundaries within which employees can
make decisions. For example, a sustainability-focused company may have values emphasizing
environmental preservation and corporate social responsibility (CSR).
3. Definition of Competitive Spheres:
A mission should identify the industries, markets, or customer segments where the company will
compete. For instance, Coca-Cola’s mission defines its presence in the beverage industry and its
commitment to refreshing the world.
4. Long-Term Vision:
Mission statements are designed to endure changes in the business environment and remain
relevant over decades. Revisions are made only when the core focus of the business undergoes a
transformation.
5. Memorability and Brevity:
An ideal mission statement is short, impactful, and easy to remember. Many organizations use
slogans or mantras to reinforce their mission.
o Example: Nike’s mantra “Authentic athletic performance” captures its essence
succinctly.

2. Establishing Strategic Business Units (SBUs)

Strategic Business Units (SBUs) help large companies manage their diverse operations more
efficiently. A single company might operate in multiple industries or markets, each requiring unique
strategies to remain competitive. By dividing the business into SBUs, the company can focus on
individual business areas with tailored approaches.
Example of General Electric (GE)
General Electric is a prime example of a company that adopted this strategy. At one point, GE
organized its operations into 49 SBUs. This allowed each business unit, whether focusing on healthcare
equipment, jet engines, or home appliances, to operate with its own goals and management. This ensured
each unit received the proper attention and resources.
Characteristics of an SBU
To better understand SBUs, let's break down their three key features with relatable examples:
1. A Single Business or Related Businesses
An SBU focuses on a specific business or a group of related businesses that can be managed
independently.
o Example: Imagine a large Bangladeshi conglomerate like Bashundhara Group. It might
have one SBU for cement production and another for paper products. While both belong
to the parent company, they have separate goals and strategies.
2. Own Set of Competitors
Each SBU has its own competitors in its specific market.

2
 o Example: The cement division of Bashundhara Group competes with brands like Holcim
or Shah Cement, while the paper division competes with other paper manufacturers like
Meghna Group.
3. Dedicated Manager and Control
Each SBU has a dedicated manager responsible for its planning, performance, and profitability.
The manager oversees the factors influencing success, such as pricing, marketing, and operations.
o Example: In Bashundhara’s cement division, a manager might focus on pricing strategies
and improving production efficiency, while in the paper division, another manager might
emphasize sustainability and cost-effective packaging.

3. Assigning Resources to Each SBU

After identifying Strategic Business Units (SBUs), management must allocate resources effectively. This
requires evaluating each SBU’s potential based on market growth, market share, and strategic
opportunities like global expansion or outsourcing. SBUs are categorized as Stars, Cash Cows,
Question Marks, or Dogs to guide decisions on where to invest, maintain, or divest resources.

a) Stars
Stars are SBUs that operate in high-growth markets with a strong market share. These units require heavy
investment to sustain their rapid growth. Over time, as the market matures and growth slows, Stars can
evolve into Cash Cows, providing long-term profitability.
Example: A Bangladeshi company producing solar panels could classify its growing renewable energy
division as a Star. With increasing demand for green energy, it would need significant funding to scale
production and capture more of the fast-expanding market.

b) Cash Cows
Cash Cows are SBUs in low-growth markets but with a high market share. They are well-established and
require minimal investment to maintain their position. The stable cash flow they generate is often used to
fund other SBUs, such as Stars or Question Marks.
Example: An established cement business within a Bangladeshi conglomerate could serve as a Cash Cow.
It operates in a mature industry with steady demand, consistently generating revenue without requiring
significant additional investment.

c) Question Marks
Question Marks are SBUs with low market share in high-growth markets. These units need considerable
investment to improve their position, but their potential success is uncertain. Management must decide
whether to develop them into Stars or phase them out.

3
Example: A new electric vehicle (EV) product launched by a Bangladeshi company could be a Question
Mark. The market for EVs is growing rapidly, but the company’s initial market share is small. Significant
investment would be required to compete and establish a foothold.

d) Dogs
Dogs are SBUs in low-growth markets with low market share. They generate little profit and usually
sustain themselves, but they offer limited potential for future growth. Companies often choose to phase
them out to free up resources.
Example: A Bangladeshi electronics company still manufacturing feature phones might categorize this
division as a Dog. While it might generate some revenue from niche markets, it no longer aligns with the
company’s long-term growth strategy.

