STRATEGY

GENERIC STRATEGIESFOUR P’SMAPS & MATRIXES

SWOT, OPPORTUNITY & THREAT, BOSTON GROWTH SHARE, PRODUCT LIFE CYCLE, COMPETITOR MAP, PERCEPTUAL MAP

TARGET MARKET & SEGMENTATION

Chapter 1

Market Driven Strategy (info on customers, competitors, market) and Deliver superior customer value

Distinctive Capabilities (competencies)Provide Customer Value

Figure 1-7: Contrasts Between the Sales Concept and the Marketing Concept

Group Exercise

What do you think are product and market definitions for the following?

Missouri-Pacific Railroad? Xerox? Standard Oil? Colombia Pictures? Example: Carrier Product: We make air conditioners and furnaces Market: We provide climate control in the home

Table 4.1: Product-Oriented versus Market-Oriented Definitions of a Business

Company Product Definition Market Definition

Missouri-Pacific Railroad

We run a railroad We are a people-and-goods mover

Xerox We make copying equipment

We help improve office productivity

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We market entertainment

Encyclopaedia We sell encyclopedias We distribute Information

Carrier We make air conditioners and furnaces

We provide climate control in the home

Chapter 2

STRATEGY FORMULATIONDefine Corporate missionSet ObjectivesDetermine Strategic Business UnitsEstablish strategic Guidelines

DESIRABLE

CAPABILITIES

DESIRABLE

CAPABILITIES

Superior tothe

Competition

Difficult toDuplicate

Applicable toMultiple

CompetitiveSituations

Source: George S. Day, Journal of Marketing, October 1994, 49. TM 1-6

Chapter 2

CORPORATE STRATEGYManagement’s long term visionObjective milestones toward visionAssets, skills, capabilitiesBusiness CompositionStructure, Systems & Processes

Chapter 2

MARKETING STRATEGYSEGMENTATIONTARGET MARKETSPOSITIONING (4P’s)IMPLEMENTATION & MANAGEMENT

Company Orientations Toward the Marketplace

– Target Market

– Customer Needs• Stated needs

• Real needs

• Unstated needs

• Delight needs

• Secret needs

Chapter 3 Market Opportunity Analysis

1) Define Product Markets2) Analyze End Users3) Industry & Value Chain Analysis4) Evaluate Key Competitors5) Estimate Market Size & GrowthCompetitor Map pg. 97Perceptual Map pg. 103

Defining and Analyzing Markets #3

Define Product-MarketBoundaries and

StructuresDescribe and Analyze End-User

Analyze Industry & Value Added System

Evaluate Key Competitors

Forecast Market Size & Growth Trends TM 3-6McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All

Rights Reserved.

Generic Competition Strategies

Overall Cost Leadership Need high market share, efficient facilities, cost

reduction, tight overhead, no marginal customer accounts, raw materials access, re-investments

Differentiation Unique: design, technology, features, service...

Focus Specific buyer group, segment of a product line,

geographic market...

Overall Cost Leadership

Sustained capital investmentsProcess engineering skillsProducts designed for ease in

manufactureLow cost distribution systemTight cost controlFrequent, detailed reportsIncentives based on quantitative targets

Differentiation

Strong marketing abilitiesProduct engineering & creative flairStrong research & function coordinationReputation for quality or leadershipSubjective incentives & measurementsAmenities to attract high-caliber peopleFOCUS: Above, directed at specific target

Competitive Strategy-Broad formula: How to compete, set goals, policies to achieve goals

COMPET. FORCES Entry Threat of substitution Buyer bargaining

power Supplier bargaining

power Current competitor

rivalry

ENTRY BARRIERS Economies of scale Product differentiation Capital requirements Switching costs Access to distribution Cost disadvantages Government

Figure 1-5: The Four P Components of the Marketing Mix

Figure 9-3: Competitor Map – Eastman Kodak

BOSTONGrowth ShareMatrix

Figure 4-5: Three Intensive Growth Strategies: Ansoff’s Product-Market Expansion Grid

Figure 4-7: Opportunity and Threat Matrices

Identifying andDescribing Buyers #3

HowBuyers

MakeChoices

BuildingCustomerProfiles

EnvironmentalInfluences

DESCRIBINGAND

ANALYZINGEND-USERS

TM 3-7McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

Illustrative Example: Gasoline Buyers #4

RoadWarriors

TrueBlues

GenerationF3 (Fuel,Food & Fast)

Homebodies

PriceShoppers

Higher-income, middle-agedmen, drive 25-50000 miles a year… buy premium with a credit card… purchase sandwiches and drinksfrom the convenience store… will sometimes use carwash

16% ofbuyers

Men and women with moderate tohigh incomes, loyal to a brand andsometimes a particular station …frequently buy premium, pay in cash

16% ofbuyers

Upwardly mobile men and women -half under 25 years of age - constantly on the go … drive a lotsnack heavily from the conveniencestore

27% ofbuyers

Usually housewives who shuttlechildren around during the day anduse whatever gas station is based ontown or on route of travel

21% ofbuyers

Not loyal to brand or station andrarely buy premium … frequently ontight budgets.

20% ofbuyers TM 4-10

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

Illustrative Consumer Perception Map #4

LowQuality

HighQuality

Expensive

Inexpensive

GROUPI

GROUPV

GROUPIII

GROUPII

GROUPIV

• Brand E

• Brand D

• Brand C

• Brand B

• Brand A

TM 4-11McGraw-Hill/Irwin© 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

A Framework for Market Sensing #5

Probability of the Event Occurring

Effect of theEvent on theCompany*

High LowMedium

1

2

3

4

5

6

7

* 1=Disaster, 2=Very bad, 3=Bad, 4=Neutral, 5=Good, 6=Very good, 7=Ideal

UtopiaField ofDreams

Things toWatch

DangerFutureRisks

TM 5-4

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

Figure 11.3: Sales and Profit Life Cycles

Product Life-Cycle Marketing Strategies

Issues in Collectingand Using Information #6

Invasion of customer privacy e.g., use of medical

databases to sell healthcare products

Information and ethics e.g., guidelines for sharing

of confidential informationTM 5-13McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All

Rights Reserved.

Bargaining Power of BuyersConcentrated or large volume salesPurchased products are a significant

fraction of buyer’s costsProducts are standard or undifferentiatedThere are few switching costsLow profits - pressure on suppliersBuyers pose threat of backward

integrationBuyer has full information

Bargaining Power of SuppliersConcentrated suppliers, fragmented buyersLittle substitution threatCustomer is not an important buyerSupplier’s product is important inputHigh buyer switching costsSuppliers pose threat of forward integrationGovernment - defense, timber, regulation

Rivalry: Price competition, advertising,

product introductions, customer service..

Numerous Competitors: More mavericksSlow Industry GrowthHigh Fixed or Storage Costs (Excess

capacity often leads to price wars)Lack of Differentiation = commodityForeign CompetitorsHigh Strategic StakesHigh Exit Costs

Likelihood of retaliation to entry

History of retaliationEstablished firms with substantial

resources such as cash, borrowing capacity, excess productive capacity, distribution leverage

Established firms with illiquid industry assets

Slow industry growth - can’t absorb new competition.

Figure 9-2: Barriers and Profitability