Porter calls these bases generic strategies.

Cost leadership emphasizes producing standardized products at a very low per-unit cost for consumers who are price-sensitive.

Two alternative types of cost leadership strategies can be defined.

 

Type 1 is a low-cost strategy that offers products or services to a wide range of customers at the lowest price available on the market.

 

Type 2 is a best-value strategy that offers products or services to a wide range of customers at the best price-value available on the market; the best-value strategy aims to offer customers a range of products or services at the lowest price available compared to a rival’s products with similar attributes. Both Type 1 and Type 2 strategies target a large market.

 

Porter’s Type 3 generic strategy is differentiation, a strategy aimed at producing products and services considered unique industrywide and directed at consumers who are relatively price-insensitive.

 

Two alternative types of focus strategies are Type 4 and Type  5: 

 

Type 4 is a low-cost focus strategy that offers products or services to a small range (niche group) of customers at the lowest price available on the market.

 

Type 5 is a best-value focus strategy that offers products or services to a small range of customers at the best price-value available on the market. Sometimes called “focused differentiation,” the best-value focus strategy aims to offer a niche group of customers products or services that meet their tastes and requirements better than rival’s products do.