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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
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