Business Management guru, Professor Michael Porter from the Harvard Business School, has postulated two types of approaches to competition: differentiation and cost leadership. Most corporations follow one of these two alternatives. The thinking has also permeated the world of stock investors. Niche players in luxury segments and generic market leaders are behind some top stocks.
Such a black-and-white approach to business management and stock investing may be outmoded now. Segments have begun to overlap. The most demanding customers demand both the prestige of sporting brands, and the economies of plain-Jane generics. Circumstances also force customers to move vertically: the wealthy of the past are forced to compromise on price fronts, even as the progressive middle-classes of emerging economies move up the Malthusian ladder of wants.
Some corporations fight the haziness of segment boundaries with products at several price points. The automobile industry is a case in point. A leading German manufacturer with a name signifying a car for the masses, now offers luxury models at the top-end of the market. You can also buy a compact with limited editions of extravagant features. The Japanese have done this as well, but it is hard to tell their umbrella-brand personalities from individual offerings.
Politics suggests a better solution. Public posturing by presidential primes is as inclusive as possible. Your chances of making it to the Oval Office are best if you appeal to the widest part of the bell-curve of an electorate. It makes good sense for stock value, if a management is able to take aim at a broad and stable cluster, rather than at a capricious target.
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