Porter identified three effective strategies: differentiation, cost leadership, and focus. With a differentiation strategy, a company stresses its competitive advantage over its competitors, focusing on being sufficiently distinctive. With a cost leadership strategy, the company stresses lower prices to attract customers. To keep its prices down, it must have tight cost control and efficient low-cost systems processes.

With a focus strategy, the company targets a specific regional market, product line, or buyer group. Within a particular target segment, or market niche, the firm may use a differentiation or cost leadership strategy. Porter doesn’t recommend trying to combine differentiation and cost leadership because it is rarely successful, as the company gets stuck in the middle. Remember that the various grand and adaptive strategies complement one another. Managers select the appropriate strategy based on the mission, analysis, and objectives.