Marketing Management

SUMMARY: In order to sustain itself in the market, it is imperative for an organization to develop and sustain an effective competitive advantage. According to Michael Porter, there are two types of competitive advantages cost advantage and differentiation advantage. A company obtains a cost advantage when it offers the same value as the competitor but at a lower cost. When a company offers value that is superior to that of the competitor, it is said to have differentiation advantage.

Porter suggested the five forces model to analyze an industry. They are rivalry among firms, threat of substitutes, bargaining power of buyers, bargaining power of suppliers, and barriers to entry/threat of new entrants. A company faces competition at various levels are generic competition, form competition, industry competition and brand competition.