Understanding Competitive Advantage Through A Strategic Retail Typology

Abstract

The authors present a retail typology of strategies and performance outcomes based on a combination of Porters (1985) concept of competitive advantage and Miles and Snows (1978) classification of strategic groups. Application of the above theoretical concept is accomplished through an empirical examination of 159 retail drugstores. The tactics used in product, promotion, and service differentiation are examined along with location and pricing. The costs of goods, advertising expense, and rent expense of each retailer are also examined. Various combinations of these tactics result in classification into one of four strategic categories with differing sales and profit margins.