And for there to be success with customers or Market, there has to be a clear competitive advantage. A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.2 What are the strategies which provide this competitive advantage Following on from his work analyzing the competitive forces in an industry, Michael Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The four strategies relate to the extent to which the scope of a businesses activities are narrow versus broad and the extent to which a business seeks to differentiate its products The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. We will analyze in this case study how Tyrrells utilized each of these business strategies to gain a competitive advantage.
Strategy 1, Differentiation: This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products. Now how are Tyrrell's Chips different. In Will Chase's own words "It's not rocket science. We're only chopping up spuds." But there a few differentiating factors which have made a very strong impact in the customer mind. They are called "chips" to differentiate between the thick-sliced, hand-fried delicacies and the cheap as, crisps alternative. But it is more than that It's not just the quality, the packaging, or the story. It is all of them combined .The Tyrrells story - from field to fryer in the same day - has found an audience in the small but growing number of consumers who want to know the provenance of their food and are willing to pay 85p for a packet for the freshness. Tyrrells uses its own produce and bans additives or pesticides. Rather than rinsing out the starch, the company fries fat slices in sunflower oil for an "all natural" snack. Its 12 flavors - from the no-salt Naked Chips to Smoked Salmon Horseradish and Capers - do not contain GM ingredients. Tyrrells aims to be certified organic in 20 months' time. All of these things create a Niche market of Customers who want fresh environmentally friendly and healthy snack.
Strategy2 - Cost Leadership: With this strategy, the objective is to become the lowest-cost producer in the industry. Many market segments in the industry are supplied with the emphasis placed minimizing costs. If the achieved selling price can at least equal the average for the market, then the lowest-cost producer will enjoy the best profits. This strategy is usually associated with large-scale businesses offering "standard" products with relatively little differentiation that are