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Competitions in today’s world are not as what they have been in the past years. Today as the number of firm increases, competition between firms becomes tougher, as a result of increasing competition against other firms for market shares. As competition is increasing, strategies from the past would not survive in today’s world, therefore new strategies have to be created for firms to be able to compete against other firms in the market. Strategies usually produced by firms and industries have three different levels, corporate level strategy, business level strategy and functional level strategy respectively. (Bartol 001 07) Business level strategy refers to the ‘type of strategy concentrating on the best means of competing within a particular business.’ (Bartol 001 07) One important element from the Business level strategy is Porter’s Competitive Strategy, which consists of three generic business-level strategies, so as to acquire competitive advantages over other firms and organizations in the same industry. (Porter 00) The first generic strategy from Porter is cost leadership, this type of strategy emphasizes on organizational efficiency and thus lowering overall cost of providing products and services lower to those of other competitors to gain confidence from consumers. (Porter 00) The second generic strategy, differentiation, is the circumstance where products and services are developed to such an extent that the products and services are viewed as unique or different from other firm’s products and services in the same industry. Once the differentiation strategy is achieved, charging premium prices or even receiving above average profits are possible.( Porter 00) Lastly from Porter’s strategy, the Focus strategy, involves the combination between cost leadership and differentiation strategies or possibly even both within a particular portion or segment of the entire market.( Porter 00) Today successful and huge industries such as Target, Coles Supermarkets, David Jones and Kmart implants Porter’s competitive strategies to compete against other rising competitive industries. This essay would be divided into four parts, focusing on each industry and describing how each of these industries apply these strategies into real life competition to compete against other competitors for market shares respectively.
Firstly, Target Australia being one of the major shopping centers for various kinds of needs opened in 15 is the place customers could easily search for their needs at a relatively cheap and reasonable price, where prices for products and services like Target’s does not exist anywhere else. (Target 00) The reason behind Target’s reasonable pricing is the implementation of the Cost Leadership strategy where Target emphasizes on organizational efficiency. One of the strategies used by Target is to seek savings by getting supplies of the products from suppliers at low prices, and as a result a cut down in price. This is possible by either getting products in a whole lot, or by contract to a supplier. (Target 00) The Differentiation strategy is also done by Target, where Target produces products under its own brand name. Target’s main differentiation is in the clothing section, where most of Target’s product in store is its own products. With this strategy, Target could charge premium prices, and earning above-average profits, as Target controls its variable production costs in producing its own products, and Target could charge its own price, and the price is not governed or determined by the price competition, determining how much profit Target wants to get out of the product. (Target 00) Even with the power to control the price of its own products, Target still charges quite a reasonable price. (Target 00) Due to this reason, Targets in store products are mostly under the brand name Target, and other products as their minority products. This is due to the advantage obtained by Target, as Target could uses its own brand products to compete against other local or imported products, which are more highly charged then products from Target. This is an example of Product differentiation done by Target, by applying Porter’s Competitive strategies. Even though Target today is not as successful compared to the past years of Target’s success, Coles Myer has already started to focus on reconstruct Target to achieve the success that Target has achieved in the past years. (Retail Off target 001)
Secondly, Coles Supermarkets, a major shopping center for various household needs operating over 460 stores throughout Australia and employing more than 5,000 people, has been a major success over the past years. (Coles 00) Coles offers costumers a convenient way of shopping and aims to fulfill customer’s requirement as well as expectations all under a single roof. Coles has created an advantage strategy where Cole’s branches are only available in the CBD area or the city, where it is busier and have higher population, and consumers living in the CBD area are usually consumers with higher income than consumers living in the suburbs. Even though Coles has one potential competitor which is known as ‘Safeway’ where consumers could get cheaper products, Coles still holds a bigger market share within the CBD area, this being the reason that Coles has the advantage of being situated in a more accessible area. (Coles 00) Even with this situation, Coles still tries to cut down on the cost to provide goods to consumer, one way that Coles has done to cut down price is the hiring of low skilled employees, such as university students, as university students do not have a complete degree as yet, and lower work experiences compared to other employees with a completed degree, therefore, lower wages, which initially leads to a cut down in price as a result in the cut down of operating costs. The way Coles distribute its products over its branches has also lowered Coles total cost. Coles does not distribute products on regular basis, but instead on weekly basis so as to cut down operating cost in the distribution channel. (Coles 00) Coles also produces products and services under its own brand names, this is the product differentiation done by Coles to attract customers and to compete with other competitors as product by Coles are normally cheaper than other local or imported products, examples of Products produced by Cole are Coles coke, Coles sugar, and Coles Bread etc. (Coles 00)
