MGMT 498

[business policy & strategy]

Professor Ravi Shanmugam

Class 10: Business-level
strategy (pt. 2)
Thu 2/16/23

Pre-class slides

© Ravi Shanmugam, 2023

 Focus strategies introduced

[Tesla]
Differentiation: products
and services for which
consumers will pay a premium

Cost leadership: lowering

costs relative to competitors
offering similar products

[Ecotourism]
Focus: narrow product lines,
buyer segments, or
geographic markets
 Focus strategies introduced

[Tesla]
Differentiation: products
and services for which
consumers will pay a premium

Cost leadership: lowering

costs relative to competitors
offering similar products

[Ecotourism]
Focus: narrow product lines,
buyer segments, or
geographic markets
 Focus strategies introduced

Differentiation: products
How it’s done:
and services for which • Not just…
consumers will pay a premium
“We’ll market it
Cost leadership: lowering to these people”
costs relative to competitors
offering similar products

Focus: narrow product lines,

buyer segments, or
geographic markets
 Focus strategies introduced

Differentiation: products
How it’s done:
and services for which • Choose a single segment
consumers will pay a premium (or group of segments)
• Tailor your strategy to
these segments…
Cost leadership: lowering • …including product,
costs relative to competitors promotion, value-chain
offering similar products activity design, etc.

Note: this can overlap with

Focus: narrow product lines, the other strategies
buyer segments, or
geographic markets
 Levels of segmentation

One product and communication

Mass marketing strategy for all buyers

“A group of consumers who share a

Segment similar set of needs and wants.”

“A more narrowly defined consumer group

Niche seeking a distinctive mix of benefits.”

“Segments of one” – customization of

Individual product and promotion, reflecting
individuals’ unique preferences
 How focus strategy affects P5F

Focused niches make it easier to establish advantages with respect to P5F

 Risks of focus strategies

• Danger of getting
squashed by large rivals
if too successful
• Focusing too narrowly or
too widely

Focused niches make it easier to establish advantages with respect to P5F

 Recap

The two general BLS approaches can be adopted

to target smaller, more specific markets.
 Next in-person class
What’s due:
• Case presentation: group 1