WIN WIN APROCAH

1. PORTER’S GENERIC STRATEGIES

2. Porter Generic Strategy
- FMCG
Team Member:
Sureshkumar Maurya – MMM 11
Jayshree Naik - MMM 14
Maheshkumar Singh - MMM 23
Nikhil Mali - MMM
Himmat Gupta - MMM

3. Top 10 FMCG Companies in
World (2013)
Rank Company Market Value
($ in Billions)
1 Nestle 233.5
2 Procter and Gamble 208.5
3 Coco-Cola 173.1
4 Anheuser-Busch InBev 153.5
163.2
5 Philips Morris International 150.6
6 Unilever 122.3
7 Pepsico 118.9
8 British American Tobacco 102
9 Reckitt Benckiser Group 51.2
10 General Mill 29.9

4. Top 10 FMCG companies in
INDIA (2013)
Rank Company Market Value
($ in Crores)
1 ITC Ltd. 256,769
2 HUL 127,144
3 Nestle India 49,768
4 Godrej Consumer Products India 28,107
5 Dabur India Ltd 26,272
6
GlaxoSmithKline Consumer
Healthcare 23,435
7 Colgate Palmolive 18,329
8 Marico Ltd 13,137
9 Emami 10,788
10 Procter and Gamble 9,555

5. Introduction…
⚫ Michael Porter is a professor at Harward Business
School.
⚫ A firm’s success in strategy rests upon how it positions
itself in respect to its environment.
⚫ Michael Porter has argued that a firm's strengths
ultimately fall into one of two headings: cost advantage
and differentiation.
⚫ By applying these strengths in either a broad or narrow
scope, generic strategies result:, Cost leadership
Differentiation, and Focus (Cost Focus and
Differentiation Focus)

6. Cost
Leadership
• Superior profits
through lower
costs.
• E.g. : Wal-Mart,
Micromax phone
Differentiation
• Creating a
product or service
that is perceived
as being unique
“throughout the
industry”
• E.g. : Mcdonald,
Nokia, Samsung
Focus
• Concentrating on
a limited part of
the market.
• Cost Focus
• Differentiation
Focus
• E.g. : PepsiCo,
Apple I-phone,
Vertu
Generic Strategies

7. Target Scope
Advantage Advantage
(Low Cost) (Product
Uniqueness)
Broad Cost Leadership Differentiation
Narrow Focus Strategy
(Cost Focus)
Focus Strategy
(Differentiation)
Porter’s Generic Strategy…

8. Porter Generic Strategy

9. Cost Leadership Strategy
⚫ Aiming to become Lowest Cost Producer
⚫ The firm can compete on the price with every other
industries and earn higher unit profits.
⚫ Cost reduction provides the focus of the organisation’s
strategy.
⚫ Targets a broad market.
⚫ Competitive advantage is achieved by driving down
costs.
⚫ A successful cost leadership strategy requires that the
firm is the cost leader and is unchallenged in this
position.
⚫ Especially beneficial : where customers are price
sensitive

10. Type
Industry
Founded
Founder(s)
:
:
:
:
Public
Beverage
1886
Asa Griggs Candler
Headquarters : Coca-Cola headquarters,
Atlanta, Georgia, U.S.
Number of locations
Area served
:
:
+200
Worldwide
Employees
Fla
:
:
Approx. 2.1 million (2011)
Cola, Cola Cherry, Cola Vanilla,
Cola Green Tea, Cola Lemon,
Cola Lemon Lime, Cola Lime,
Cola Orange and Cola Raspberry.

11. Brand

12. ⚫ Focusing on cost leadership through disciplined working capital
management and tight operating expenses control.
⚫ Optimization of the production and distribution infrastructure
⚫ Personal cost ownership throughout the organization
⚫ Logistic excellence
⚫ Daily Average serving from 9 peoples (1886) to 1.8 million people
now.
⚫ Ensure the strongest and most efficient production, distribution,
and marketing systems possible
⚫ The established Coca-Cola HBC Business Services Organization
(BSO) that standardizes, centralizes, coordinates and simplifies
certain Finance and Human Resources processes to improve
productivity and provide important transactional services at a
lower cost

13. ⚫ Access to the capital required to make a significant
investment in production assets.
⚫ Design skills for efficient manufacturing
⚫ High level of expertise in manufacturing process
engineering.
⚫ Efficient distribution channels.
Success Mantra…

14. Risks Involved..
⚫ Other firms may be able to lower their costs as well.
⚫ As technology improves, the competition may be able to
leapfrog the production capabilities, thus eliminating
the competitive advantage.
⚫ It could lead to a damaging price wars.
⚫ There might be difficulty in sustaining cost leadership
in the long run.
⚫ A firm following a focus strategy might be able to
achieve even lower cost within their segment.

15. Differentiation Strategy
⚫ A differentiation strategy calls for the development of a
product or service that offers unique attributes that are
valued by customers.
⚫ Customers perceive the product to be different and
better than that of rivals.
⚫ The value added by the uniqueness of the product may
allow the firm to charge a premium price for it.
⚫ Differentiation can be based on product image or
durability,after-sales,quality,additional features.
⚫ It requires flair,research capability and strong
marketing.