4. Assessing Growth Opportunities

Assessing growth opportunities is a critical part of a company's strategic planning. It involves
evaluating ways to grow the business, which could mean expanding existing operations, acquiring new
businesses, or even downsizing or discontinuing older businesses. If a company’s projected sales do not
meet the future goals, management must act to fill that gap by developing or acquiring new businesses.
There are three primary strategies for assessing growth opportunities: intensive opportunities,
integrative opportunities, and diversification opportunities.

A. Intensive Growth
Intensive growth involves expanding within a company’s existing operations by exploring
various ways to enhance current products or markets. The aim is to increase sales, profitability, or market
share without entering new industries. Corporate management can assess intensive growth opportunities
using a framework called the "product-market expansion grid," which categorizes potential strategies
based on whether a company is targeting existing or new products, and existing or new markets. The grid
includes four primary strategies: market penetration, market development, product development, and
diversification.

i. Market-Penetration Strategy
The first strategy within intensive growth is market penetration, which focuses on increasing
market share with existing products in existing markets. This involves finding ways to attract more
customers or convince current customers to buy more. Strategies for market penetration might include
aggressive marketing campaigns, offering promotions, or improving product features to make them more
appealing to customers.
Example: A Bangladeshi clothing retailer might use a market-penetration strategy by increasing
its advertising efforts or offering discounts during major shopping festivals like Pohela Boishakh to
attract more customers to its existing stores, thereby increasing its market share in the current market.

4
 ii. Market-Development Strategy
The market-development strategy looks for opportunities to expand existing products into new
markets. This could mean targeting new geographical areas, reaching new customer segments, or
exploring new distribution channels. The goal is to grow the customer base by bringing existing products
to areas where they haven’t been introduced yet.
Example: A Bangladeshi company that sells bottled water in urban areas might use a market-
development strategy by expanding its reach to rural regions where there is a rising demand for clean
drinking water. Alternatively, they might enter international markets with similar consumer needs.

iii. Product-Development Strategy

The product-development strategy involves creating new products for existing markets. This
strategy aims to offer customers more variety or improved options to encourage repeat purchases and
attract new customers. Product innovation is key to this strategy, whether through enhancing current
products or introducing entirely new ones.
Example: A local electronics company in Bangladesh might implement a product-development
strategy by launching a new range of smart home devices, such as smart speakers or security cameras, to
meet the growing demand for home automation in the current market.

iv. Diversification Strategy

Finally, the diversification strategy involves developing new products for new markets. This is
the most risky of the four strategies since it requires entering unfamiliar markets with products that are
new to the company. However, diversification can provide substantial growth opportunities, especially
when current markets are saturated or declining.
Example: A Bangladeshi company that specializes in traditional garments might pursue
diversification by launching a new line of eco-friendly beauty products. This move would tap into a new
market segment of environmentally conscious consumers while introducing an entirely new product
category for the company.

B. Integrative Growth
Integrative growth occurs when a business seeks to increase its sales, profits, and control over its
operations by merging with or acquiring other companies within its industry. This approach helps the
company expand its reach, reduce costs, and improve efficiency. Integrative growth strategies are
typically categorized into three types: backward integration, forward integration, and horizontal
integration.

• Backward Integration

5
Backward integration happens when a company takes control over its suppliers, typically by acquiring or
merging with firms that provide raw materials or components. This strategy ensures a stable, cost-
effective supply of materials, reduces dependency on third-party suppliers, and can improve the
company's profit margins by cutting out intermediaries.
Example: A Bangladeshi garment manufacturer might pursue backward integration by acquiring a textile
mill that produces fabric. This would allow the company to control the quality, cost, and supply of the
materials used in its clothing production, ensuring more reliable operations and better cost management.

• Forward Integration
Forward integration involves a company taking control of its distribution channels or retail outlets. By
merging with or acquiring businesses that sell the final product, the company can directly manage how its
products reach customers. This strategy can improve profit margins, reduce reliance on third-party
distributors, and enhance customer relationships.
Example: A successful rice producer in Bangladesh might engage in forward integration by opening its
own chain of grocery stores or online platform to directly sell its rice to consumers, cutting out the need
for intermediaries like wholesalers or retailers.

