How To Build Brands Within Framework Of Low Cost Leadership Strategy

2890 words - 12 pages

Among the foundations of Business Administration Theory, Porter's Business Strategies and Branding are unquestionably at top of the list. Other then their own significance for Business Management Processes these are basis of abundant intellectual work. Acknowledging the fact that theory some times not only misrepresent core idea but diverge with practical situation as well, its importance can not be denied.This article too, is all about Theoretical dimensions of above identified concepts. Analysis shows, vice versa to the perfect strategic alignment between Differentiation and Branding, there is a blunt mismatch when a company with low Cost Business Strategy progresses towards BrandingDifferentiating products from that of competitors was probably the primary motive behind Brand initiative, as it is said, way back in 3000 B.C. MSN Encarta encyclopedia demonstrate brands as natural consequence of advertising that according to archeologists is evident among the Babylonians in 3000 BC. Despite of such ancient heredity, it was only 1990's when brand came at top of the priority list for strategy makers.This article puts Brand Management into the framework of Business strategies proposed by Michel Porter. Starting from the introduction, it provides detailed comparison of both of these contemporary business hypotheses and in-depth analysis of variables having direct impact on these.BUSINESS STRATEGIESMichel Porter, an economist before his specialization in "strategy" introduced generic strategies for organizations in 1980. By applying fundamental demand and supply functions of market into individual business setups he transpired two dimensions of a firm. The external demand size dimension was illustrated as "Strategic Scope" and internal Supply dimension as "Strength or Core Competence" of a firm. Rational behind it was Empirical research on the profit impact of market share that indicated firms with a high market share were often quite profitable, but so were many firms with low market share. Porter observed that firms having big market share generate profit by selling its product to large number of customers on relatively low prices. In contradiction to it some firms sell their products on relatively high prices and hence remain able to be profitable by increasing their profit margins even with small market share. By segregating strategic scope of firms into broader and narrow customer base while core competencies based on price or product features, he crafted a Generic Business Strategy Model that, over the years earned spectacular deliberations of business community. This two bi two matrix provided firms a logical gorund to use price or differentiation features of product as competitive advantage over others. Despite of some critics the business strategies, commenced by this matrix, have been essential part of every business bible.Exploiting business strategy as a unique selling point requires a company to acquire certain skills and alignment of its...

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