16. Uniqueness Buyers’Value
Differentiation

17. McDonald’s

18. Type
Industry
Founded
:
:
:
Public
Restaurants
McDonald’s Corporation
Founder(s) :
J V in India :
Headquarters
Area served
Key people
:
:
:
Richard and Maurice
McDonald,( McDonald’s
restaurant concept )
Ray Kroc,( McDonald’s
Corporation founder )
Vikram Bakshi &
Amit Jatia
Oak Brook,Illinois,US
Worldwide
James A. Skinner
(Chairman & CEO)

19. Number of Restaurants
Customers
Products
:
:
:
+33,000 in 118 countries
appr. 67 million / day
Fast Food
(hamburgers , chicken ,
french fries , soft drinks ,
coffee , milkshakes , salads,
desserts , breakfast )
⚫ McDonald's customers are of all classes, but largely
working, and people of all ages.
⚫ McDonald’s strove to meet a customer wait time at no
more than one minute in line and 30 seconds at the
counter.

20. ⚫ McDonald's understood that the parent was making the
purchasing decision, most likely based solely on price.
What McDonald's marketing executives did was
ingenious. They put a toy in with the hamburger,
french fries, and Coke. Then they gave it a special
name, calling it a Happy Meal. Then they marketed it to
the kids.
⚫ McDonald's knows that some customers go to its stores
to take a quick break from their day's activities and not
because McDonald's was able to make their food ten
seconds faster than a competitor. So McDonald's
marketing executives then put together the phrase,
“Have you had your break today?”
⚫ They've taken competing on price right out of the
picture,” says Greshes. “They bring you quality,
convenience, service, and value — and they make you
feel like you are getting a break in your hectic day.

21. Success Mantra…
⚫ Access to leading scientific research.
⚫ Highly skilled and creative product development team.
⚫ Strong sales team with the ability to successfully
communicate the perceived strengths of the product.
⚫ Corporate reputation for quality and innovation.

22. Risks Involved…
⚫ Involves higher costs.
⚫ Customers might become price sensitive and choose on
price rather than uniqueness.
⚫ Customers may no longer need the differentiation
factor.
⚫ Imitation by competitors and changes in customer
tastes.
⚫ Rivals pursuing a focus strategy may be able to achieve
even greater differentiation in their market segments.

23. Focus Strategy
⚫ The focus strategy concentrates on a narrow segment
and within that segment attempts to achieve either a
cost advantage or differentiation.
⚫ The premise is that the needs of the group can be
better serviced by focusing entirely on it.
⚫ A firm using a focus strategy often enjoys a high degree
of customer loyalty, and this entrenched loyalty
discourages other firms from competing directly.
⚫ Because of their narrow market focus, firms pursuing a
focus strategy have lower volumes and therefore less
bargaining power with their suppliers
⚫ However, firms pursuing a differentiation-focused
strategy may be able to pass higher costs on to
customers since close substitute products do not exist.

24. Private
Type
Industry
Founded
Founder(s)
Headquarters
:
:
:
:
:
Animal food manufacturing
North Carolina,U.S.(1986)
Frank C. Mars
6885 Elm Street, McLean,
Worldwide
Virginia, US
Area served
Key people
:
: Steven Badger(Chairman)
Paul S. Michaels
(President and CEO)
Employees
Divisions
Subsidiaries
:
:
: Wrigley Jr. Company
Reckitt Benckiser

25. ⚫ The company makes the market leaders Pedigree (dog food) and Whiskas
(cat food), as well as kitekat (cat food) and Pal (dog food).
⚫ By successfully adopting the 'focus' strategy since 1950, Mars Inc. has
emerged as the largest consumer animal food company.
⚫ The leading exporters of pet food for 2004 were France ($993 million),
United States ($786 million) and the Netherlands ($511 million),[6] while
the leading importers were Japan ($718 million), Germany ($617 million)
and the UK ($563 million)..
⚫ Top Brand are Cesar, Greenies, Nutro, Pedigree, Royal Canin, Sheba,
Whiskas, KiteKat, Chappi, Catsan

27. Success Mantra…
⚫ Lower investment in resources.
⚫ The firm benefits from specialisation.
⚫ Provides scope for greater knowledge of a segment of
the market.
⚫ Makes entry to new markets easier and less costly.
⚫ Firms using a focus strategy often enjoy a high degree
of customer loyalty.

28. Risk Involved…
⚫ Limited opportunities for growth.
⚫ The firm could outgrow the market.
⚫ Danger of decline in the chosen segment or niche.
⚫ Risk of imitation.
⚫ Risk of changes in the target segment.
⚫ A reputation for specialisation inhibits move into new
sector.

29. ⚫ Cost Leadership
- Being the lowest cost producer in the industry as
a whole
⚫ Differentiation
- The exploitation of a product or service which
is believed to be unique
⚫ Focus
- Restricting activities to only part of the market through:
- Providing goods or services at lower cost to
that segment (cost focus)
- Providing a differentiated product or service to that
segment (differentiation focus)
We have Learnt…