Final answer:
Porter's competitive strategy known as 'differentiation' focuses on providing unique value to customers through superior product quality, special features, or after-sale service. It involves creating products with distinctive features that set them apart in the market, aligning with a company's core competency.
Step-by-step explanation:
According to Porter, the generic competitive strategy that enables a company to provide unique and superior value to the buyer through product quality, special features, or after-sale service is known as differentiation. This approach involves creating differentiated products that stand out in the market due to their unique attributes, which can include physical aspects, location, intangible aspects, or overall perceptions. Companies often find success in focusing on their core competency, specializing in a limited range of products that they can perfect and distinguish from competitors' offerings.
The concept of product differentiation is essential in markets characterized by monopolistic competition, where the variety of products available contributes to a firm's competitive advantage. It is the variety in styles, flavors, locations, and characteristics that creates market niches and allows businesses to target specific customer groups with their bespoke value.