What is the connection between these three big names?
I thought of discussing something about their strategies and how they have carved a niche for their products in markets they serve.
Apple believes in differentiation. It is guided by Steve Jobs philosophy that if apple products can wow customers, price does not remain a criteria for them while deciding to buy those products. They see ‘value’ for the price they pay. In short, apple attempts to convince them that what it sells is perhaps what the customers were deprived of for so many years. Example, iPod.
Samsung believes in cost leadership. It constantly attempts to achieve lowest possible cost for a given degree of sophistication around an established product that sells in market. It does not strive to come out with magical inventions. It only innovates to bring down the cost and make the product accessible to more and more aspiring consumers. Example, it did not invest millions of dollars in inventing touch screens for mobile phones. But once the concepts sinks into market, Samsung makes it cheap and affordable (Galaxy brand).
Tata, the company, is a splendid combination of the above two extremes. Tata invests to bring out Indian versions of global products and at the same time reduces their cost to increase their reach in Indian markets. Jaguar, the luxury car brand, is now manufactured by Tatas at a substantial low cost. They have achieved such cost reduction with what I call as Cost Innovations. They have substituted expensive auto components with their low cost counterparts wherever possible. And JLR now contributes to more than 50% of Tata Motors net profit!
Michael Porter, a ‘Grandmaster’ of Strategy had proposed these three ‘intents’ long time ago while he was publishing his views in Harvard Business Review, a journal of theory & practice of strategy formulation and implementation. He was indeed a visionary. All around us we see today what M.E. Porter saw years before it happened.