• Horizontal Integration
Horizontal integration is when a company merges with or acquires other firms that operate in the same
industry and at the same stage of production or distribution. This strategy helps expand market share,
increase production capacity, and reduce competition within the industry.
Example: A software company in Bangladesh that specializes in educational apps might acquire another
company that develops similar applications, thus increasing its market share and reducing competition.
This move would allow the company to offer a wider range of products and potentially reach more
customers.

C. Diversification Growth
Diversification growth is a strategic approach used when companies seek to expand beyond their current
businesses into entirely new products, markets, or industries. This is often pursued when there are
attractive opportunities outside of their existing business sectors, and they believe they have the necessary
resources and capabilities to succeed. Diversification can reduce risks by spreading investments across
various industries, and there are several types of diversification strategies companies can follow:
concentric diversification, horizontal diversification, and conglomerate diversification.

• Concentric Diversification
Concentric diversification occurs when a company expands into new products or markets that are related
to its existing business. The new ventures are linked by similar technology, market needs, or customer
bases, making it easier for the company to leverage its existing strengths and expertise.

6
Example: A Bangladeshi company that manufactures computers may diversify into software development
to create solutions that complement their hardware products. This allows the company to offer a more
complete package to customers, increasing its value proposition and market appeal.

• Horizontal Diversification
Horizontal diversification involves entering new industries or markets that are unrelated to the current
business but leverage the company’s existing capabilities, resources, or infrastructure. This allows a
company to tap into new opportunities without directly competing with its existing products or services.
Example: A popular fast-food chain in Bangladesh might branch out into the hospitality industry by
acquiring a hotel chain. The company could use its experience in managing customer service and its
existing distribution channels to operate hotels, creating a new revenue stream while reducing reliance on
its core food business.

• Conglomerate Diversification
Conglomerate diversification refers to expanding into entirely new businesses that are unrelated to the
company's current products, markets, or technologies. This is typically done to reduce risks by
diversifying into industries that don’t correlate with the company’s existing operations. Although it can
provide opportunities for growth, conglomerate diversification involves higher risks since the company
might lack experience in the new industry.
Example: A telecommunications company in Bangladesh might venture into the food and beverage sector
by acquiring a chain of restaurants. This move would help the company diversify its income sources and
reduce the impact of potential downturns in the telecommunications industry.

D. Downsizing and Divesting Older Business

As part of managing long-term growth and maintaining efficiency, companies sometimes need to prune or
divest older, underperforming businesses. This process is referred to as downsizing or divesting. By
letting go of businesses that no longer align with the company's strategic goals or that require too many
resources to maintain, the company can free up valuable resources for investment in more promising
ventures. Downsizing can help reduce costs, streamline operations, and focus on areas with higher
potential for growth.
Example: A Bangladeshi conglomerate with a declining traditional print media division might decide to
divest this business to focus on its more profitable digital platforms and e-commerce ventures,
reallocating resources to areas with greater growth potential.

Strategic Fit
Strategic fit refers to the alignment between a company's internal capabilities and resources and the
external opportunities and challenges in its environment. It is about ensuring that a company’s strategy is
well-suited to both its strengths and the conditions in the marketplace. A strong strategic fit enables
businesses to effectively respond to external changes, seize opportunities, and tackle challenges in a way
that maximizes their chances for success in the long run.

7
Having a strategic fit means that a company is able to align its resources—such as its technology,
workforce, and capital—with the demands of its market, customers, and competitors. This alignment
allows businesses to pursue growth more effectively and efficiently.
Example: In Bangladesh, a company that produces renewable energy equipment like solar panels might
have a strategic fit by aligning its capabilities with the growing demand for clean energy solutions. As the
government pushes for more sustainable energy sources, this company can capitalize on the opportunity
by using its expertise in solar technology to meet market demand, thus achieving long-term success.
Similarly, a company that produces mobile phones might have a strategic fit by aligning its product
offerings with the increasing demand for smartphones in rural areas, where mobile internet usage is
growing.

