Generic Strategy
The company that I have chosen is Tesla, and they focus on a differentiation strategy. Michael Porter outlined the grand strategies that a company can follow in order to compete effectively in the marketplace, as being differentiation or cost leadership, and these can be either at the niche or broad-based size levels (QuickMBA, 2010).
The differentiation strategy is defined as a strategy where the company seeks to compete on the basis of having a unique brand, product or product attributes. In that sense, Tesla has sought to have the best cars, to build its brand from the ground up as a premium brand, and employ a skimming strategy by targeting the high end buyer who will pay a premium for the best (Musk, 2006). There is ample evidence to support that this is the strategy for Tesla, beyond the fact that Elon Musk specifically wrote that in 2006.
First, in terms of product, Tesla's vehicles tend to receive rave reviews from critics, something that points to a premium product (Levin, 2015). The reviews have spurred sales of Tesla vehicles, to the point where there is now a waiting list to buy one. These are in-demand vehicles to the point where the company is having difficulty producing enough of them to meet demand (Tesla Annual Report). Furthermore, the vehicles are appointed with the sort of features and options that are typical of cars in the luxury category, and Tesla compares itself in advertising to the cost of ownership of conventional gasoline or diesel-based luxury vehicles. This sets the market, as determined by the company, as a mainstream market whereby Tesla competes for the luxury car buyer. That, by definition, is the differentiated market. Tesla is more differentiated than most, because it has a luxury brand, many unique features, is electric, and competes in part on the basis of industry-leading technology. Overall, there are many product attributes of Tesla that are simply not found in mainstream cars and would not point to anything other than positioning as a luxury vehicle. The price point, as well, is in line with other luxury vehicles.
While Tesla is...
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