Create barriers to entry;

Enhance bargaining power;

Reduce the threat of substitutes;

Maintain leading competitive position advantages

Market conditions (external conditions)

Resources and skills (internal conditions)

(1) Changes in technology may wipe out past investments (such as scale expansion, process innovation, etc.) used to reduce costs and accumulated experience.

(2) New entrants or followers in the industry can achieve the same or even lower product costs by imitating or investing in higher-tech facilities.

(3) Market demand has shifted from focusing on price to focusing on product brand image, turning the company's original advantages into disadvantages

Create barriers to entry.

Reduce customer sensitivity.

Enhance bargaining power.

Defend against the threat of substitutes

Market conditions (external conditions)

Resources and skills (internal conditions)

The cost for companies to differentiate their products is too high.

Market demand changes.

Competitors' imitation and attacks narrow or even divert established differences

1. There are differences in needs among buyer groups.

2. The target market is relatively attractive in terms of market capacity, growth rate, profitability, competition intensity, etc.

3. No other competitor in the target market adopts a similar strategy.

4. Enterprise resources and capabilities are limited, making it difficult to achieve cost leadership or differentiation in the entire industry, and can only select individual market segments.

1. Risks caused by a narrow target market.

2. Differences in demand between groups of buyers become smaller.

3. Entry and competition of competitors.