Components of a Mission
A mission statement is a critical element for any organization, as it defines the company's purpose,
direction, and values. It is a guiding force for decision-making, resource allocation, and organizational
culture. A well-crafted mission statement should be concise, clear, and actionable. The key components of
an effective mission statement include:

1. Strategic Intent
Strategic intent refers to the long-term vision of where the organization wants to be. It provides clarity on
the company's ultimate goals and ambitions. A strong strategic intent is usually bold and forward-
thinking, serving as a roadmap for the future. It helps employees align their efforts with the company’s
overarching objectives, ensuring a unified direction.
Example: The earthmoving equipment manufacturer Komatsu had a strategic intent to “encircle
Caterpillar,” aiming to surpass its largest competitor in the industry. Similarly, the American Apollo
space program had the strategic intent to "land a man on the moon ahead of the Soviets," which drove
the entire space mission and united the country behind a singular, ambitious goal.

2. Values
The values of an organization define its ethical and moral framework. These values guide decision-
making and set the tone for the company’s operations and interactions with stakeholders. Clear values
help maintain consistency, integrity, and a positive work culture.
Example: Mars Inc., a confectionery giant, clearly defines its values through five guiding principles:
• Quality: The company strives to provide high-quality products to customers, recognizing that the
consumer is the "boss."
• Responsibility: Mars encourages individuals to take responsibility for their actions and support
others in fulfilling their roles.
• Mutuality: Mars believes in mutual benefits, ensuring that all parties, including customers,
employees, and shareholders, gain from the company's success.

8
 • Efficiency: Mars prioritizes resource optimization, minimizing waste, and focusing on what they
do best.
• Freedom: The company values independence and the ability to shape its future while recognizing
the importance of profit in maintaining that freedom.

3. Distinctive Competencies
Distinctive competencies are the unique strengths or capabilities that set an organization apart from its
competitors. These competencies are typically difficult to replicate and define the essence of the
company. Articulating these competencies helps the company focus on what it does best and creates a
competitive advantage.
Example: Apple is known for its distinctive competencies in design, innovation, and user experience.
These competencies have made it a leader in the technology and consumer electronics market, and the
company consistently delivers products that stand out due to their sleek designs and seamless integration
across devices.

4. Market Definition
Market definition outlines the specific customer segments the organization seeks to serve and the needs or
functions it aims to fulfill for them. A clearly defined market helps a company focus its resources on
addressing the specific demands of its target audience, leading to better customer satisfaction and
business success.
Example: Sheila’s Wheels, an insurance company, has clearly defined its market by targeting female
drivers, with its business purpose being “a car insurance company designed for the female driver.” This
focus on a niche market helps the company tailor its services to the specific needs of its target audience.

5. Positioning in the Marketplace

Positioning refers to how the company distinguishes itself in the market relative to competitors. It’s the
unique value proposition that defines the company’s place in the industry. This component results from
combining the company’s market definition and distinctive competencies to carve out a unique space in
the marketplace.
Example: Virgin Group, led by Richard Branson, has successfully positioned itself as a brand that is
unconventional, customer-friendly, and innovative. The company’s broad range of businesses—from
airlines to mobile services—are all linked by the same unique approach to customer service and its
"different" way of doing business.

The Marketing Strategy Process

9
Once the purpose of an organization is clearly defined, the next step is to craft a marketing strategy that
will help achieve this purpose. The development of a marketing strategy can be broken down into three
main levels: establishing a core strategy, creating competitive positioning, and implementing the strategy.

• Core Strategy
The core strategy is the foundation of a marketing plan. It begins with a thorough and creative assessment
of the company’s internal capabilities—its strengths and weaknesses—as well as the external
environment—opportunities and threats. This analysis, often referred to as a SWOT analysis, helps
identify what the company does well and what challenges it faces.
Based on this analysis, the core strategy is formulated. This includes setting clear marketing objectives
and determining the broad focus for achieving those goals. The core strategy ensures that the company's
marketing efforts align with its overall vision, leveraging strengths to take advantage of opportunities
while mitigating weaknesses and threats.
Example: A smartphone company may identify that its core strength is its high-quality camera
technology, while its weakness is limited brand recognition. The core strategy might then focus on
emphasizing the camera as the primary selling point while creating brand awareness through targeted
advertising.

