Greggs Plc’s Generic Strategies Analysis

Introduction

Porter’s Generic Strategies framework explains that organizations can attain competitive
advantage basically through low costs and by differentiating their services and products as
compared to competitors. Companies may focus on a narrow target in the market or they can
target their products by covering most of the market place {1}.According to porter’s frame work
there are three generic strategies by which an organization can embark on to get competitive
advantage, these are leadership, differentiation and focus. Greggs Plc Uk is a leading retailer of
bakery products and we shall make an analysis of this company in the light of Porter’s generic
strategies framework. Greggs have biggest selling lines. The items include Greggs sausage roll,
freshly baked savouries and their savoury and sandwich range contributes two third of their
business {2}.

Greggs Market Segmentation

Greggs aimed at a large market segment sine its products are available on national basis. Greggs
is operating with 1400 shops all over UK and it has plans to open further 600 shops to expend its
target market towards a larger market segment. We shall make an analysis of Gregg’s strategy in
the light of Porter’s generic framework.

Analysis

Cost Leadership Strategy Perspective

Firstly according to cost leadership concept companies require to develop policies aimed to
become and remain the lowest-cost producer in the industry {3}. Greggs do not fall in this
because its policy is to produce high quality products which need the use of high tech technology
and high grade expensive ingredients, therefore product cost cannot be maintained at a low level.
Secondly the frame work says that companies should control the costs by making efficient-scale
facilities, tight costs control and overhead, by avoiding marginal customer accounts, by reducing
the operating costs, minimizing the labor costs, by reducing the input cost, and by decreasing the
distribution costs. Greggs is working on these lines to reduce the costs of their operations {3}.
The objective is to increase the profit margin not to reduce the price of the products, therefore
Greggs strategy do not relate with this point. Thirdly Competitive advantage is taken by the low-
cost leader by keeping its costs of production and distribution lower than competitors. As already
mentioned Greggs strategy is to keep costs low just to make more revenues since the company
believes in customer value by providing quality and good service. Fourth point is that that
leadership cost strategy is especially important for firms selling unbranded commodities
{4}.Greggs do not fall in this category because it is selling branded products with its name.

Differential Strategy Perspective

Firstly in the differentiation strategy, companies create something different about its service or
product which is unique in nature and differentiate it from competitors in the industry. According
to company information Greggs continuously focus on to develop exciting new recipes with
improvement in the old favourites {5}, making the products different than others.

Secondly the features of the product or service are projected in a way that customers perceive
the product having advantageous features which are not normally found in competing products.
Gregg’s strategy is to project its product feature of fantastic quality; fresh bakery food at great
value prices {5}, therefore the company is following the feature benefit selling strategy. Thirdly
in this concept the customers are price insensitive. Adding value in terms of distinct features in
the product means increase cost in production and distribution of differentiated product as a
result the price of the product will be somewhat on higher side as compared to non differentiated
products. This is the reason Greggs has set high prices as compared to others as the company
history reveals the that in 1999 supermarkets began to market their mark in the bakery market
making the competition tough, but with continuous focus on their strengths, development of
fresh quality foods the company remained to go at great value prices{5}.
Fourth point is that to achieve differentiation possible strategies may include, brand image, use
of technology, focus on product features, service quality, value to customers, and distribution
setup. Greggs is following all these strategies. Finally differentiation might lead to brand loyalty
among customers and result in reduced price elasticity. Greggs has adopted strategies to create
brand loyalty among its customers.

Conclusion

If look at the Greggs strategies it is obvious that the company is following the differentiation
strategy. They are operating nationwide in UK .The company meets the criterion of this strategy
as it has a leading brand name, Their product and service features are unique in nature, customers
are willing to purchase their products, company is continuously making new products and
increasing the product range, they believe in service quality, give value to customers and they
have their own supply chain setup and they distribute from their own 1400 outlets. They do not
offer franchise and do not make products for others; therefore differentiate themselves and their
product. They generate very fast cash flow and have strong balance sheet enable them to invest
funds on development, technology and advertisement.{5}. All these activities are very close to
the points as stated in the differential strategy of porter’s generic strategies framework, therefore
Greggs is following the differential strategy.

References

1. Lynch, R. (2003), Corporate Strategy, 3rd ed., Prentice Hall Financial Times.

2. http://www.bakenet.eu/tiki-read_article.php?articleId=1634

3. www.docstoc.com › Business › Employment › HR and Benefits

4. http://www.encyclopedia.com/doc/1G2-3273100118.html

5. http://www.greggs.co.uk/how-greggs-began