Competitive Strategies: Porter’s Generic Strategies That Work
Porter’s Generic Competitive Strategies
You’ve probably seen Porter’s Generic Strategies diagram a dozen times in a business textbook or a classroom. Theory is one thing—seeing it IRL is another.
In this post, we’ll break down the framework using companies that follow each of the four strategies and add one more strategy, which is not recommended, at the end.
No fluff. Just practical examples.
Quick Refresher: What Are Porter’s Generic Strategies?
Michael Porter proposed that companies compete based on two dimensions: scope (broad or narrow market) and advantage (low cost or differentiation). From these, four strategies emerge:
Cost Leadership (Low cost, broad market)
Differentiation (Unique offering, broad market)
Cost Focus (Low cost, niche market)
Differentiation Focus (Unique offering, niche market)
Porter developed this framework in 1980 in his book, Competitive Strategy: Techniques for Analyzing Industries and Competitors.
1. Cost Leadership: Winning with Volume and Efficiency
If your goal is to be the low-price leader across a broad market, this should be your choice for a competitive strategy.
Real-world examples:
Real Canadian Superstore – Competes aggressively on price across a wide product range.
Canadian Tire – Drives volume across automotive, hardware, and home goods with strong private-label products.
Tim Hortons – Mass-market coffee and food, driven by scale and familiarity.
This strategy works when cost is critical for those in the market—but you must make the margins work, and that usually means selling in high volumes. Read: large, international company.
2. Differentiation: Standing Out in a Crowded Market
Instead of competing on price, with this strategy, you offer a product that people can’t get anywhere else—and charge more for it.
Real-world examples:
Lululemon – Premium athletic wear paired with community-driven branding and in-store experiences.
Cirque du Soleil – Reinvented circus entertainment with a unique, artistic performance model.
Purdy’s Chocolatier – A premium chocolate brand known for handcrafted quality and a loyal customer base.
If you’re building a brand people love, this is where you want to be. If you decide to take this approach, then quality is critical. You must have a product that the market regards as outstanding.
3. Cost Focus: Serving Customers at the Right Price
With this strategy, you're not trying to serve everyone—just a niche market that cares about price.
Real-world examples:
No Frills – Lean stores and private-label goods for the budget-conscious grocery shopper.
Westjet (the early years) – Zero-frills air travel for airline travellers who value price over comfort.
Dollarama – Products for a low price for customers (mostly) located in rural and low-income communities.
Focus is the keyword here—quality isn’t critical, but efficiency is. Manufacturing and distribution need to be bare-bones. People in this market are less concerned about quality. All they want is something that suits their purpose for a very low price.
NOTE: Our company doesn’t have any clients in this category—because they spend very little on marketing.
4. Differentiation Focus: Nailing It for a Passionate Niche
If you choose this strategy, then selling to everyone is NOT the focus, and that’s the point. The goal is to offer something special and unique to a specific market.
Real-world examples:
Mountain Equipment Company (MEC) – Gear and clothing for outdoor enthusiasts with an environmental conscience.
Canada Goose – High-performance outerwear brand known for luxury craftsmanship.
John Fluevog Shoes – A designer shoe company known for bold styles, craftsmanship, and a fiercely loyal customer base.
If you want customers to find and buy exactly what they are looking for, then this is the best strategy to choose. This is often where premium brands and cult followings are born.
5. Stuck in the Middle
You don’t want to be here.
If you fail to choose one of the four strategies listed above, then this is where you will end up.
The result? Lots of work and very little profit. Don’t fall into this trap. The consequences are lots of work and no profits. No company should be in this position.
The symptoms are being overworked and not making a profit (or a very low personal salary).
Contact me if you think your company is “stuck in the middle”. I’ll help you get out of this hole.
Final Thought
Porter’s model isn’t just for academics. It’s a practical way to evaluate your competitive position.
Trying to do everything, appeal to everyone, cut costs, or be mediocre is a recipe for disaster.
Strategy matters.
So… where does your business fit?
Are you leading on cost? Building a unique brand? Serving a focused niche?
Let me know if you’d like to develop a stronger competitive strategy.
AI: Yes, I used ChatGPT to help me, but I had this has been highly modified and customized by me.
I’m not sure why I feel the need to say this. Isn’t everyone using AI in some way or another?