• Competitive Positioning
Competitive positioning involves identifying the company’s target market—both customers and
competitors—and defining the company’s competitive advantage. The company needs to figure out how
it can serve its target customers better than the competition. This could involve differentiating itself
through factors like product quality, customer service, price, or innovation.
The essence of competitive positioning is to create a unique space in the market, which makes the
company stand out. It is about ensuring that customers perceive the brand as offering something distinct
from competitors and that the company can deliver on that promise consistently.
Example: Coca-Cola and Pepsi are direct competitors in the soda market, but they have different
competitive positions. Coca-Cola focuses on emotional appeal, positioning itself as a timeless, iconic
brand associated with happiness, while Pepsi focuses on the younger demographic, positioning itself as a
more modern, adventurous choice.

• Implementation
Once the strategy and positioning are defined, the next step is implementation. This involves creating a
marketing organization capable of putting the strategy into action. This could involve establishing a team
responsible for executing the strategy, setting clear roles, and ensuring that all aspects of the strategy are
coordinated effectively.
Implementation also focuses on the tactical aspects of marketing, including the marketing mix: product,
price, promotion, and distribution. This is where the company decides on the specific products or services

10
to offer, how to price them, how to promote them, and where to distribute them. The goal is to make sure
that the marketing message aligns with the positioning and is communicated effectively to the target
audience.
Example: A company launching a new product may need to decide on pricing strategies (e.g., premium
pricing or competitive pricing), promotional campaigns (e.g., online advertising or influencer
partnerships), and distribution channels (e.g., retail stores, e-commerce, or both). Each of these decisions
should reflect the company's positioning and strategic objectives.

Establishing the Core Strategy

The core strategy is a fundamental part of an organization’s overall plan. It defines the company’s
objectives and outlines the broad strategies it will employ to achieve them. To effectively establish this
strategy, the organization must conduct a detailed analysis of its available resources and the market in
which it operates. This analysis is crucial to ensuring that the core strategy aligns with the company’s
mission and business goals.

1) Analysis of Organizational Resources

An effective core strategy begins with an in-depth analysis of the organization’s internal resources. This is
called Organizational Analysis (OA). It involves assessing the company's internal characteristics,
operations, and external environment to determine how well it is equipped to achieve its goals.
Example: Imagine a company like Bashundhara Group in Bangladesh. If it is analyzing its resources to
craft a core strategy, it would begin by reviewing its infrastructure, workforce, financial capacity, and
current product offerings. This analysis would help identify what strengths the company can leverage and
what weaknesses need addressing.

• The Product Portfolio

A product portfolio is a collection of the various products or services that a company offers. The
company reviews the profitability of each product to assess whether the current product mix is supporting
its business strategy and long-term objectives.
Example: If a company like Aarong is evaluating its product portfolio, it would look at the profitability of
its diverse product range, from handmade garments to home décor. This would help the company decide
whether its current offerings meet customer demand and whether there are opportunities for new
products.

• Portfolio Plan
A portfolio plan serves as a guide for making investment decisions. It specifies the mix of investments—
ranging from low-risk to high-risk—that is most likely to achieve the company’s financial goals. This
plan also considers the company’s risk tolerance, which plays a vital role in shaping the direction of its
investments.

11
Example: A company might develop a portfolio plan that includes investing in both stable, profitable
products (e.g., home essentials) and riskier ventures (e.g., new technology products) to balance long-term
growth with short-term stability.

2) Analysis of the Markets Served

Next, the company conducts an analysis of the markets it serves or wishes to serve. This analysis helps
identify opportunities and threats within those markets, and focuses on two key areas:
• Customers (current and potential): What are the needs of the customers the company serves,
and how might these evolve?
• Competitors (current and potential): Who are the company's competitors, and what are their
strengths and weaknesses?
By understanding the market, the company can make informed decisions about where to focus its
resources.
Example: For a business like Pran in Bangladesh, market analysis would involve understanding
consumer preferences in food products, such as the shift toward healthier options, as well as analyzing
competitors in the FMCG sector like Square Group.

3) SWOT Analysis
A SWOT analysis is a tool used to assess a company’s Strengths, Weaknesses, Opportunities, and
Threats. This analysis provides a comprehensive view of the internal and external factors affecting the
company, and helps identify areas where the company can capitalize on its strengths or needs to improve.
Example: If Grameenphone, a telecom company in Bangladesh, conducted a SWOT analysis, it might
identify its strength in network coverage, its weakness in customer service, opportunities in expanding 4G
services, and threats from competitors like Robi.

