Porter’s Generic Strategy
The overall cost leadership is the most appropriate strategy for Indomie (mie goreng) as the dominant market leader in response to the price war competition in the market with their follower and challenger. To compete effectively in price-sensitive market such as instant noodles, Indofood concentrates upon achieving the lowest costs of production and distribution costs with setting its prices at a lower level than its competitors (Kotler, 2003). This is the choice of generic strategy in order to maintaining Indofood as the market leader in instant noodles industry with slightly increase according to the objective in year of 2006, which is 40 percent Indomie as the highest sales percentage brand in Indofood. According to what stated in Wilson (1997, p.329), “rather it provides management with an opportunity to learn how the triad of technology, management and labor can be used effectively”. Therefore, instead of the large scale economies of Indomie production, stricter controls also are being implemented including better production management to reduce cash tied up in inventory and others of operating costs. After restructuring the operations, from focus on divisional profitability to core product profitability, the management will work in better coordination. In addition, focusing distribution in potential area also will help the cost cutting but still capture the wide market coverage.
Indomie in general or Indomie (Mie goreng) fried noodle as the substitute product of staple food, has concentrated its product based on the demographic segmentation of people aged older than 5 years old we categorized for all ages, from children, teenager to older. This flavour of Indomie has an extremely wide range of segment’s overall attractiveness, because of the full market coverage in undifferentiated marketing strategy with its mass production product, mass distribution, and mass promotion of one product for all consumers (Kotler, 2003). It is the approach carried out in the cost leadership strategy of Porter (1980). Company set about broadening the consumer base for the product (Broadbent, 1981), such as Indomie (mie goreng) can be targeted for all ages, from segment with lower income to high income people. But looking back to the market trend of 2004, the competitors win from narrowing the market segment with the low price. Therefore, the next year 2005-2006 market will be more targeted for lower income class. In addition, it is targeted for people’s consumption who lives in urban city and rural, especially with high level of consumption in urban city with having the meal between the busy times, for student and working people audience. Besides that, in global market, main target is the Asian countries which noodles as the choices as the staples food.
Indomie has benefited nature in the consumer’s heart and mind, because its existence as the jargon of the instant noodles as a household name in Indonesia since 20 years ago. Thus, Indomie (Mie goreng) fried noodles offering the instant noodle with the strong and emotional message with customer to occupy a distinctive place in the mind of the target market (Kotler, 2003). In order to build the positioning strategy, Indomie (Mie goreng) fried noodle will come with a worthwhile difference to promote, with the benefit and communicable of the brand positioning, which is “Smart Price for Anywhere, Anytime, and Anyone”. In the year of 2005-2006, Indomie uses prices and functional as its basis for its dominant in the market place. As competition increases and the product already know well by Indonesian’s consumers, an elaboration associate themselves more clearly and an introduction of a new price (Hooley & Saunders, 1993). Elaboration of Indomie in appreciating the loyalty consumer with concerned about the social wellbeing of consumers that Indomie (mie goreng) can be functioned in various occasion/festival, time and...
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