Thirdly, David Jones, with the mission of to sell “the best and most exclusive goods” and to carry “a stock that embraces the everyday wants of mankind at large” opened up in the year 188. (Website) David Jones aims to offer high quality shopping, with a comfortable environment to customers best described as average and above income customers. (David Jones 00) This is the implementation under the focus strategy by Porter, where the whole market is not targeted or aimed by David Jones, but instead only a portion or a segment of the whole market. Addition to it is the product differentiation done by David Jones, where self produced products and services are available under the brand name, David Jones, for example men’s clothing. (David Jones 00) David Jones sells products under its own brand name for the reason to compete with other competitors as well, as David Jones has the advantage of power over price. (David Jones 00)
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Kmart being the fourth opened its first store in 16. During the first day of the opening, Kmart was immediately overcrowded with customers expecting to fulfill their requirements as Kmart offers a huge range of products and services ranging from a majority of household hardware, fashion, sporting goods, furniture, and horticulture to supermarket foods from over 50 departments with no doubt, a very reasonable inexpensive price to meet up to customers expectancies. (Kmart 00) This is made possible by having a huge space to provide Kmart’s products and services to customers, and Kmart has cut down on the price of the land purchased by choosing an area farther away from the city, or closer to suburbs, where the land is cheaper than closer to the city. (Kmart 00) This provides Kmart with an advantage of having a bigger space or area, and cheaper cost of land and that is the reason that most of Kmart branches are located in suburb areas. (Kmart 00) With lowering cost, Kmart has chosen to provide a large portion of products which consist of household equipments, which does not have expiry dates, and so there is no time limit when Kmart has to have their product sold, and as these products does not have expiry date, Kmart stock their products in the warehouse, or in other words stock pile, and this is advantage for Kmart as regular distribution of the products to branches is not needed. Distribution is only needed when Kmart runs out of certain products, and distribution is done to each branch when the limit that Kmart has set is reached. (Kmart 00) This leads to a huge reduction in distribution costs to Kmart braches. All of these cost reduction reflects on the price of products that Kmart has set for customers. With the products that Kmart has offered, Kmart also offers products under its own brand name; one example is Household equipments that are sold under the brand name Kmart. Kmart also sells many others of its own products. (Kmart 00) Reason behind this that Kmart has applied the Product Differentiation Strategy, where with success in product differentiation, premium prices could be charged and that it would give Kmart above-average profits, and even with this advantage Kmart still set its price at a reasonable level, and this is because if prices were too high, customers might lead to other less costly alternatives rather than choosing Kmart’s products, and Kmart could not compete with other products available at Kmart as Kmart could only compete by price, as other Kmart could not compete with the quality of other products available in the market.
Finally, it could be concluded that firms or industries such as Target, Coles Supermarket, and Kmart uses the strategies by Porter, of which are cost-leadership and product differentiation to compete against other firms in the same market for the whole market and not only a portion or segment of market, while David Jones aims at only a portion or segment of market which consists of consumers with average and above incomes, to apply the concept of product differentiation and to compete against these other products at that level. Therefore, it could be concluded that successful Industries or firms today, such as Coles Supermarkets, David Jones, and Kmart, all uses Porter’s Competitive Strategy to various extents to compete against other rivalries within the same industry for the purpose to compete for market shares. Target today has not been that competitive compared to years before, but Coles Myer the parent company, has started to rearrange the management and focusing on rebuilding Targets success in the past years. With today’s type of competition with other firms and industry, any possible strategies need to be considered if the firms want to stay in the market, to be able to compete with other firms as well as to maximize profit and maximize market share.
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