4) Core Strategy Development

Once the company has completed these analyses, it can develop its core strategy. This strategy will focus
on achieving growth, improving profitability, and expanding its market presence. There are several
approaches a company can use:

• Market Expansion
One way to grow is by expanding the market. This can be done by attracting new users, finding new uses
for existing products, or developing new products that can stimulate demand in the market.
Example: ShopUp, a Bangladeshi B2B e-commerce platform, could expand by reaching new small
businesses in rural areas, creating more opportunities for growth.

• Increasing Market Share

12
In mature markets, companies often focus on increasing market share. This usually involves attracting
customers away from competitors, often by offering better value, product features, or customer service.
Example: In the Bangladesh mobile phone market, Samsung may try to increase its market share by
offering attractive pricing and better after-sales service compared to Huawei or Xiaomi.

• Improving Profitability
Companies can improve profitability without increasing sales by enhancing margins. This can be done
by improving efficiency, reducing costs, or finding ways to offer premium products with higher profit
margins.
Example: Unilever Bangladesh could focus on improving profitability by reducing manufacturing costs
through better supply chain management, without raising the price of its popular products like Lux soap.

Creation of the Competitive Positioning

Competitive positioning refers to how a company positions itself in the marketplace to achieve a distinct
and favorable place in the minds of its target customers. This process is essential for ensuring that the
company’s offerings stand out and are perceived as superior or different from its competitors. The
creation of competitive positioning involves selecting market targets and establishing a differential
advantage, which together help the company compete effectively.

1) Market Targets
When creating competitive positioning, one of the first steps is to choose the market target. This
involves selecting the right customer segments to focus on. The process of choosing the right target
involves evaluating two key factors:
• Market Attractiveness: This refers to how appealing the market is in terms of growth potential,
profitability, and demand. A company needs to assess whether the market offers the right
opportunities to achieve its business goals.
• Company Strengths: The company must also evaluate whether it has the capabilities to serve
this market effectively. This includes assessing internal strengths, such as resources, expertise,
and brand reputation, which will enable the company to meet customer needs better than
competitors.
Example: Consider Robi Axiata in Bangladesh. When targeting mobile users, it considers the
attractiveness of the growing middle-class market and assesses its ability to offer affordable, high-quality
data services. By focusing on the market of young, tech-savvy users, Robi targets an attractive, growing
customer base that aligns with its service capabilities.

2) Differential Advantage
Once the target market has been identified, the next step is to establish a differential advantage, which
means offering something unique that sets the company apart from its competitors. A differential

13
advantage can be created from the company’s strengths, distinctive competencies, or resources that its
competitors cannot easily replicate. There are two main strategies that companies can use to create a
competitive advantage:
Cost Leadership
The cost leadership strategy focuses on becoming the lowest-cost producer in the industry. By achieving
a significant cost advantage, the company can offer its products or services at a lower price than its
competitors, attracting price-sensitive customers while maintaining profitability.
Example: Aarong, a popular retail brand in Bangladesh, has established a cost leadership position by
producing products at scale and utilizing efficient supply chain management. This allows it to offer high-
quality products at competitive prices, making it appealing to budget-conscious consumers.
Differentiation
The differentiation strategy involves offering products or services that are perceived as unique or
superior in the market. This could be through innovative features, high-quality service, exclusive design,
or branding. The goal is to create a strong, positive perception of the product that makes it stand out and
command premium prices.
Example: Apple is a classic example of a company that uses differentiation. Its products, such as the
iPhone, are differentiated by their sleek design, superior user experience, and innovative technology. This
uniqueness allows Apple to command higher prices compared to competitors.
Combining Differentiation and Cost Leadership
The two strategies—cost leadership and differentiation—are not mutually exclusive and can often be
pursued simultaneously. By offering unique products or services with superior quality, a company may
gain market share, leading to economies of scale or experience effects that allow it to lower production
costs. In turn, this could lead to a competitive advantage on both fronts: high quality and low cost.
Example: Samsung successfully combines both strategies. While it differentiates itself with advanced
smartphone features, its vast production scale and efficient supply chain allow it to offer these high-end
products at competitive prices compared to other premium brands like Apple.

14